FSBO TRENDS IN THE MARKETPLACE
The advent of internet real estate marketing websites has been very disruptive to the traditional real estate model of hiring a real estate agent and paying the commissions associated with a real estate broker to broker sale transaction.
The traditional way of selling real estate continues to change exponentially for the following reasons:
- General dislike of real estate agents
- Desire to not pay a 6% commissions
- Desire for more transparency in the sale transaction
- The desire for more control in the real estate transaction
- Many of the functions the real estate agent traditionally performed in the marketing of properties can now be performed without the necessity of a real estate agent
- Lack of housing inventory has created a situation where the demand for properties far exceeds the supply of properties making it much easier for sellers to find a buyer
In a FOR SALE BY OWNER transaction a seller has found a buyer without the assistance of a real estate agent, or a buyer has found a seller without the assistance of a real estate agent. Trulia, Zillow, Realtor.com, and other real estate websites now enable individuals to market their property for sale without the necessity of hiring a real estate agent. This is a fairly new approach to real estate sales that was simply not possible in the past. In the past the only way to market a property was a sign in the yard, conduct an open house, and hire a real estate agent to enter the property into the Multiple Listing Service which is a paid website designed for real estate agents and real estate brokerages. Today an unrepresented seller or buyer has access to practically 100% of the same information that a real estate agent and brokerage does. This has created a strong trend in the industry of sellers testing the market first before hiring a realtor through internet real estate sites that are specifically designed to serve that function.
Often non-represented sellers successfully find a buyer but do not know what to do next, or an unrepresented buyer has found a seller and does not know what to do next. Traditional Realtors are paid a commission when a sales transaction occurs. Traditional brokerages charge 3% on the listing side and 3% on the buyer broker side. They do not assist FSBO buyers and sellers because they are SALES AGENTS and because their brokers will not allow them to act in that capacity.
Also, because real estate sales agents are not attorneys they are required to have agency agreements executed (in order to avoid acting in the capacity of an attorney) and other forms which do not envision an FSBO transaction. It’s just not what real estate agents do.
Buyers and sellers recognize the value of avoiding 6% commissions and believe they can perform many of the same functions of a realtor. While it would be impossible for non-licensees to perform all acts of a real estate agent, the seller can do just enough to attract a ready and willing buyer, and a buyer can do just enough to attract a willing and able seller and reach agreement on basic terms. It is at this point that our services are very beneficial to the FSBO process. We draft the real estate contract and take the sale all the way through closing. You have one point of contact throughout the sale process and are represented by a law firm, not real estate agents.