FSBO, a company dressed up in the language of seller’s choice, is still a restricted group of buyers, and we’ve long known what a restricted group of buyers produces, writes Darryl Davis.
For over 40 years, one of the most powerful tools I’ve brought to the conversation about the value of professional representation is sold-by-owner data. The numbers always tell the same story. Sellers who avoid the multiple listing service consistently walk away with less money. There are also quite a few. It has decreased significantly.
What FSBO data consistently shows
The evidence is not new. It’s deep and surprisingly consistent over the decades.
According to NAR data, the median FSBO sales price over the past year was $360,000, compared to $425,000 for agent sales, an 18% difference for agent-listed homes.
But perhaps the most important data point isn’t a statistic. These are stories about people who built their entire businesses around the idea that sellers didn’t need an agent and hired an agent when that was their home base.
The Wall Street Journal reported in August 2011 that Colby Sambrot, founder and former CEO of ForSaleByOwner.com, had been trying to sell a New York condo through the FSBO channel for six months. He eventually hired a broker. As a result, the home received multiple offers and was sold for $150,000 over the original asking price.
In May 2014, the Sarasota Herald Tribune reported that Al Bennati, CEO of BuyOwner.com, a company that helps people sell without going through a real estate agent, hired agents from Coldwell Banker to list his Florida property for $3.78 million.
The founders of the two major FSBO platforms chose professional representation and the public markets when their money was at stake. That’s not an anecdote. This is a data point about what people who understand the system actually do when their bets become reality.
MLS: The driving force behind price
This is a metaphor I always remember. FSBO is like opening a restaurant with a hand-painted sign in the window and hoping the right customers will walk by. The MLS is on every delivery app, every review site, and every mapping platform at the same time, so every hungry buyer in town can find you at the same time.
This simultaneity is not just convenient; It is the competitive mechanism that drives prices up. Multiple buyers discover the same home on the same day and know others are looking, creating more urgency and competing offers.
If you take that away, you’re not just changing your marketing channel. We have dismantled the pricing system that favors sellers. This is exactly why FSBO homes have consistently underperformed agent-assisted sales for 30 consecutive years.
New categories we created
Then I realized that I was witnessing what was happening. And that’s why I think naming it clearly is the most honest thing we can do in our industry.
Private listings and coming soon strategies are presented to sellers as a sophisticated marketing approach. I want to be clear: I am the seller’s choice.
Sellers who understand the trade-offs and choose a private or pre-market strategy have every right to make that decision. Privacy is a legitimate concern. Regulating pedestrian traffic is a legitimate concern. For the right seller in the right situation, these are huge benefits.
What I cannot support is presenting a private or soon-to-be-launched strategy as financially superior to an open MLS. Because that claim applies directly to decades of consistent data. And so they founded a company that lives up to its own name: FSBO.
Traditional FSBO limits the exposure of your home to people who happen to drive by. Sellers often intentionally limit the pool of buyers. FSBO does the same thing with a different wrapper. This means limiting exposure to buyers who work with agents in one brokerage or one portal’s pre-market feed. The big difference between the two is transparency.
FSBO sellers know what they are signing up for. Sellers who participate in corporate FSBO arrangements are often told the opposite. This means that you will get better results if you limit your buyer pool. The data doesn’t support that claim.
To be fair, at least one company claims that its private-first approach allows homes to sell for nearly 3% more. But here’s what they don’t tell homeowners: That 3% is nothing compared to a fully open market. This is compared to the company’s MLS listing. And if you look at the performance of that MLS listing compared to other companies’ listings, you’ll already see a drop in rankings.
So they’re basically saying, “We’re doing better than our below-average performance.” It’s not in the seller’s interest. This is a statistic that only looks good if you don’t ask the following questions:
FSBO limits the buyer pool to people driving by. Corporate FSBO limits it to people who work for that business. Both reduce competition. The seller needs to know that before signing.
discussion without good answers
The data is not complex. Zillow’s analysis of 2.72 million transactions shows that sellers who limit their pre-market exposure can see a 1.5 to 3.7 percent difference in final sale price. Bright MLS empirical research confirms that there is no price advantage and pre-market products take an additional 17 days to sell. One direction. every time.
So here are some questions that every agent and brokerage leader should ask. If limiting listings to a single brokerage network creates higher prices than a truly open MLS, then we would have a fiduciary duty to eliminate the MLS altogether.
By this logic, why would an agent who has a duty to the seller take advantage of a system that actively harms the seller?
The answer is, “I don’t intend to do that.” And we do not advocate abolishing MLS, because deep down we all know the truth. Providing maximum exposure to the maximum number of buyers yields the best results for sellers.
FSBO data proved that decades ago. MLS was built on it. FSBO companies dress up in the language of the seller’s choice, but are still a limited pool of buyers. And we’ve known for a long time what a restricted pool of buyers produces.
Darryl Davis is the CEO of Darryl Davis Seminars. Connect with him on Facebook and YouTube.
