Are 'For Sale By Owner' Homes Cheaper?
Real estate editor Maryann Haggerty and columnist Elizabeth Razzi expand on a question submitted in a recent online chat.
Q: When I was home shopping back in the hot market days, my agent took me to for-sale-by-owners who cooperated -- that is, gave the 3 percent fee to the buyer's agent. She had many examples where FSBOs greatly underpriced their homes, which led to a great savings on the buyer's part, but only a small difference in the commission.
A: Maryann Haggerty: Ah, the questions about how real estate agents and sellers who don't use agents interact. Do agents shun FSBOs? Do FSBOs overprice their houses? Or do they underprice them, as your agent seemed to believe? And what does all of this mean for would-be home buyers?
Elizabeth Razzi: I wonder if the appraised values of those homes reflected such below-market prices. And were you able to scoop up an underpriced deal at the height of the hot market? Sure seems like it would be a pity if you passed it up.
In the go-go market of several years ago, bidding wars tended to break out even on properties priced at what was thought to be the market value. It's reasonable to expect an underpriced FSBO would draw multiple bids as well. Even with the market as slow as it is now, I've had real estate agents tell me that it's "impossible" to underprice a home, because if it is underpriced it will draw multiple offers. I'm not sure I buy that argument, but it sure makes the theory that FSBOs routinely underprice homes more interesting.
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