Category: Other Products & Services

By Dennis Rodkin, Crain’s Chicago Business, Aug. 28, 2014

Condominiums have been selling quickly and at good prices in Lakeview this year, so Matt Sulkowski recently decided to see what he could get for his two-bedroom unit on Sheffield Avenue. Figuring the place would pretty much sell itself, he decided to go without an agent and listed the property on a couple of for-sale-by-owner websites.

“I can get it in front of a number of eyes myself,” Mr. Sulkowski said. “An agent wouldn’t get too many more.”

Mr. Sulkowski’s no-agent strategy has been gaining popularity this year. In the second quarter, 42 percent more Chicago-area homes were listed on forsalebyowner.com than during the same period in 2013, according to the site’s managers.

By comparison, conventional multiple-listing service listings in the nine-county area during the second quarter were up just under 12 percent from a year before, according to reports from Midwest Real Estate Data LLC.

More sellers are going it alone amid a recovering residential market. Some neighborhoods, including Mr. Sulkowski’s, have been experiencing a runaway sales pace, making it appear that merely dangling a property in front of buyers is enough to get it sold. At the same time, price declines after the bust have left many homeowners with less equity, and some sellers may be trying to maximize their proceeds by eliminating some of the commission they have to pay out at closing time.

‘THEY EXPECT IT TO SELL’

Whether they believe they don’t need an agent or can’t afford one, homeowners find that the strategy of marketing a home themselves may “feel like the reasonable path to try,” said Igal Hendel, a Northwestern University economics professor who has written about FSBO sellers.

“They expect it to sell,” he said, and if they can maximize their proceeds by paying less in commissions, “that is what they will try first.”

Another factor in the increased use of an FSBO site may be consumers’ comfort with the Internet’s growing role in all aspects of the real estate transaction, Mr. Hendel said.

Many home sellers “realize that a lot of the tools that used to be exclusive to agents are now available to anybody if they’re willing to spend a little time doing research,” said Eddie Tyner, general manager of forsalebyowner.com.

That was the case for Mr. Sulkowski, who works in commercial real estate. Several condos have sold in his and similar buildings recently, so establishing an asking price via comparable sales wasn’t daunting, thanks to sale records widely available online, he said.

“It’s easy to see whether you’re overpricing or underpricing it,” he said.

STILL UNSOLD

Yet Mr. Sulkowski is still waiting for a buyer. He has yet to receive an offer for his condo, which he listed in June for $484,900. He has reduced the price twice, cutting it Aug. 25 to $449,900.

Indeed, though FSBO listings are up, the real question is whether the homes sell. Sales through forsalebyowner.com rose 16 percent nationwide in the second quarter from the year earlier, Mr. Tyner said. Nationwide home sales of all types, both using agents and not, were down about 1 percent in the same timeframe, according to the National Association of Realtors, or NAR.

Forsalebyowner.com — not to be confused with a competitor, FSBO.com — is a Tribune Publishing Co.-owned venture that is the largest of the Internet sites for sellers without agents. Forsalebyowner.com would not provide its number of listings, only percentage increases.

NAR estimates that FSBO sales accounted for 9 percent of U.S. home sales in 2013. The association declined to provide historical figures.

Selling without an agent may save sellers money, but it costs them time. The seller has to prepare the listing information, disclosures and photography, host showings and open houses and scrutinize offers when they come in. A real estate lawyer and other professionals can help with some of those tasks, although the seller still has to manage them, in place of a listing agent.

FOURTH HOME

Maureen and Len Gaudio of Elmhurst sold their first home without an agent, a Chicago condo, way back in 1994. They are now trying to sell their fourth, a house on Church Street in Elmhurst that they have listed on owners.com for $725,000.

“It’s commissions,” said Ms. Gaudio, a marketing consultant. “We don’t feel they’re justified. We can do most of the work to sell it.”

Sellers in Illinois can pay as much 3 percent to a listing agent and 3 percent to a buyer’s agent, but many agents work for less. If a buyer is using an agent, the Gaudios will still pay the agent a commission. In that situation, they would save about $21,000, assuming the house sells at full price. They could save twice that amount if the buyer is unrepresented.

