For Sale By Owner

Looking to sell a home on your own is an over whelming venture but not un-heard of in todays Real Estate market.  There are many factors to selling a home on your own.  Some are purely legal and some are knowledge with some ambition involved.

Many people have decided to sell their own home and those are based on a few factors in thinking.  The number one would be the notion of saving the commission from using a professional like a Real Estate agent.  This is not always a great idea as you will see little further in my article.   Some think they just want to try it and see if they can be successful selling their home all on their own.  Maybe they have done it before or know someone that has, and they were successful so why not me.  To sell a home is a daunting task to say the least.  Its a lot more then just go get a sign from the local hardware store and bang it on the front lawn and people will come and buy my house.  Exposure like that is simply not enough into today’s world we live in.  You need more allot more exposure.  This for the average person is just simply way to difficult and way to much work.  Hence comes in the Professional.

Selling your own home has legalities to think about.  What I mean by this is, selling a home you as the home owner have legal obligations to consider when it comes to disclosure of defects in your home.  These must be known to the potential buyer.  Patent defects must be know to the buyer.  If you knew something that would effect the living of the home and not disclose that to the buyer then there could be legal involved after the sale.  The paper work involved could be overwhelming but Lawyers could help you with that.  The largest factor is the marketing of the property.  Its not easy to market a property on your own, it takes great time to do this.  A professional does all this for you, along with all the scheduling of the showings, the phone calls, the negotiating etc.

Let’s go into some hard data here on FSBO ( for sale by owner ) and hiring a professional ( Realtor )

The first metric we looked at was Days on Market, the number of days that it takes to sell a home, using the FSBO method versus MLS.

Figure 1 below shows that FSBO freehold properties took approximately 2.5 times longer to sell than freehold properties listed on MLS with an agent.

Figure 1: FSBO Days on Market vs MLS Days on Market for Freehold Properties

Source: TREBB and Insightt

Likewise, condominium properties in the GTA took longer to sell than condominium properties listed on MLS as demonstrated in Figure 2 below.

Figure 2: FSBO Days on Market vs MLS Days on Market for Condominium Properties

Source: TREBB and Insightt

We then reviewed the sale price to list price for FSBO sold properties and the overall GTA market as illustrated in Figure 3.

Figure 3: Selling Price to List Price in the GTA

Source: TREBB and Insightt

As you can see, both freehold and condominium properties sold by FSBO companies had a lower sales-to-list ratio than the overall MLS market for the first two months of 2021. With a red-hot freehold market combined with low inventory, FSBO sales-to-list ratios matched the GTA market in March of 2021. The same could not be said for condominiums, which were lower than the overall GTA market in the first quarter of 2021.

Putting it all into perspective:

If the average savings a FSBO customer realizes is two per cent of the selling price through a lower listing commission, the selling price to list price for the GTA market shows that these savings may be offset by a lower selling price alone.

Of course, this is not a scientific “apple to apples” comparison because there may be other unknown factors at play for this particular data sample.

Here are a few other observations we uncovered in this analysis:

1. The sample size of FSBO sold properties is small compared to the overall GTA MLS market sample. We estimated the FSBO market share to be one per cent of total sales in the GTA, which is a small sample size and welcome news to the traditional real estate professional.
2. We also looked at a number of FSBO listings and it certainly felt that they had more than their fair share of complicated and challenging properties, which can also skew the results.
3. We are in a sellers’ market with low inventory, especially for freehold properties, which is forcing Realtors to find properties any way they can regardless of listing model.

For more articles please come back.  If you have any Questions feel free to reach out to me anytime.

Data from REM May 2021