Are You Dealing With FSBOs and BUBBAs?

The great amount of real estate information available on the world wide web and elsewhere has certainly empowered both FSBOs (For Sale By Owner), as well as BUBBAs (Buyers Unrepresentated By A Buyer’s Agent), the latest in a real estate acronym. Interestingly, according to NAR (National Association of Realtors), this latest category of buyers increased by 4%, from 19% in 2005, to 23% in 2006. Of the 23%, 13% bought directly from a builder, without representation, while the remaining 10% bought directly from the seller.

The reasons as to why a buyer would not use a professional realtor to handle the transaction for them are intriguing, and I would suspect that it comes primarily down to commission. I am of the belief that the consumer mistakenly thinks that he or she is saving themselves the commission percentage if they forego a realtor. I don’t believe that they fully understand that the commission is paid by the seller. Most likely, they are liable to be first-time buyers who truly do not know how things work. I’m sure that there are also the buyers who are looking for a better deal from the seller direct, because they are not paying a commission.

The whole key lies in consumer education, whether dealing with a FSBO or BUBBA. In either case we need to educate them as to how complex and complicated buying or selling a property can be, the many steps involved and what it takes to complete a successful transaction. If we focus on the positive aspects of why it is important to hire a real estate professional, our conversion rate will be higher and we will be able to lower that 10% figure, which to me, is way too high.