I went to two open houses yesterday. My sister and her partner are looking for a place. The homes we looked at were on the same street in Oakland. One was listed by an agent with Pacific Union, a prominent Bay Area brokerage company; the other was a FSBO.
The first home, the one listed with a broker, is marketed adequately. It seems to be priced right. The listing appears on pacunion.com, Realtor.com, and Trulia. There are eight photos. Not enough, but better than some.
The second home, the FSBO, is more interesting. It too seems to be priced properly. The owner paid this company, (yikes, what a crappy site!) one of those flat-fee posting "brokers", to get the home into the MLS and thus onto everyone’s IDX display, including that of Pacific Union. No big deal — that’s been done for ten years. And, as we know, it produces results less than 20% of the time.
But … this homeowner also set up a Blog for his home. With 47 photos. He also took the time to list it for sale on Zillow, adding a bunch of photos there.
There are lots of things he did not do with the blog that he should have. He chose the wrong platform. And the photography is not exactly inspiring. But he still did a better job marketing his property online, where it really counts, than the pro down the street did.
It made me think about the impact Web 2.0 will have on the FSBO market. Despite more than a decade of Realtor bashing and consumer empowerment, the percentage of homes sold without an agent has remained flat. But will that continue now that consumers have access to the same free or nearly free Web 2.0 applications Realtors are just starting to adopt? Now that it’s cheap and easy to get listings into the MLS, and most public listings websites no longer view placing FSBOs next to their broker listings taboo? Now that forking over big bucks for print advertising is no longer necessary?
I don’t think so.
The entry of generations X and Y into the real estate market has been talked about a great deal — usually in relation to practitioners’ level of preparedness to "deal" with them. But many of these consumers, whose FSBO parents fumbled with useless "FSBO kits" and homemade yard signs, will look at the bounty of Web 2.0 applications — from blogs to video editing and sharing tools — and think long and hard before they pay 6% to have their property marketed just adequately.
Web 2.0 will empower Realtors with the desire and skills to master its practice. It will do the same for the FSBO-inclined consumer. With each coming year, an increasing number professionals who ignore this reality will be left in the lurch.
I think we’re going to see a significant increase in FSBO’s in the coming years. What do you think?
– Brian Boero
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I agree FSBO's will probably go up with all these sites being hyped, but it will be interesting to see how many people eventually give up and go back to a realtor. I've searched the local FSBO site, and 99% of the homes on there are WAY over priced, and that just doesn't fly in today's market. Regular people need to be grounded into reality by a professional.
I look at it from a slightly different angle. With people (who may choose to attempt to sell their home FSBO) having access to all of these great Web 2.0 tools I find myself looking for ways to solidify the online marketing that we do so as to have a cohesive and well designed marketing plan in place. Just because you have the keys to the race car doesn't mean that you will get around the track like a professional driver would.
Some FSBO's who utilize Web 2.0 will be very successful. These people probably would have been able to sell their house on their own without web 2.0.
Everyone deserves a shot with these Web 2.0 tactics…which is why we offer a Free Report on our Madison Real Estate Show blog labeled "Top 10 Web 2.0 Marketing Tips for Selling Your Home- FSBO Edition"
If we as REALTORS don't utilize these great marketing techniques you can bet that some FSBO's will.
The number of homes sold FSBO is difficult to pin down and is a statistic that I suspect is often calculated in a self serving fashion by NAR and other realtor groups. Even your example cited above was technically listed with a "broker" and presumably wouldn't fall under the FSBO category by most stat makers. More telling may be the "amount of" or "percentage of sales price" listing commission that is paid. I agree that the tools available today to FSBOs will have some upward pressure on the number of FSBO sellers, but I think that home prices will have a more significant impact. Many homeowners today just don't have enough equity to afford a full commission.
I don't think the number of un-represented sellers will change much. There will always be some number of DYI types who are always convinced that doing something themselves is cheaper and better. I could have put a new roof on my house, but would I have saved time and money. Not likely, I hired a pro.
