The NAR has just alerted the planet that they are about to revise their reported house sales information downward for current houses back thru 2007 in a ‘meaningful’ way. Terrific… just what we all want… bad news on top rated of already dismal news! The NAR has cited numerous reasons for the new set of data including their use of outdated assumptions reported by the 2000 census and the geographic expansion of MLS geographies causing ‘double-counting’. This apparently has compounded the problem of only counting MLS data, which as we know, only contains agent listed properties and not those sold by the owner, or For Sale By Owner. Mr. Yun has mentioned, ‘and due to the fact far more individuals are utilizing realtors to list their houses instead of selling them independently, realtor-listed sales numbers have turn into artificially inflated’.

Wait a minute, this sounds as though the NAR has just discovered this fact!

The NAR had been publishing an annual study survey, ‘Profile of Property Purchasers and Sellers’ for at least the past decade. Every year they compile the number of houses sold with the help of an agent compared to those sold by owner. The 2007 report cited 12% of all home sales were FSBO. This percentage of FSBO sales has varied by no more than 1-two percentage points annually thru 2011, when FSBO’s represented ten% of all existing property sales, which was up 1 percentage point from the earlier year. What is confusing in the remarks of the NAR is why they would now all of a sudden recommend they have been overcounting MLS sales figures. They have often been tracking FSBO sales and the annual estimated FSBO sales have not changed substantially more than the past 5 years. Therefore, it is confusing as to why now they would make an adjustment to their modeling projection for this element.

This appears to recommend the NAR is trying to characterize FSBO sales as becoming increasingly insignificant because a lot more and more sales are via an agent. As cited in their own study, this is not the case at all. In truth, their personal analysis information reveals that there are a important level of ‘Flat-Fee MLS’ sales which are actually owner sales that have opted to only pay a buyer’s agent a commission. The NAR disguises this data by labeling as ‘the agent listed the property in the MLS and performed handful of if any additional services’. These sales represent a hybrid sale that drastically reduces the amount of commission paid by an owner selling their personal house. Since the owner can decide how significantly commission is to be paid to a buyer’s agent, the owner can save up to three percentage points or far more, representing a significant savings. The NAR research indicates these sales represent about 10% of all existing house sales. Therefore, the real percentage of homes sold by the owner is more than 20% when both pure FSBO sales are combined with Flat-fee MLS sales.

Home sellers can no longer pay the traditional 5-6% commission rates as they face going underwater with their mortgage and are watching their equity evaporate everyday as prices continue to fall. Sellers will discover alternative techniques to sell their house to stay away from the standard commissions.

We will all stand by for the new numbers. We just hope they are not funny numbers!