The Reality for FSBOs – Leaving Money on the Table

Imagine you’re at an auction, eyeing a painting you admire and when the auctioneer opens the bidding at $100 you look around and see you’re the only one in the room. Well congratulations, you just scored a great painting for $100. Now, imagine you’re eyeing that same painting, and this time when the auctioneer opens the bidding you’re surrounded by a roomful of people, some whispering to each other, some gesturing at the painting, and others silently raising their paddle as the bids continue to rise. Unfortunately for you, the buyer, you now experienced competition and won’t be getting that painting for a bargain price.

Now imagine you’re selling your home, and you decide to do it for sale by owner. You spend your own money to advertise it, pester neighbors and friends to try to spread the word, and hope that enough people will even know it’s for sale. You hold an open house, have a handful of people tell you they’re interested, but they don’t have any urgency to make an offer. You try to follow up with them all but they’re elusive. Finally, one person agrees to a written offer. You have a sinking feeling in your stomach. It’s lower than you expected. You banter bake and forth and finally they raise their price a little—take it or leave it. You take it, thinking you’re still ahead by not paying a realtor. Congratulations, you just gave a buyer a bargain price. You left your own money on the table, and you haven’t even made it through inspection yet. And did all of the work… There is a reason that 92% of people who sell their home for sale by owner wouldn’t do it a second time.

Without competition, buyers have no sense of urgency and know that they have the upper hand. By listing with a realtor though, that same home is exposed to countless more people—not just through the Multiple Listing Service (MLS) but also networking with other realtors (TOP agents always talking to each other about who has what for sale, what’s coming on the market that’s not yet listed, what our buyers are looking for, etc.), dozens of other websites not available to a FSBO, and more. After all, if that “right buyer” is busy looking at dozens of homes they saw from the MLS, how are they going to find you?

Who Are the Buyers?

Buyers are back! As many renters transition to homeowners now, let’s take a look at who is fueling today’s real estate market.

When the “bubble” burst a few years ago, even qualified buyers got scared and sat on the sidelines. It took some time and reassurance to enter the real estate market, but now we’re seeing many first-time buyers who would have bought 3-4 years ago. Coupled with yesterday’s and today’s first-time buyers, the entry-level market in particular is seeing tight inventory and rising prices.

Move-down buyers like empty nesters and those paring down their lifestyle are driving a new market of smaller, but more upscale housing like the patio homes found at Louisville’s Steel Ranch. Move-up buyers with growing families are also adding to the real estate rebound.

With high rents now, investors are doing well taking advantage of these low interest rates. Another sector of buyers, coined “boomerang buyers” by some, are those who were previously foreclosed upon or did a short sale years ago and are now eligible to buy again. Though not everyone in this category with qualify for a loan, many are paying more in rent than they would a mortgage and now have stable jobs and a down payment to take advantage of today’s market.

As the dynamics of today’s buyers are changing, it should be interesting to see how they shape the future market.