Just mention the words “For Sale by Owner,” and realtors cringe. Mention those same words to some sellers and they say with a pumped fist, “Yesss!” So, who’s right? Most brokers agree that sellers should always use a licensed realtor.
It depends on whom you ask. For realtors, it makes little sense for a seller to go it alone, without the help of a broker and his or her existing customer base. For sellers who wish to save the realtors’ standard commission fee of six percent and are willing to put in the work involved in marketing their homes, it makes perfect sense.
“I had an exclusive contract with a realtor and he had two open houses and I never heard from him again,” said Susie Goetz, whose three-bedroom East Hampton house near the village is on the market for $590,000. She is selling the house herself.
“I’ve advertised the property and held open houses every Sunday, she said. “I do what a realtor would do and have had far more people seeing my house than when I was with a realtor.” The property has been on the market for a year, and she has had one offer, which didn’t pan out.
That she hasn’t sold her house isn’t lost on John A. Viteritti, a licensed real estate broker, lecturer and consultant to the real estate industry. Viteritti has probably taught most of the brokers on the East End; he teaches the local real estate courses offered by Long Island University at its campus in Riverhead. “With all my experience and even as a licensed broker, I would never sell my house myself,” he said. He referred to statistics from the National Association of Realtors (NAR).
“The difficulty of for-sale-by-owner transactions increased with challenging market conditions over the past year. The level of FSBOs was a record low 11 percent, down from 13 percent in 2008. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997” said Walter Molony of NAR Public Affairs.
Many of these properties, he said, were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. “Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low six percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.”
Most buyers expect a house that is for-sale-by-owner to be cheaper than a house being sold by realtors, Viteritti said.
“According to the NAR, those sales that are negotiated through a real estate broker sell for 16 percent more than if the owner sells themselves. So, even when you consider you’re saving the six percent broker’s fee you’re still losing 10 percent,” he said.
“The market that we’re in today is very different from a few years ago. There’s an excess of product, but real estate brokers have the customer base that a seller needs,” he added. “It would be impossible for me to generate that customer base on my own.”
Another issue, he said, is that a for-sale-by-owner seller doesn’t have the knowledge of real estate laws that a broker has.
But Linda Leahy, of Bridgehampton, is determined to sell her house on her own. She has had exclusive deals with brokers that haven’t panned out in the past. A broker recently helped her list her house on MLS, the multiple listing service, as an open listing, which means any broker can sell the house for the full commission, and she has it listed on forsalebyowner.com, a national website that charges a fee for listing your house and providing a depth of information about how to go about selling your house on your own.
Leahy, who has her realtor’s license but is not affiliated with any real estate company, has had her four-bedroom, 3,000-square-foot home on Williams Way in Bridgehampton on the market, off and on for three years. It is currently priced at $1,995,000.
“The house is now priced to sell,” she said. “We are south of the highway and the house has a lot of good features.” Still, she said, she hasn’t been able to sell it.
She has had one response from her ad on forsalebyowner.com. A recent offer came in at half the asking price and she rejected it.
Greg Healy, VP of operations forsalebyowner.com said his site “provides the consumer a choice to empower them, give them confidence, education and full information about marketing to help them sell their home on their own.” The main reason people choose brokers is that they don’t want to do all the work themselves, he said.
But sites like forsalebyowner.com and www.owners.com offer step-by-step guides for selling your house on your own. For example, www.owners.com provides information on the following topics:
• Deciding to sell “FSBO”
• Pricing Your Home
• Preparing your home for sale
• Marketing your home to buyers
• Holding an open house
• Closing the sale
Other websites that have in-depth information and instructions on selling your house on your own include www.fsbo.com; www.homesbyowner.com; www.newyorkfsbo.com and www.Help-U-Sell.com. These sites will often help you find a local real estate attorney, who can walk you through the legal process of selling your home.