Monday, August 14, 2006


Is the NAR Undercounting the FSBO Market Share?

In its annual Profile of Home Buyers and Sellers, the National Association of Realtors reports the percentage of respondants who sold their homes "For sale by owner" (FSBO), as opposed to those who "sold home using an agent or broker." According to the NAR, the percentage of FSBO sales has been declining slightly over the past few years, and was just 13% in 2005. Is this accurate?

In this blog, Russ Cofano argues that FSBOs in some areas might be "disguised."

In February, 2005, the Austin Board of Realtors, for example, tried to discourage flat-fee brokers by establishing a rule that prevented exclusive agency listings from being posted on Realtor.com. (Click here for the FTC report on this.) Exclusive agency listings allow the owner to sell property without paying a commission to a listing agent. The more traditional arrangement is the exclusive right to sell listing, which requires the owner to pay a commission to the listing agent if the house sells, even if the owner finds the buyer without the agent's help.

The Federal Trade Commission, while investigating whether the rule violated anti-trust laws, discovered that after the rule was adopted, the number of exclusive agency listings dropped dramatically--from 18% to 2.5%. This, Cofano argues, implies that would-be FSBO sellers may be finding alternative ways to list their properties.

A recent Money Magazine article seems to confirm his suspicion. It describes how discount broker Aaron Farmer has gotten around the Austin ban on exclusive agency listings:
Farmer in Texas charges a commission at closing and then automatically rebates the commission to the client. No money changes hands. The addition of that slight-of-hand in his contract is enough for Farmer to call his listing "exclusive-right-to-sell," a category of homes that do get listed on Realtor.com.
This supports Cofano's suspicion that the NAR has been undercounting the market share devoted to FSBOs. Farmer's clients, for example, would not be counted as FSBO sellers.

The FTC has recently put a stop to the Austin Board of Realtors' rule. It will be interesting to see how this affects the percentage of exclusive agency listings.

Okay, well incase any of you FSBO people are looking for a great way to get some extra exposure, there is a great site that I have found. It targets not only agents, but the little guy as well(homeowners)who can't compete with the big guys. It's cheap, only costs you $4.99 for your listing and you get tons of freebies and tools to use, which is awesome.

You get an online messaging feature, which I found to be the best thing. It's like a potential buyer alert. You even get a hit counter for each property you list so you know for a fact, you are being seen! I have had success using this site and I recommend it to every homeowner out there.

Like I said, you get freebies so check it out...It's easy to use, especially for the semi-non- internet-smart or ready people like myself because they have a listing wizard, this is a big help!

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