The NAR's "2002 Profile of Homebuyers and Sellers" shows that the percentage of FSBOs is shrinking, and thanks to the NAR's new method of extrapolating FSBO data, the industry now knows a little more about the typical FSBO profile than it did, but there are still some tantalizing omissions.

The NAR separates FSBOs into two types - those in which the seller knew the buyer (these homes did not require marketing) and those in which the owners wanted to sell their homes without the assistance of a real estate professional. Because the first type were able to sell their homes without marketing, they don't qualify as true FSBOs because the home was never offered for sale on the open market.

What is not included in the survey is how many homeowners tried to sell their homes themselves before hiring a Realtor, and what reasons made them decide to desert the FSBO course of action. The NAR instead addresses these questions in a press release by suggesting that earlier surveys during hot real estate markets showed as many as 20 percent of owners would try to sell their home without a professional and that the increasingly complexity of the transaction, the time required to market a home and security in admitting unscreened strangers, might have influenced the FSBO decline.

The failure rate of FSBOs would be very useful information for Realtors who market to FSBOs to know, especially if the figure is high. Imagine if 30 percent of sellers or higher went FSBO, as reported by some agents in some areas? If only 13 percent succeeded, why did the others fail? How long did they try to market their homes before turning to a Realtor? Which methods were used and what was the cost? What was the original asking price, and what price did the Realtor list the home? How quickly did the Realtor sell the home and for what sales price? What was the percentage difference? What reasons do they give for their failure to sell their home themselves?

For example, how significant is the Internet as a competitor to the yard sign - the FSBOs favorite means of marketing? While Web sites such as agent listings-driven Realtor.com thrived with more traffic than ever, FSBO Web sites all but disappeared in 2001. The largest, Owners.com, is in some kind of automated limbo. Even at its height, Owners.com never accumulated more than 35,000 listings nationwide. Realtor.com offers Web visitors over 2 million listings to view.

This is supported by the fact that more buyers turned to the Internet in their home search than ever before, and agents used the Internet more than ever in marketing homes. Two-thirds of Web-enabled homebuyers used the Internet to find a home, the largest number ever counted.

Still, there are plenty of tidbits to chew on.

The survey offers some compelling reasons why going FSBO may not be such a hot idea.

• The percentage of for-sale-by-owners (FSBOs) was 13 percent in 2001, down from 16 percent in 1999 and a cyclical peak of 18 percent in 1997.
• Homes sold by a real estate agent captured a higher price. The median selling price of a home sold directly by an owner was $137,400, while the median selling price of a home sold by an agent was $175,000, a differential of a whopping 27 percent.
• Forty-eight percent of homebuyers first learned about the home they bought from a real estate agent. The next biggest sources were yard signs, at 15 percent; friend/neighbor/relative, 8 percent; the Internet, 8 percent; and newspapers, 7 percent.

Still, some sellers were tempted. Of the 13 percent of homeowners who sold their own homes, some interesting trends were noted.

• A larger percentage of FSBOs were in no hurry to sell, 55 percent, compared to listed sellers, 42 percent
• FSBOs had less household income, $74,100, compared to listed sellers, $78,800
• FSBOs are older, 45 years, compared to listed sellers, 41 years
• Forty-six percent of FSBOs did not want to pay commissions, and 8 percent did not want to deal with an agent
• Thirty-one percent of FSBOs sold their homes to a neighbor or relative
• Despite two-thirds of buyers using the Internet, only 8 percent of FSBOs used the Internet to market their homes, while 38 percent used newspapers, and 44 percent used yard signs to market their homes.

Agent-driven listings sites as well as the increased use of the Internet by agents as a marketing tool, may have been more effective in shutting down FSBOs than they have been given credit. The coincidence is too large to ignore.

Would FSBO sellers repeat the experience? Despite problems such as understanding the paperwork, 20 percent, and getting the right price, 9 percent, 35 percent of FSBOs say they would sell their homes again., while 22 say they would use an agent next time, and 43 percent were undecided.

Published: June 17, 2002

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