Real estate agents (who currently don't fit into the gen x, gen y demographic very much) struggle with all the tech options at their doorstep. I expect that dyi sellers will generally fit into that mold themselves. It takes some time and some talent to filter out which tech tools are worthwhile and how best to syndicate a listing. Selling one house a decade probably doesn't adequately prepare you for dealing with the issue.
Lastly, marketing is only one piece of the puzzle. Finding a buyer is not the same as getting a transaction through escrow. If real estate were easy, the failure rate wouldn't be so dramatically high.
Brian – this is precisely why I got my RE license last Oct. It was about this time last year that I started a sideline business offering RE photography as well as using and reselling RealEstateShows.com. Frustrated at the lack of response from the RE community, I developed a FSBO website and started offering the same service to them. I figured some of these FSBOs would turn into referrals to agents. Therefore, I proceeded to get my RE license so that I could benefit through referral fees.
It was through this process that I realized just how few RE agents "get it" and saw the opportunity to build a dynamic team that understands and uses the types of technologies promoted by 1000Watt.
We now provide a service to Fizbos enabling them to use many of these Web 2.0 marketing vehicles. We approach this from a position of "How Can We Help You?" … knowing that some of those who are unsuccessful selling by owner will turn to our Full Service RE business because of the relationship we have built. To me it's a Win-Win-WIn: a win for Fizbos who are successful selling by owner, a win if they decide to list full service (because we rebate their investment) and, of course, a win for our RE business!
Hello Brian,
Great post. I also think FSBO's will increase over time for a few reasons.
They already have when you factor in the flat fee MLS listings as per this post from over a year ago – http://www.forsalebyownercenter.com/blog/2007_01_01_forsalebyownercenter_archive.html and as noted above by Marc.
As noted above the current equity crunch will force sellers to explore other options like FSBO.
Lastly remember that the largest group of home sellers will be boomers who A) are already familiar with the process, with many being or having been licensed and B) will depend on their Gen X kids to help them with the process and Gen X will be very interested in saving equity from the sale because savings will directly help them support their parents in the future and ultimately affect the amount they may receive.
Marketing a home for sale is more than throwing it in the MLS with a few pictures and using all these "web 2.0" freebies to market a home.
I think real estate agents will absolutely shrink in numbers because it's becoming a business of expected high quality and wanting something "exclusive".
REALTORs who claim MLS and Zillow submission as their golden tools to why they deserve 6% are destined to fail. I wouldn't even give them 1% for that.
Innovate. Be unique. Offer something no one else has.
THAT will make you a desirable REALTOR and will give homeowners a reason to hire you.
By the way, I hate this notion that a single REALTOR is not worth 6% because most home sales occur with a separate buyer agent representing the buyer where they receive 3% of the commission so in reality those listing agents are asking 2% – 3% for their services, not 6%.
I didn't agree with separating commissions at first but now it feels more and more necessary.
When I do presentations to sellers I always make a note to highlight that I'm asking for X% while Y% will be what we offer to the buyer agent. I'm sure I'm not the only one.
I think this is very interesting, and those savvy enough will use web 2.0 tools to their advantage and sell on their own. I was surprised the other day to be checking my Gmail and see a sponsored link above my inbox for a web page that an FSBO had set up. There was just one static page, with photos and some text about the property. The URL was quite clever, it was literally the first line of the address of the property. Not necessarily web 2.0, but clever tactics nonetheless.
Thanks for the reminder that we as professionals have competition and that we continue to strive to become better.
However good the marketing gets for these unrepresented sellers, that is a small portion of the professional's task. A strong Realtor with negotiate toughly, protect the client's interests, keep the deal on track when an inexperienced fsbo would lose it.
These are the reasons why the real estate industry exists.
Great post!
I own a local fsbo website and the #1 reason I hear that people go fsbo is to save money. Most have no clue how to sell their homes. They think that they can throw a for sale sign in the yard, and put a few ads in the newspaper and sell their house. Many do not take the time to research home prices, or how to market their homes. Many give up after just a few weeks. Selling fsbo is possible, but it is not for everyone.