Meet The Fizzbows
At Homethinking, we’re dedicated to helping people find the right Realtor to sell their home with. We think that a good Realtor can provide definite benefits for anyone thinking about selling their most valuable asset. But while we’re of the opinion that real estate professionals are well worth their commissions, not everyone agrees with us. FSBOs (For Sale By Owner) are certainly a valid slice of the market, and so I decided to find out just how many there were. Of course, this wasn’t as easy as it might sound, so I had to settle for stats on currently available FSBOs from one of the largest FSBO sites on the web, ForSaleByOwner.com, coupled with projected census data for 2005.
According to the data I collected on 9/13/06, there are 38,721 properties listed in the United States on ForSaleByOwner.com. The states with highest concentration of FSBOs (in terms of people per FSBO) were:
| 1. | Michigan | (3,031 people per FSBO) |
| 2. | Colorado | (3,351 people per FSBO) |
| 3. | Georgia | (3,562 people per FSBO) |
| 4. | Indiana | (4,493 people per FSBO) |
| 5. | Ohio | (4,582 people per FSBO) |
And the States with the lowest rate of FSBOs in the country were:
| 46. | South Dakota | (21,444 people per FSBO) |
| 47. | Mississippi | (22,605 people per FSBO) |
| 48. | California | (32,177 people per FSBO) |
| 49. | North Dakota | (33,421 people per FSBO) |
| 50. | Hawaii | (39,906 people per FSBO) |
There are some caveats with the data. The number of FSBO listings traditionally is 15-20% of the market. According to realtor.com there are 3 million listings with a Realtor representing them. So forsalebyowner.com’s 40,000 are clearly not representative of the whole market. And their sales team might be better in some areas than others causing a skew towards those states where they are better or worse.
But still the question of why a home owner in Michigan is over ten times more likely than his compatriot in Hawaii to go the FSBO route is an intriguing one. Perhaps even more intriguing, California - with Silicon Valley at its heart - features so low on the list. So the technology savvy of its inhabitants, it seems, does not necessarily effect the decision to engage a Realtor when selling their home.
If you’re state isn’t on the list, just leave a comment and we’ll be sure to post it.
-Tony Floriani
I think there is a fairly simple answer. Michigan has not experienced the dramatic gains over the last 5 years that say Hawaii or California has.
When you property has gone up $150k and it’s now worth $500,000, it’s no big deal to pay $30k of that to an agent. Which would be about 20% of your net equity but physiologically, you still ahead $120,00.
If you only have $20,000 of equity and you paying $10,000 in real estate commissions that just “seems†like a much bigger amount.
Simply look at the NAR 2nd quarter 2006 data regarding home prices.
Detroit - down 8.0%,
Grand Rapids - down 1.9%,
Lansing - down 1.5%.
According to the report below.
Detroit area – median price in
2004 - $161,000
2005 – $134.5
2006 – 2nd quarter – $155.7
Source: http://www.realtor.org/Research.nsf/files/REL06Q2S.pdf/FILE/REL06Q2S.pdf
No equity, no room or very little room to pay real estate commission. People will not want to give up the little bit that they have gained.
I think that if there is a significant decrease in values in places like California, Florida and New York, you will see much of the same “FSBO†effect in those states in years to come.
For Sale by Owner Center
13 Sep 06 at 4:46 pm
My thoughts on the differences between Michigan and California are that Michigan has significantly lower population density as well as a dramatically higher unemployment and poverty rate. People in Michican can’t affort to part with the REALTOR commission and therefore follow the FSBO route.
Here in California, we have the wealth effect where everyone is so convinced that they have excess equity that they are more than happy to delegate the sales process to a REALTOR.
Barrett Niehus
14 Sep 06 at 12:21 am
I’m a broker in Boulder, Colorado and I manage a real estate firm here called Colorado Landmark Realtors, a Christie’s Great Estates affiliate I’d take a look at the contracts and closing practices in the states that have high and low percentages. Colorado’s contracts are very good, very easy to fill out, and outline a real estate transaction very well. Further, our closings are done by title companies that handle everything from title search to rounding up HOA docs to actually executing the transfer of property. If you don’t feel like you need the marketing, research and price/terms negotiation that a realtor can offer, Colorado’s an easy state to do a deal on your own.
great site. Thanks fro letting me comment,
Martin Anderson
VP Colorado Landmark Realtors, Christie’s Great Estates
Martin Anderson
14 Sep 06 at 1:12 am
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18 Sep 06 at 12:08 am
I agree about less equity=less likely to use a Realtor. In Charlotte, N.C., the listing services for FSBO’s are growing, but I don’t think those sellers are seeing dramatic gains in the price they eventually receive.
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