The number of residences sold without the assistance of real
estate agents appears to be growing but relatively few know about the
trend because it's not been widely reported, and those who have noticed aren't
publicizing it. In fact, the National
Association of REALTORS (NAR) has reported a decrease in the number of for sale
by owner (FSBO) transactions despite evidence contradicting that conclusion.
I've personally witnessed a surge in FSBO transactions over
the last year or two, and there's been a corresponding growth in the number of
home purchasers without agents. My
observations are unscientific but nonetheless are evidence of the shift away
from agent-assisted transactions. To
back up my own observations I've discussed the topic with title company closing
agents, residential appraisers and other home inspectors who've observed the
same. Each person I've discussed the
matter with described a substantial increase in residential transactions closed
without the assistance of real estate agents in the last year, and some
speculated non-agent transactions have doubled as of late. One appraiser told me 25% to 40% of the
appraisals she'd performed in the last few months were on FSBO transactions
when in prior years the number was less than half that.
Real estate transaction data and trends are recorded by and
publicized through organizations that exist for the advancement of real estate
agents and affiliated groups who rely on real estate-related commissions and
fees, thus they aren't likely to publicize stories describing the ease at which
these transactions are successfully facilitated without agents because it might
empower homebuyers and sellers considering going without agent
representation. The NAR and other real
estate entities discourage individuals from buying or selling homes without an
agent. Type "Should I sell my
house FSBO" into an internet search and you'll likely discover most of the
results are posts by real estate agencies or organizations trying to sway
people into using agents through fear and subjective statistics.
The number of persons buying and selling homes without
agents is unknown. There's not an
independent organization tracking these statistics, and local register of deeds
offices aren't a good resource because they don't always differentiate the
demographics of the parties to transactions and/or whether the properties are
residential homes, lots, commercial buildings, or multifamily dwellings. The numbers publicized by the NAR and the
affiliated Multiple Listing Service agencies (MLSs) overseen by the NAR
are recorded by those agencies using information culled from their clients and
reported by real estate agents.
Subsequently, statistics of home sales transacted without agents are
purely anecdotal, and the research is less than scientific.
The NAR has published this information on their website,
presumably to discourage FSBOs:
“FSBOs
accounted for 8% of home sales in 2014. The typical FSBO home sold for $210,000
compared to $249,000 for agent-assisted home sales."
From the 2015 Profile of Home Buyers and Sellers, National Association of REALTORS®
These statistics are misleading: First, the NAR doesn't actually know how many transactions were
FSBO because they're using subjective and partially fabricated data - the NAR's
stats are not derived from objective or independent sources (they do sell their
data for $249.95 on their website if you want to check it). Second, NAR's data doesn't compare the price
of identical houses sold both with and without agents, rather they compare the
comprehensive sales of all residential properties minus those sold by
agents. Their numbers exclude
low-dollar residences, such as trailer homes and dilapidated properties that
are generally far more likely to be sold without the assistance of agents,
which skews the statistics significantly.
Independent studies have
shown FSBO properties and those sold by agents generally sell for the same
price. A report published in 2009 for
American Economic Review by Igal
Hendel, Aviv Nevo, and François Ortalo-Magné revealed virtually no difference
in sales price of agent-listed homes versus those sold without agents. From the report's conclusions:
"We have compared the
performance of MLS and FSBO platforms for the sale of single-family residential
properties. After controlling for differences in house and seller
characteristics, we find that the MLS delivers no price premium (even before
netting commissions)"
Independent research, such as the study cited above, raises
doubt to the legitimacy of the NAR's claims.
To make matters worse for the NAR, it has been determined agents have
been providing inflated and inaccurate sales numbers to the NAR's
affiliated MLSs from which the sales data is sourced. A January 27, 2016 article in the Washington
Post by Kenneth Harney reports independent researchers discovered inflated or
inaccurate sales prices provided to the MLS by agents 8.75 % of the time.
The FSBO trend hasn't gone entirely unnoticed. A May 2015
FoxBusiness.com article cited statistics from Eddie Tyner,
president of ForSaleByOwner.com, who claimed seller traffic to its website was
up more than 200% for the first quarter of
2015 over the same period in the prior year.
The shift towards buying and selling real estate
independently is likely the result of unprecedented opportunities to market or
search for properties via Zillow, Trulia, Craigslist, ForSaleByOwner.com and
other online services. These resources
offer buyers and sellers the opportunity to both publicize and seek properties
without an agent's assistance, and at little to no cost. Advancements in
technology and free access to real estate listings have provided most
homebuyers and sellers with many of the same resources and tools that weren't
available to non-agents in the past.
Another reason home buyers and sellers might forego using an
agent is poor customer service.
According to the 2015 National Association of REALTORS Profile of Home
Buyers and Sellers, only 67% percent of home sellers would definitely use the
same agent again. This is an abysmal
number for an industry so driven by customer service. A 67% satisfaction rating indicates many agents aren't doing a
good job in the eyes of their clients.
The worst home buying or selling horror stories I've heard
are from people who felt they were misled or underserved by their agent. Of all the persons I've worked with who've
bought and/or sold both with and without agents, almost every one that
expressed a preference said they'd rather go without.
To be clear I am an advocate of real estate agents in many
cases. I'm friends with many agents and
I've seen first-hand the benefits of using a good agent. There are some very good reasons for
enlisting the assistance of a real estate agent to help home sellers and buyers
conduct residential sales and purchases, and there are a number of excellent
agents that have to ability to make the process easy and expeditious. However, diligent persons considering the
sale or purchase of a home without an agent shouldn't be intimidated by the
fear tactics used by some in the real estate industry. Title companies, mortgage lenders, home
inspectors, lawyers and appraisers are available to help independent buyers and
sellers navigate through the process without an agent's assistance. Documents for buying / selling homes are
available at title companies, office supply stores and on the internet.
Buying or selling homes can be done independent of real estate agent assistance, and it appears a growing number of people are discovering that fact for themselves despite what some are publicizing.
Buying or selling homes can be done independent of real estate agent assistance, and it appears a growing number of people are discovering that fact for themselves despite what some are publicizing.
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