For-Sale-By-Owner (FSBO) House Sales Market Trends (2020-2024)

2/8/2025

Introduction

The for-sale-by-owner (FSBO) approach to selling real estate has been a common practice in the housing market, offering homeowners the possibility of saving money on realtor commissions and retaining more control over the sale. However, selling a home without professional guidance can be challenging, given the complexities involved in real estate transactions [1]. This report examines the market trends for FSBO house sales over the past five years, analyzing the factors that have contributed to the observed patterns and providing insights into the motivations and challenges associated with this approach. In addition to exploring the reasons why homeowners choose to sell FSBO, this report will also discuss the potential benefits of working with a real estate agent.

Motivations for FSBO Selling

Homeowners choose to embark on the FSBO journey for various reasons [2]:

Cost Savings: The primary motivation for many FSBO sellers is the desire to save money on realtor commissions, which can be a significant expense in a real estate transaction.
Control over the Process: Selling FSBO provides homeowners with complete control over the selling process, from setting the asking price to marketing the property and negotiating with buyers.
Faster Sale: In some cases, FSBO sellers may believe they can sell their homes faster by dealing directly with buyers and avoiding the time it takes to find and work with a real estate agent.
Existing Buyer Relationship: Some homeowners opt for FSBO when they already have a buyer lined up, such as a friend or family member.
Unique Circumstances: FSBO might be a practical choice in specific situations, such as selling a unique property or in a rural area where FSBO is more common.

FSBO Market Share Trends (2020-2024)

Despite the potential advantages of FSBO, data from the National Association of REALTORS® (NAR) reveals a steady decline in FSBO transactions over the past four decades. In 2024, FSBOs accounted for only 6% of home sales, the lowest share on record [3]. This downward trend reflects a broader shift in the real estate landscape, where technological advancements and the availability of alternative selling options have diminished the perceived advantages of the FSBO approach.

Despite a slight increase in 2022, the overall trend in FSBO sales from 2020 to 2024 has been a decline [3, 4].

Year	FSBO Home Sales (%)	Agent-Assisted Home Sales (%)
2020	7%	93%
2021	7%	93%
2022	10%	90%
2023	7%	93%
2024	6%	94%

Source: NAR [3, 4]

Benefits of Working with a Real Estate Agent

While the FSBO approach may seem appealing for its potential cost savings, working with a top-rated real estate agent offers numerous benefits that can contribute to a more successful and less stressful sale:

Expert Guidance: Real estate agents possess in-depth knowledge of the local market, including pricing trends, buyer preferences, and competitive conditions. They can provide valuable insights and guidance throughout the selling process.
Efficient Home Preparations: Agents can advise on necessary repairs and upgrades to maximize the home's appeal to potential buyers. They can also help stage the home effectively to create a positive impression.
Effective Marketing: Agents have access to a wider range of marketing channels and resources, including the Multiple Listing Service (MLS), professional photography, and online advertising. This broader reach can help attract more potential buyers and generate greater interest in the property.
Strong Negotiation Skills: Agents are skilled negotiators who can advocate for the seller's best interests and secure favorable terms. They can effectively handle counteroffers, navigate complex contingencies, and ensure a smooth closing process.
Transaction Management: Real estate transactions involve a significant amount of paperwork, legal procedures, and deadlines. Agents can manage these complexities, ensuring that all documents are completed accurately and on time, and that the transaction proceeds smoothly.

Challenges Faced by FSBO Sellers

Homeowners who choose to sell their homes FSBO often encounter various challenges that can make the process more difficult and time-consuming:

Pricing the Home: Accurately pricing a home can be challenging without the market knowledge and expertise of a real estate agent. Overpricing can deter potential buyers, while underpricing can result in lost profits [1]. According to NAR, 17% of FSBO sellers find getting the price right to be the most difficult task [5].
Marketing the Property: Effectively marketing a property requires time, effort, and knowledge of various marketing channels. FSBO sellers often struggle to reach a wide audience and generate sufficient interest in their properties [1]. Data from [5] shows that 46% of FSBO sellers didn't actively market their homes, potentially contributing to the decline in active FSBO sales.
Managing Negotiations: Negotiating with buyers can be challenging, especially for those unfamiliar with real estate practices. FSBO sellers may find themselves at a disadvantage when it comes to securing favorable terms [1].
Handling Paperwork: Real estate transactions involve a significant amount of paperwork, including contracts, disclosures, and legal documents. FSBO sellers may find it overwhelming to complete these documents accurately and on time [1]. NAR data indicates that 10% of FSBO sellers find understanding and performing paperwork to be a major challenge [5].
Legal and Financial Risks: Without professional guidance, FSBO sellers may be exposed to legal and financial risks, such as failing to make required disclosures or properly handle escrow funds [1].
Time Constraints: Selling a home FSBO can be time-consuming, requiring the seller to handle all aspects of the process, from marketing and showings to negotiations and closing. This can be particularly challenging for those with busy schedules or limited availability.
Limited Buyer Pool: FSBO sellers may have access to a smaller pool of potential buyers compared to agent-listed properties, as many buyers work with real estate agents who primarily focus on MLS listings.
Competition with Agent-Listed Properties: FSBO sellers often face competition from agent-listed properties, which may have greater visibility and professional marketing materials.
Emotional Involvement: Selling a home can be an emotional process, and FSBO sellers may find it difficult to maintain objectivity and negotiate effectively without the guidance of a neutral third party.

