REALTORS Actually Losing Ground to FSBO and Alternative Real Estate Models
The NAR is often quoted as stating the FSBO's are going down and losing market share but the reality, is that they (we) are really gaining a huge market share.
Don't believe me?
I know many (REALTORS) will quote the 2006 National Association of REALTORS (NAR) Home Buyer and Seller Survey there is a downtrend in For Sale by Owner transactions but you must actually read the report to quote it properly.
Here are the favorite facts of the NAR report:
"We find that the level of for-sale-by-owners is on a sustained decline and is now at a record low..."
- 12% of real estate transactions were FSBO in 2006 (down 1% from previous year)
- 13% in 2005.
- The record high was 20% in 1987
- the cyclical peak of 18% in 1997.
What interesting about the NAR and the report is that unless your purchase it for $125 to read the entire report this important facts are left out. Unfortunately I cannot post the entire report I purchased for you to read as the NAR would come after me but here are these important additional facts:
- 12% sellers successfully completed FSBO transactions - (proudly made public)
- 8% sellers successfully used minimal "MLS only" listing (this is really just a FSBO who paid $300 to get it on the MLS) - not shown in press release.
- 9% of sellers used a "limited service agent" i.e. alternative, discount, ala carte... call it what you want, it's not a traditional agent and not a traditional commission. - not shown in press release.
So when you do the math, that is 29% of the estimated 6,180,000 real estate transactions where NOT completed by a full service 6% agent.
Lets see...
- 29% of 6,180,000 is 1,792,200 transactions.
Now to me that seems like a SIGNIFICANT increase alternative / fsbo real estate transactions from the often quoted 20% high of 1987 when only a total of 3,526,000 transactions were done.
- 20% "all time high" of 3,526,000 is 705,200 "FSBO / alternative" transactions.
Maybe it's just me but 1 million MORE transactions seem like an increase?
Labels: discount, fsbo, NAR, real estate commissions, REALTORS
7 Comments:
Well, the FSBO market is growing not a moment too soon. It turns out that, to charge a "fair" fee, a successful agent must give back $69k a YEAR to buyers and sellers. Obviously, they're overcharging...
Thanks for the good analysis. It seems like the one-size fits all model is really what is breaking. Different levels of service seem to be the future.
I don't blame you for your math because you are spinning the number in favor which I would do the same to but what you are looking at from NAR are listing sides. there is also a number called BCS. Buyer controled sides. Many FSBO's, all Flat Fees and all Discount have buyer agents represent them. Realtors are still very much involved.
Great blog on FSBO. We are seeing the same thing in Canada. Http://www.bytheowner.com is about 1% of the market. Real estate agents sales are dropping and FSBO's is gaining.
Have to agree with BytheOwner on this one. Our site is seeing tremendous sales and the public seems to be embracing FSBO as they realize it really is not brain surgery to sell your own home.
If I'm a FSBO and I pay for the signs, I pay for the ads in the paper, I find websites that i can list my house on for free, and even get a MLS from one website for free, then why should I pay arealtor because his buyer picked up my flyer and wanted to see my house. We have had 3 realtors ask about a 3% commission, and told them no, because they had nothing invested. The third one had called to show to his clients. After the wife said no commission, he said, "Well I guess my clients won't be looking at your house. I even had a potential buyer from Florida, who came on his own, ask for a commission, because he was a realtor in Florida. Hey if the buyer pays full price, I might give the realtor $1,000, but I'm willing to let her help us find a house. When we bought here it was FSBO and no commissions were payed. We went to look without our realtor. It is only fare.
This is the truth. Slowly but surely people are listing using flat fee mls. The old days are the old days. Its so easy to just get on the MLS and then every sigle web site.
Use a trusted listing flat fee mls realtor like: http://www.listingflatfeemls.com or c21 or any of the big national ones.
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