One of the main reasons why For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe they will save the commission an agent charges for getting their house on the market and selling it. A new study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.
In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:
“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”
Why would FSBOs net less money than if they used an agent?
The study makes several suggestions:
“There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
“Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.
Three conclusions from the study:
FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.
If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.
Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers who are out looking for homes, which has caused prices to rise.
The great news about rising prices, however, is that according to CoreLogic’sHomeowner Equity Report, the average American household gained over $14,000 in equity over the course of the last year, largely due to home value increases.
The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home during the 1st quarter of 2017 (the latest data available).
For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets.
The added equity is helping families put their children through college, invest in starting small businesses, pay off their mortgages sooner and even move up to the home that will better suit their needs now.
If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, let’s get together to discuss your options!
This is the latest Las Vegas Real Estate Market Report for the week,
data is obtained from the Greater Las Vegas Association of Realtors MLS.
Single Family Residence (SFR)
Available – 5,130 (+6, Last Week 5,124)
Under Contract – 5,102 (-16, Last Week 5,118)
Days of Supply –3 1 (+0, Last Week 31)
Short Sales – 1,051 (-3, Last Week 1,054)
Condominiums and Town Homes (CONDO/TH)
Available – 678 (-18, Last Week 696)
Under Contract – 1,022 (+23, Last Week 999)
Days of Supply – 20 (-1, Last Week 21)
Short Sales –1 99 (-3, Last Week 202)
Every summer, families across the country decide if this will be the year they sell their current house and move into their dream home.
Mortgage rates have hovered around 4% for all of 2017, forcing buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!! At the same time, inventory levels of homes for sale have dropped dramatically as compared to this time last year.
Trulia reported that “U.S. home inventory has tumbled 8.9% over the past year and has now fallen for nine consecutive quarters.” There is now 20% less inventory than there was five years ago.
Here is a chart showing the decrease in inventory levels by category:
Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2017, now may be the perfect time.
According to the National Association of Realtors®’ 2017 National Housing Pulse Survey,84% of Americans now believe that purchasing a home is a good financial decision. This is the highest percentage since 2007 – before the housing crisis. Those surveyed pointed out five major reasons why they believe homeownership is a good financial decision:
- Homeownership means the money you spend on housing goes towards building equity, rather than to a landlord
- Homeownership creates the opportunity to pay off a mortgage and own your home by the time you retire
- Homeownership is an investment opportunity that builds long-term wealth and increases net worth
- Homeownership means a stable and predictable monthly mortgage payment
- Homeownership allows for various deductions on federal, state, and local income taxes
The survey also revealed that the majority of Americans strongly agree that homeownership helps create safe, secure, and stable environments.
Homeownership has always been and still is a crucial part of the American Dream.