The theory goes that FSBOs (for sale by owners) offer better deals to you, buyers, because they save on the typical 6% commission and can pass those savings on to you. We thought we would take a sampling of properties at different price points, and see if this theory holds water. (Of course, all we have to count on is the asking price, so bear with us.)
420 E 55th Street
FSBO: asking $575k for apt 1B
Broker: asking $550k for 9B, on the market 13 weeks
301 E 79th Street
FSBO: asking $740k for apt 8N
Broker: asking $650k for 17N, on the market for 17 weeks
299 W 12th Street
FSBO: asking $1.55mm for 15k
Broker: asking $1.47mm for 6K, on the market 25 weeks
It’s not surprising that pricing comes in above broker-represented properties. Back in 2006 when Urban Digs conducted a similar experiment, he yielded similar results. Just because owners save that 6% doesn’t mean they’ll trickle down those savings.
Now for the other side of the coin: when we dug into the FSBO listings for analysis, what we found is really a bifurcation of property pricing … a bi-polar pricing pattern, if you will: either pricing above market, as the above suggests, OR pricing significantly below building comps or below market. This begs the question of how much money they may, in fact, be leaving on the table for the sake of saving the broker commission.
This bifurcation underlines a rather common sense conclusion: owners will rarely be the ideal people to price their own properties, not only because they don’t do this day in and day out, but because they’re pricing their own property.
By conducting the process on their own, sellers fall prey to the behavioral pitfalls that always trip up those acting on their own behalf.
