“For Sale By Owner: Sign of an Overcrowded Market?”

Posted by Press of Atlantic City

By KEVIN POST Business Editor | Posted: Sunday, October 10, 2010

Press of Atlantic City

There are about 2 million houses for sale this year, the U.S. Census Bureau reports — five years after the for-sale inventory was 1.4 million — and more homeowners are trying to sell the properties themselves, real estate professionals say.

“It could be some people had homes up for sale for a while and didn’t have success, or there are just more houses on the market right now,” said Allan Dechert, president-elect of the New Jersey Association of Realtors.

Joanne Cleaver, senior content producer for ForSaleByOwner.com in Chicago, said its business dropped with the rest of the market after 2006, but through July of this year listings and sales are up about 3 percent. Correction: 33% – ForSaleByOwner.com staff

She said increased interest in “FSBOs” is driven by the economy and the advance of technology.

Clients say that with so little equity left in their homes by falling property prices, they can’t afford to have some of it paying the typical 6 percent commission to a real estate agent, Cleaver said.

At the same time, she said, digital technology has made it easier for sellers to reduce the gap between what a Realtor can offer and what they and companies such as hers can do.

ForSaleByOwner.com, in fact, will put a seller’s listing on the nation’s biggest real estate database — www.Realtor.com — but only as part of its top-of-the-line package, which costs $809, she said.

Michael Imperiale has paid far less to put his home in the Eagles Glen development in Egg Harbor Township on the market.

In mid-June, he put it on Owners.com for $49.95, which allowed him to post a description of the four-bedroom, 21/2 bath house and as many photos of it as he wanted. He put up 14 pictures.

“We’ve gotten a few calls,” Imperiale said, “not as many, I guess, as if you had it with a Realtor. We had some people come through.”

Last week, he added Zillow.com to his marketing, paying $39.99 for a similar listing with description and photos.

The economy and reduced home values motivated Imperiale to sell his house himself.

“What (equity) we have in the house is already lower, and if you pay the real estate commission on top of that, that’s an additional loss,” he said. “We’re going to have to take a small loss on the house, but if you add a $15,000 real estate fee on top of that, it could be substantial.”

Imperiale and his wife bought the house new in 2005 for $287,000 and added hardwood floors, a paver and concrete patio, and landscaping in the front and back.

In his first listing, he priced it at $299,900. In last week’s listing, he came down to $299,000.

FSBOs accounted for 13 percent of home sales in 2008, said the 2009 National Association of Realtors Profile of Home Buyers and Sellers. That survey found that among owner-sellers, 51 percent put the listing online, 44 percent used a yard sign, 22 percent placed a newspaper ad and 15 percent held an open house.

Dechert, of Ferguson Dechert Real Estate in Avalon, said there are many potential pitfalls for those who manage the selling process themselves.

Pricing: “A lot of times owners tend to overestimate the value of their property,” he said, which can reduce the chance of a sale.

Technology has made some pricing information available to homeowners, but not all of it, he said.

“Even Realtors are continually analyzing values and getting sellers down to where they need to be in today’s marketplace.”

Marketing: Experienced real estate agents know where to market properties, both online and off. “The Internet is a great place to be if you know where, and we still use print, but it’s a matter of picking the right ones,” Dechert said. “There are a lot of different real estate publications and it’s a matter of knowing which ones work.”

Then there are online virtual house tours for potential buyers, which look at each room and more. “Every one of our properties for sale has a virtual tour, but the individual seller wouldn’t likely have access to that software or the ability to put one of those together,” he said.

Negotiating: Real estate agents are better at negotiating sales agreements, and not just because they have more experience, he said.

“You don’t want it to be personal,” Dechert said. “Sometimes we tell sellers you’ve got to take the emotion out of this, that it’s a business transaction.” That can be hard for seller-owners.

Cleaver said agents have an advantage with negotiations and paperwork, but said that if a real estate attorney is overseeing the sale, the attorney can help with those things, too.

She conceded that one FSBO disadvantage is still strong: Showing the house and screening the people seeing it. “That can be emotionally difficult for some people.”

Dechert said it can also be a security risk, one that Realtors work to reduce when they’re taking people through houses. That may have motivated the several FSBO owners contacted for this story who declined to comment, despite the free attention it would bring to their properties. They would prefer people were not aware they’re selling their homes unless those people are looking to buy themselves.

Cleaver said her company encourages sellers to indicate that they’ll pay the standard half commission to buyer’s agents, which cuts their fee savings in half but encourages agents helping buyers to show them their houses.

Imperiale has done that on both his listings, so if his house sold for the $299,000 he’s asking — a big if, of course — he’d give the buyer’s agent about $9,000.

He’s also ready to be patient, but at least what he’s done so far has been no problem.

“I understand the economy and realize houses aren’t selling like they were and we’ll be on the market longer,” he said. “But I have to say that regarding the do-it-yourself aspects and the simplified technology, it’s really easy to do.”

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Posted in BUSINESS on Sunday, October 10, 2010 12:01 am