In addition to these challenges, data from [5] highlights the fast-paced nature of FSBO sales, with a median time on the market of one week compared to three weeks for agent-assisted homes. While this shorter timeframe may seem advantageous, it can also create pressure on sellers to make quick decisions and potentially accept offers that may not be in their best interests. Furthermore, 77% of FSBO homes sell in less than two weeks, indicating that sellers need to be prepared for a potentially rapid sales process [5].

Factors Contributing to the Decline in FSBO Sales

Several factors have contributed to the decline in FSBO sales over the past five years:

Increased Complexity of Real Estate Transactions: The process of selling a home has become increasingly complex, involving intricate legal and financial procedures. Homeowners often find it challenging to navigate these complexities without the expertise of a real estate agent [1]. This includes understanding and complying with various regulations, disclosures, and contractual obligations.
Availability of Alternative Selling Options: The emergence of alternative selling options, such as iBuyers, flat-fee MLS listing services, and cash home buyers, has provided homeowners with more choices beyond the traditional FSBO and agent-assisted models [6]. These options offer varying levels of support and cost structures, catering to different seller needs and preferences.
Shifting Market Dynamics: The real estate market has undergone significant shifts in recent years, with fluctuating mortgage rates, inventory shortages, and changing buyer preferences. These dynamic conditions make it more difficult for FSBO sellers to accurately price their homes and effectively market them to potential buyers [6].
Perceived Value of Real Estate Agents: Despite the potential cost savings, many homeowners recognize the value that real estate agents bring to the table. Agents offer expertise in pricing, marketing, negotiation, and transaction management, which can ultimately lead to a smoother and more successful sale [7]. Data from [6] shows that sellers who used an agent earned significantly more profit than those who didn't, highlighting the financial benefits of using an agent despite the commission costs.
Increased Transparency and Access to Information: The settlement between the NAR and the U.S. Department of Justice has led to increased transparency in the real estate industry. This includes greater access to information for buyers and sellers, which has leveled the playing field and reduced the information advantage previously held by real estate agents [8]. However, this increased transparency also means that FSBO sellers need to be more informed and proactive in their approach.
Financial Considerations: While the desire to save on commissions is a key motivator for FSBO sellers, data suggests a potential correlation between income level and the choice to sell FSBO. The median household income of FSBO sellers is lower than that of agent-assisted sellers, indicating that financial constraints may play a role in the decision to forgo professional representation [2].

Impact of Recent Changes in Real Estate Commissions

Historically, home sellers typically paid both the buyer's and seller's agent commissions. However, recent court-mandated changes have decoupled these commissions, giving buyers the responsibility to negotiate fees directly with their own realtor [1]. This shift has potentially reduced the financial burden on sellers, as they are now only responsible for paying the listing agent's fee, which averages around 3% of the selling price. However, this change also introduces new complexities to the transaction process, as sellers may need to navigate negotiations with both the buyer and the buyer's agent regarding commission fees. This added complexity might discourage some homeowners from selling FSBO, as they may prefer the more traditional and streamlined approach of working with a listing agent who handles all aspects of the transaction.

While the decoupling of commissions may seem advantageous for FSBO sellers, it's important to consider the potential implications for buyers. Buyers are now more aware of the costs associated with agent representation and may be more inclined to negotiate lower fees or seek alternative options. This could lead to increased competition among buyer's agents and potentially impact the level of service provided.

Conclusion

The market for FSBO house sales has experienced a steady decline over the past five years, driven by a confluence of factors. The increasing complexity of real estate transactions, the availability of alternative selling options, and the perceived value of real estate agents have all contributed to this trend. While the FSBO approach may still be a viable option in certain situations, such as selling to a friend or family member, data from the National Association of REALTORS® shows that the majority of homeowners (90% in 2024) are opting for the expertise and support of real estate professionals to navigate the complexities of the modern housing market [9].

The declining trend in FSBO sales suggests that in the current real estate landscape, the expertise and support of real estate agents are becoming increasingly valuable for homeowners seeking a successful and profitable sale. Agents offer a range of benefits, from accurate pricing and effective marketing to skilled negotiation and transaction management, which can help sellers achieve their desired outcomes. While the FSBO approach may offer potential advantages in terms of cost savings and control, the challenges and complexities associated with it may outweigh these benefits for many homeowners.

As the real estate market continues to evolve, it's essential for homeowners to carefully consider their options and make informed decisions about the best approach to selling their homes. Whether choosing to sell FSBO or work with an agent, understanding the market trends, potential challenges, and available resources can help ensure a smooth and successful transaction.

Works cited

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3. NAR: FSBOs hit record low; homeseller age hits record high - Chicago Agent Magazine, accessed February 8, 2025, https://chicagoagentmagazine.com/2024/11/15/nar-2024-profile-homesellers-fsbos/
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9. FSBOs Reach All-Time Low, More Sellers Rely on Agents, accessed February 8, 2025, https://www.nar.realtor/magazine/real-estate-news/fsbos-reach-all-time-low-more-sellers-rely-on-agents