For Sale By Owner Remains Risky Proposition

An adage in the legal profession goes, “A man who represents himself has a fool for a client.” In the housing industry–particularly realtors–feel the same way about those who attempt to sell their own homes.

And yet, For Sale By Owner, or FSBO, persists, tempted to cut out an agent and the typical 6 percent commission that comes with them Trulia, San Francisco, estimated 6.2 percent of all home listing in the U.S. are FSBO.

But with such temptation comes risk, Trulia said. When it comes to actually listing the home, Trulia reported FSBO sellers are slightly more optimistic about the value of their home and list their homes at a 2% premium nationally.

“This sounds like great news for sellers, but there is a risk: FSBOs often see their homes sit on the market longer than agent-listed homes, sometimes by more than a month,” Trulia said.

Trulia reported Tulsa, Okla., has the most FSBO listings, 12.69%, as a share of all homes for sale. Honolulu has the fewest (1.3%). The median FSBO size is only 23 square feet smaller than an agent-listed home, and two years older.

Trulia said the largest positive difference in listing price for a FSBO is in Pittsburgh, where a comparable FSBO home is listed at a 12.9% premium to an agent-listed home. The median listing price of FSBOs in Pittsburgh is $147,250, and the median price of an agent-listed property is $149,900.

At the other end of the Keystone State, Philadelphia is where there’s the largest negative difference in FSBO listing prices, at -14%. The median listing price of FSBOs in Philadelphia is $111,900, while the median listing price of an agent listed property is $205,000.

Only two metros of the 10 biggest FSBO markets are located on the coasts, Portland, Ore., and Buffalo, N.Y. Honolulu has the lowest proportion of FSBOs in any market. Otherwise, Trulia said coastal areas tend to see the least amount of FSBO-listed homes in their markets, with nine out of the 10 smallest FSBO markets being located on the East and West coasts. The only non-coastal market is Las Vegas.

So, is FSBO worth it? “Ultimately, it’s not unreasonable for sellers to consider a FSBO listing considering the potential payoff,” Trulia said. “But it’s important to remember the value agents bring to the table. They have access to more listings and buyers, know a market’s ins and outs and have experience negotiating a deal.”

More importantly, a listed price many markets is just a starting point,” Trulia said. “In some markets, San Jose, Calif., for instance, properties can be priced lower to start bidding wars,” it said. “FSBOs also run the risk of underpricing their homes.” Additionally, Trulia said FSBO properties run the risk of languishing–perhaps due to the inexperience of the seller in finding and negotiating with a potential buyer.