There is a place for everything, and a recent report from Zillow suggests that “For Sale by Owner” properties have their place in the overall real-estate market.
Over the past three years, “FSBOs” have made up 4 percent to 6 percent of all home listings nationally, which translated to roughly 63,000 homes for sale during September 2021. The research also found that FSBOs are most common in rural areas and tend to be more affordable.
“Our research shows that homes put on the market directly by owners are a small but consistent part of the housing ecosystem,” said Zillow economist Alexandra Lee. “We see that these types of listings are more heavily used by rural, lower-income sellers, a demographic that appears to value flexibility to sell their home on their own terms.”
The research found that, in 2021, 24 percent of rural sellers did not use an agent, compared to 16 percent of suburban and 20 percent of urban sellers.
Additionally, across all markets, FSBOs are listed at prices 18 percent lower than properties represented by agents. This trend is likely attributable to location and size of the home, rather than the home being sold at a discounted price.
The median listed price for a FSBO home is $292,810. The median price of a home listed with a seller’s agent is $355,777.
FSBOs can be found in every state in the country, providing an option for some buyers searching for a home at a lower price point. In states like New York, Illinois and Montana, FSBOs are 19 percent to 25 percent less expensive than non-FSBO properties.
States with the largest share of FSBO properties are concentrated in the Midwest and South. FSBOs make up at least 10 percent of all homes for sale in Iowa, Mississippi, Nebraska, Kentucky, Arkansas, Oklahoma and West Virginia.
The data show homeowners with lower incomes are more likely to sell their properties directly.
For instance, a household earning less than $50,000 annually is almost twice as likely to sell a home without an agent than a household earning over six figures. Around a quarter (24 percent) of sellers earning less than $50,000 sold their home without the help of an agent over the past three years.
While more FSBOs are generally in rural areas, FSBOs can still be found at lower prices than traditionally listed properties in a number of large, populated U.S. metro areas. In 23 of the largest 50 metros, FSBOs are priced lower than agent listings.
Looking closer at these figures, the research shows that homes for sale by the owner in Indianapolis, St. Louis, Atlanta and San Antonio had the largest price differential – FSBOs in these markets were listed at 10 percent less than traditionally listed properties in these markets.
Overall, FSBOs are used for all home types, but are most popular for sellers of smaller home types like townhomes, rowhouses, duplexes, triplexes, mobile homes and manufactured homes.
The steady and consistent prevalence of FSBO listings underscores the importance of this option as one of many in today’s housing market, researchers concluded.