Any quick-wrist search online about the effectiveness of selling your home by owner (also known as For Sale By Owner or FSBO) will land you with a furry of articles, quotes, memes, and videos quoting a certain National Association of Realtors (NAR). In this article NAR assert their data shows selling without a licensed real estate professional can (1) take longer, and (2) sell for less.
At a first glance, this report could be assumed to be bias. Every licensed Realtor® pays a yearly fee and contributes to a powerful and wealthy Super PAC. Any reduction in membership is a direct attack to the very existence of the NAR.
Putting aside self awareness and self-protection, then comes analyzing the data.
A Forbes article (here) by John Wake calls into question the data used. Here is a recap: analyst at NAR lumped together Single Family homes sold (with and without realtors) and the sale of Mobile Homes. Clearly these two, albeit independent homes, are not considered by the market to be in the same category.
In this article, Forbes quotes research (here) by two professors: Igal Hedel from Northwestern University, Department of Economics, and Francois Ortalo-Magne, from the School of Business University of Wisconsin, Madison. In this research clearly states, when comparing apples to apples, single family homes v single family homes, there is no difference.
At PadBlock.com we can validate such conclusion, albeit with a smaller sample size. During 2020 our data shows homes (condos and single family homes) were under contract to close within an average of 11.8 days; with an outlier of 3 days. We’ve found similar results for selling prices. Every home we’ve listed sold at or above asking price, with an outlier selling a whopping $27,000 OVER asking price.
As the number of For Sale By Owner transactions increases, due to a cultural shift (a better understanding of contracts by the general public), a growing trend of Do It Yourself (we literally DIY everything thanks to Google and YouTube), and a louder call to question of the real estate licensee’s value for 4 to 6% commission, the industry is about to see a tectonic shift.
We foresee a future with a limited role for the licensed real estate agent. Roles which we will discuss in a separate article.
Its has been my conclusion for several years that the future of real estate is flat fees.