It’s been a seller’s market, which has, in turn, bolstered the confidence of sellers to market and sell their own properties instead of hiring an agent.
The unprecedented real estate market that emerged during the pandemic has also led to a rise in homes for sale by owner (FSBO). The reason for this recent upswing? It’s been a seller’s market, which has, in turn, bolstered the confidence of sellers to market and sell their own properties instead of hiring an agent.
While this approach may seem more cost-effective to sellers, it can leave them vulnerable to knowledge gaps, mistakes, and, ultimately, money left on the table. It’s more important now than ever for agents to communicate how their expertise is an invaluable asset in navigating the real estate market.
The rise and risks of FSBOs
“We have definitely seen a rise in this trend due to the accessibility of listing information on third-party real estate websites,” notes Neyshia Go, Senior Global Luxury Estates Advisor with Sotheby’s International Realty – Beverly Hills Brokerage.
While there are some success stories that come out of an FSBO transaction, there are also huge risks involved, especially within the luxury market. “This is possibly one of the most dangerous—economically speaking—mistakes a seller can make,” says Tara Fox, Associate Real Estate Broker with Daniel Gale Sotheby’s International Realty.
She also explains that navigating the FSBO route is far more complex than most sellers are prepared to tackle. “FSBO homes typically bring less profit to the seller than homes that are listed and sold by a real estate agent—they have a larger network, better advertising, and a stronger sense of market value,” she adds. Homes that are sold by owners typically go for less money, compared to similar homes listed by agents, and remain on the market for longer.
Go notes that while there has been an overall increase in FSBOs, most clients do recognize that agents are an invaluable resource in the way that they’re able to negotiate, market, and position their properties.
The value and expertise of an agent
Knowing the ins and outs of the real estate market and communicating that value to clients is much like any other industry, where expertise and knowledge are gained through proper education and experience. “I always tell sellers that I wouldn’t try to litigate a case or perform surgery because I’m not an expert and would have no idea what to do and look for. So would you try to sell your home, market it, and negotiate without ever having played the role of an agent?” Go says.
Fox agrees, noting that listing a luxury home involves complexities that trained agents are well prepared to navigate. “Realtors do this all day long—it is a listing broker’s job to know how to handle these things.”
Not only do agents understand the market on a complex level, but they have a rich network of resources and connections to support them — an aspect that sellers can sometimes overlook when choosing to sell on their own. “I also make sure to communicate the importance of a full-service marketing and sales team, as well as the database of buyers, brokers, and sphere of influence it takes to sell a property for the most money possible,” Go says.
In addition to marketing and advertising services, Fox says agents act as seller’s advocates, helping them dodge major mistakes. This includes undervaluing their home, neglecting housekeeping and staging, negotiating poorly, and other consequences that can result from a lack of knowledge of the real estate market. An experienced agent will create value for the seller as well as the buyer, and ensure a seamless transaction. Ultimately, deferring to the expertise of an agent will result in a more successful sale for all parties.
So how can agents stay relevant and communicate their value?
It can be a challenge to prove to sellers that agents are still relevant in an oversaturated seller’s market, but both Go and Fox have some advice for fellow agents. “Know your value and communicate your own, personal value proposition,” Go says. “Selling homes is hard—especially in California where we still negotiate and handle the transaction during the escrow process.”
Fox occasionally will reach out to FSBO sellers directly. “I often ask what is the dollar amount they want to net and, if I can attain the number with the commission not affecting their number, why not hire an expert?”
Ultimately, encouraging sellers to hire an agent means being upfront about the value of your own expertise, and how that expertise translates to convenience and better financial outcomes for them. Fox adds, “Be honest, be authentic, and be who you are.”