“How’s the Market?” Episode 12 – December 2019

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Reading Time: 6 mins, 40 secs

Hey, welcome back to How’s The Market for December 2019. We create this monthly show in collaboration with our friends at Keeping Current Matters to keep you your team, your office informed about the market conditions, so in turn you can educate your clients and maintain a positive momentum in your local marketplace.

Now here’s what we’re at today. You of course notice in the first time in move up markets, there is very few listings available. Yet buyer demand is increasing every single day and as a result, something has happened that hasn’t happened in a decade and guess what it is?

I’m going to tell you, the National Association of Realtors reported that for the first time in 10 years, the number of homeowners who, get this, are trying to sell on their own, yes, I’m talking about FSBO, for sale by owners. The percentages is ticking up year over year per NAR statistics.

Here’s why I think that’s somewhat alarming. The people that are trying to go FSBO, are actually the younger generation. Get this, write it down, 36% are millennials. 26% are Gen Xers trying to sell on their own. Versus 22% baby boomers, maybe DIYers, been there, done that. And 19% the generation above them.

In my opinion, here’s what needs to happen next. These people are going to need to understand that going FSBO. Yes, even in the day and age of this, still is not a good idea. The good news is we’ve got statistical support that’ll actually validate your position. It’s your job to begin creating content and informing consumers in your farm, in your sphere, that they do not want to make this mistake.

According to the Consumer Housing Trends report of the people that wanted to go and sell their house, 36% of them attempted to sell it on their own first. What we both know is only 11% of the homes are actually sold without an agent involved.

It’s easy to try, especially with today, the number of portals and websites and everything else, and you and I both know it’s very difficult to actually pull it off. The statistics behind the study of collateral analytics makes an even stronger case for not trying in the first place.

See, hitting people right where it matters most is the key. And guess what, that is in the actual home sales price. Their research says that for sale by owners result in prices significantly lower than those from similar properties using an agent inside the MLS. The average sales price of a for sale by owner was nearly 6% lower than similar properties listed and sold by you and your fellow professionals.

Here are three key reasons why we believe that’s happening. Number one is FSBO buyers, not sellers, buyers, are looking for a discount. We know that’s their mindset.

Two, FSBOs are often not staged, so they don’t show as well as they could. And we both know the trend we’re seeing today with staging and the impact that’s having on getting homes sold.

Number three, FSBOs receive far less exposure than homes listed by an agent. And we both know less exposure means less demand, while more exposure translates to more people seeing the house, potentially falling in love with it, making an offer, and if you’re in the right market and the right price point, a bidding war.

What’s interesting is that that statistic that FSBOs sell for 6% less than homes represented by agents. Think about why that’s interesting. You and I both know, it’s exactly the same standard commission rate. So at the end of the day, FSBOs are dealing with all of the stress, all of the hassle, all the showings, all the paperwork, and then putting up with all of this risk for essentially no additional benefit.

Their net outcome is the same with or without an agent. So you and I both know why not use one. Those three alone are really strong support for why consumers shouldn’t forgo the services of a real estate professional like you.

I’ve got even more ammunition for you to use to combat this clear growing trend. Let’s take a look at the seven reasons not to sell your home as a for sale by owner that you can in turn share with your sphere, create videos about, use inside your farm, and just educate people, if you call them over the phone or knock on their door.

Obviously, number one, without market knowledge, it’s really hard to pick the accurate price for a for sale by owner to drive maximum demand and of course get it sold.

Number two, FSBOs often have no marketing plan whatsoever and don’t even get me started with the photos that we see on some of those portals.

Number three, it’s a big pain in the you know what to actually conduct every showing without a lockbox or someone else that has the key to make it easy.

Number four, for sale by owners are exposing themselves to a lot of legal liabilities. You know it and I know it.

Number five, for sale by owners are more likely to fall into a scamming situation of someone that’s coming in trying to buy their home for less and do some shady stuff.

And of course number six, dealing with their emotional attachment to the home can be really difficult. You’ve seen it when you’re on a showing, the seller is there, they want to show you everything, and how excited they are about the house. We both know that’s bad.

And number seven, finally, as we’ve covered previously, the properties sell for significantly less.

Now, there’s one more angle on this that I just want to share with you and have you think about. At this year’s success summit I brought in negotiation expert, Chris Boss, former FBI lead hostage negotiator. I brought him in for a reason because I know and you know today’s agent, you, has got to be a negotiation expert. That’s what we get paid to do. That’s not something that the average for sale banner has any experience with whatsoever. Think about that.

When you’re talking with that potential prospect, share with them all the messaging around all of the potential people that you got to negotiate with to get the property to close. Hello. The buyer, the buyer’s agent, the buyer’s attorney, the home inspection company, the termite company, the buyer’s lender, the appraiser. Can we just stop right there? The title company, the city or town you might be dealing with or their HOA, the buyer’s buyer. Remember, sometimes they need to sell their house in order to buy this one, and we know you’ve been out there saving the day on those transactions in your normal listing sold. All of that, plus the bank.

The bottom line is, there’s just a lot of work and it’s not something most homeowners even consider when they’re making this decision whether to hire or not hire an agent to sell their house.

What’s the big takeaway from the final housing market of 2019? The tendency, or trend, for these homeowners to go FSBO when selling their house is on the rise for the first time in a decade.

That’s why your role is to combat that trend in your marketing, in your messaging, in your videos, in your day to day conversations, and continually articulate the values that you bring to the table and what you provide in your services.

I’ve given you certainly plenty of ideas that you can use, and I’m sure with very little effort, you can pinpoint even more reasons why hiring you and your firm provide a better experience and end result for homeowners.

That’s my message. Thank you so much for watching and participating with everything we do with my friends at KCM and us here at Ferry International. From all of us, we wish you a wonderful New Year and have 2020 be your best year ever.



 

 

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