Bryan Hunsberger
I Asked Artificial Intelligence - Should You For Sale By Owner?
Let’s see what AI has to see for either side of the argument.
I asked the world’s leading Artificial Intelligence platform for it’s opinion on selling homes For Sale by Owner (FSBO) or using a professional Real Estate agent. What I got was fascinating.
ChatGPT is taking over the internet. You can ask it any question, and you’ll get a reasoned, very intelligent response. We asked it what stocks to buy in 2023, however, and it wouldn’t say…so it won’t opine on everything. (It’s probably best to just trade with your Senator, as Unusual Whales reported they beat the market most consistently. click here for that report.).
So we decided on an experiment. What kind of persuasive arguments could the world’s largest artificial intelligence give for either side of the issue regarding selling your home FSBO?
My first request to ChatGPT was this: "Write me an article for why a homeowner should use a Real Estate Agent instead of selling For Sale by Owner."
My first request to ChatGPT was this: “Write me an article for why a homeowner should use a Real Estate Agent instead of selling For Sale by Owner.”
The reply:
Are you thinking about selling your home? If so, you may be considering the option of selling it yourself, also known as “For Sale by Owner” (FSBO). While this option can be appealing because it allows you to save on real estate commissions, there are several reasons why you may want to consider using a real estate agent instead.
One of the main benefits of using a real estate agent is that they have expertise and experience in the real estate market. They know how to price your home correctly, how to market it effectively, and how to negotiate with buyers to get the best deal. This can be especially important in a competitive market where you may be up against other sellers.
Another advantage of using a real estate agent is that they have access to a wide range of resources and tools that can help you sell your home more efficiently. For example, they may have access to the Multiple Listing Service (MLS), which is a database of properties for sale that is only available to real estate agents. They may also have connections with other agents who may have buyers looking for a home like yours.
In addition, a real estate agent can take care of all the paperwork and other logistical details that are involved in the selling process. This can be especially helpful if you have a busy schedule or if you are not familiar with the legal aspects of selling a home.
Finally, using a real estate agent can help you avoid potential legal issues or disputes that may arise during the selling process. An agent is trained to handle these types of situations and can protect your interests as a seller.
Overall, while selling your home FSBO can save you money on commissions, the expertise and resources that a real estate agent brings to the table can often more than make up for the cost. If you want to maximize your chances of a successful and stress-free sale, it may be worth considering using a real estate agent.
My second request was the flip-side: "Write me an article on why a homeowner should sell For Sale by Owner instead of using a Real Estate Agent."
My second request was the flip-side: “Write me an article on why a homeowner should sell For Sale by Owner instead of using a Real Estate Agent.”
Here’s what ChatGPT gave me:
If you’re thinking about selling your home, you may be wondering whether to use a real estate agent or go the “For Sale by Owner” (FSBO) route. While hiring a real estate agent can be a convenient option, there are several reasons why you may want to consider selling your home FSBO instead.
One of the main benefits of FSBO is that it allows you to save on real estate commissions. When you sell your home through a real estate agent, you typically have to pay a commission that is based on a percentage of the sale price. Depending on the market, this commission can be quite substantial, potentially adding thousands of dollars to your closing costs. By selling FSBO, you can avoid paying this commission and keep more of the sale proceeds for yourself.
Another advantage of FSBO is that it gives you more control over the selling process. When you use a real estate agent, you are essentially hiring someone to represent you and make decisions on your behalf. While agents are professionals and are generally acting in your best interests, you may still feel more comfortable making your own decisions about things like pricing, marketing, and negotiations.
Selling FSBO can also be a good option if you are comfortable with marketing and have a good understanding of the real estate market. With the proliferation of online tools and resources, it’s easier than ever for homeowners to advertise their homes and reach potential buyers. If you are able to effectively market your home and are confident in your ability to negotiate with buyers, you may be able to sell your home FSBO without the help of a real estate agent.
Finally, FSBO can be a good option if you are in a rush to sell your home. When you use a real estate agent, there is typically a certain amount of lead time required to get your home on the market and find a buyer. If you need to sell your home quickly, going FSBO may allow you to move the process along more quickly.
Overall, while hiring a real estate agent can be a convenient option, there are several reasons why selling FSBO may be a good choice for you. If you are comfortable with the process, have a good understanding of the real estate market, and want to save on commissions, FSBO may be the right option for you.
Some Closing Remarks - Can AI Lie?
It struck me how flimsy the later arguments were for selling For Sale by Owner. Certainly the most common and certainly true argument for selling on your own is to save on real estate commissions. That’s not debated. However, the subsequent arguments weren’t as accurate.
“Another advantage of FSBO is that it gives you more control over the selling process.” I suppose it’s true that the selling process gives you more DIRECT control over the selling process. However, all decisions are the homeowners to make. The agent is a fiduciary for you, and doesn’t make decisions for you.
Certainly point three, “Selling FSBO can also be a good option if you are comfortable with marketing and have a good understanding of the real estate market” is an accurate statement, but generally only true of Real Estate agents. It essentially could read, “Selling FSBO can be a good option if you are already a real estate agent.”
The worst, and most misleading argument is the last: “Finally, FSBO can be a good option if you are in a rush to sell your home.” While it is true that FSBO homes that actually close typically closed 33% faster than Agent sales, this is a misleading statistic. That’s because only 1/3 of FSBO homes actually get sold. According to Zillow, 67% of FSBO homeowners give up and hire a real estate agent. So the “speed of close” argument is patently false considering 2/3rds of FSBO listings don’t even succeed
The Most Important Consideration Was Not Discussed
To me, the most important consideration in deciding to FSBO or not wasn’t brought up – Maximizing the Sale Price. It’s important to understand that as a fiduciary, a Real Estate Agent can’t promise you: “I will get the absolute maximum out of your sale price.” A lot of the sale process is out of their control because it’s your house, and your decisions. An agent can’t make a promise they can’t keep.
However, on average, according to the National Association of Realtors, FSBO homes sold for an average of $225,000 in 2021. Realtor listed homes sold for $330,000. Granted, this number doesn’t take into account the demographics of the sellers. Presumably, very large transactions skew toward using an agent, while budget homes skew toward FSBO. However, it does still capture the reality of FSBO sold homes being cheap, on average, to buy.
Anecdotally, most buyers, and all agents, see FSBO’s as an opportunity to buy at “deal” pricing, but with the caveat of it being a nightmare transaction. The lost revenue of your FSBO home being sold cheap can cost you more than the saved commission. The next question I might ask ChatGPT is the meaning of the saying “Penny Wise and Pound Foolish” as it relates to FSBO. Those are the details that artificial intelligence is missing from actual hard won life experience.
