February 2, 2016 by Leave a comment

When home prices rise steadily over several straight years, seller’s markets crop up where demand is strongest. One of the side effects is a renewal of interest among home sellers in trying to find a way to forgo the traditional six percent commission that real estate brokerages charge. Typically, that means marketing their homes on their own.

During the current three-year old housing recovery, however, there’s no sign that more sellers are going “FSBO”, or “for sale by owner.” Since 2012, sale prices have risen about 20 percent, according to CoreLogic.[1] In several of the hottest markets like Riverside CA or Los Angeles price increase are near or exceeding 10 percent in 2015 alone.[2]

Despite the strength of the recovery, interest among home sellers in going it alone has yet to materialize. According to the National Association of Realtors’ annual Profile of Home Buyers and Sellers, only 8 percent of sellers went FSBO in 2014, fewer than in 2013 and the smallest share since the association started collecting data in 1981.[3] But a lot has changed in 35 years and NAR’s survey may not be providing a complete picture of how the Internet may be empowering consumers to reduce the fees they pay real estate brokerages.

The traditional definitions of FSBO may mask a growing trend among many sellers to do more of the marketing themselves with the help of the Internet and brokerages using newer models.

Here are a few of the new ways people are saving when selling their home:

Auctions. Foreclosure auctions were a significant part of the real estate business four or five years ago and now online auctions have become an increasingly popular way for owners to sell their homes at a good price without having to wait for months. Sites like Auction.com and Hubzu.com offer incentives to buyers to buy their next home at an auction.

Discount brokers. There is nothing new about brokerages that offer their services at rates significantly less than their competitors. Most, however, provide less service for their lower prices. Redfin is probably the best known of a new breed of brokerages that gives buyers rebates and sellers commissions as low as 1.5 percent without reducing service.[4]

Owners.com gives buyers a rebate equivalent to about 1.5 percent of brokerage fees after the closing. The rebate comes from the 3 percent commission that traditionally goes to the buyer’s agent.

Fee for service/listing on MLS. During the housing boom that ended ten years ago, demand was so strong that many owners saw no need for a real estate agent with one exception—they wanted to list their homes on their local MLS. Dozens of brokerages went into business by simply listing homes for a flat fee of $500 to $1000 and not providing other marketing services, or providing other services for fixed fees.

 New online tools. Ten years ago the first web sites and online brokerages for FSBO owners created the first listing inventories of FSBO homes and distributed turnkey tools like yard signs and brochures. Today a new breed of sites has taken FSBO tools to a new level.

Sites like forsalebyowner.com and owners.com provide sophisticated advice and unique tools to help owners value their properties and price them properly. Owners.com provides a trend tracking tool that helps owners see priding trends down to the neighborhood level.


[1] http://www.corelogic.com/research/hpi/corelogic_hpi_october_2015.pdf



[2] http://www.corelogic.com/research/hpi/corelogic_hpi_october_2015.pdf

[3] 2014 Profile of Home Buyer and Sellers, National Association of Realtors.

[4] https://www.redfin.com/about/listing-fee


Steve Cook is managing editor of Real Estate Economy Watch, which was recognized as one of the two best real estate news sites of 2011 by the National Association of Real Estate Editors. Before he co-founded REEW in 2007, he was vice president of public affairs for the National Association of Realtors. In 2006 and 2007, he was named one of the 100 most influential people in real estate.

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