Yet listing a home online isn’t free. Each of the FSBO sites has a menu of prices, depending on the level of exposure and other factors. At forsalebyowner.com, prices range from a basic listing for about $80 to $699 for one that includes placements on the big real estate portals including trulia.com and realtor.com.

At that level, “you’re getting as many people seeing it as your agent could get,” Mr. Tyner said. His firm estimates that its site saved users a combined $70 million in commissions on approximately 9,000 sales in 2013.

Justin Zintak quickly found out how much exposure FSBO listings get when he listed a Huron Street condo in River North, which he co-owns with his mother, for $1.4 million on forsalebyowner.com. Within 12 hours he received five or six calls from real estate agents warning that he won’t get the property sold without an agent.

“I’m pretty sure there’s a convention where they all get the same notes on how to solicit people who are trying the for-sale-by-owner” option, he said.

By Susan Johnston, U.S. News & World Report Dec. 3, 2013

When Shannon Stell and her husband decided to sell their Yorktown, Va., home this summer, they ran the numbers and discovered that the small amount of equity they built up during two years of homeownership would be wiped out once they paid an agent’s commission. Instead, they chose the “for sale by owner” route (or FSBO), and uploaded a listing and photos online with the help of a website called forsalebyowner.com. They gave one showing – to someone who was also selling a home nearby and perhaps wanted to scope out the competition, so Stell doesn’t count that showing – and announced an open house through the neighborhood’s Facebook page.

A neighbor’s daughter and her family stopped by the open house that weekend and on Monday morning, they made an offer. Both parties hired their own real estate attorneys to prepare closing documents, and Stell says the process went smoothly. “It was only on the market for 20 days when we accepted the offer,” she says. “We’ve got that down payment that we didn’t have to pay to a Realtor.”

Forsalebyowner.com is one of several websites that let consumers list their properties on the Multiple Listing Service, or mls.com, instead of paying a real estate professional to do it for them. Eddie Tyner, general manager of forsalebyowner.com, says the website has seen listings grow by 14 percent in the past year. “If a person has the time and willingness to invest in the process, we believe that almost anybody could do this,” he says. “The benefits are pretty substantial.”

Beyond saving on commission (5 or 6 percent is typical when both parties have an agent), Tyner says FSBO gives homeowners more control over negotiating price and other factors. “If you take out the person in the middle and you’re able to negotiate with the actual buyer, you’re the only two people who have an interest in it,” he says. “If you add other people, some of their interests get put into the equation.”

Jane Hodges, author of “Rent vs. Own: A Real Estate Reality Check for Navigating Booms, Busts, and Bad Advice,” offers a different point of view. “Most people choose to FSBO because they want to keep as much of their post-sale proceeds as possible,” she says. “However, the Realtor argument against this is that a good Realtor can get you sufficiently more for your sale, or accomplish the sale faster, such that their fee and your higher sale price still wash out in a way where you make the same or better money.”

Sellers sometimes grumble that their agent set the price too low because the agent wanted to move the property quickly. Then again, agents often know the local real estate market, and sellers sometimes have unreasonable expectations about what their home is worth. “We recommend that people view this as a business transaction and try as hard as they can to keep that mindset,” Tyner says. “If they don’t [set a reasonable price] they’re not going to sell their house.”

Nowadays, data about recent sales and comparable properties is readily available online if you’re willing to sort through it, which perhaps explains why FSBO listings are becoming more common. “If you live in a neighborhood where there are lots of very similar properties, such as a gated community where homes come in only a handful of flavors and sizes, and there’s been some turnover,” Hodges says, “it’s easy to present your property as one with direct comps and rationalize your pricing.”

Of course, if a property is priced too high, it’s likely to sit on the market. “The longer a home sits on the market, regardless of listing type, the more ‘smell’ the listing gets on it,” Hodges says. Setting a realistic price from the beginning can prevent the potential stigma associated with a property that sits on the market for long periods of time.

Even if a buyer is interested in a property, a mortgage company won’t approve the transaction if the property appraises too far below the expected price. Kim Schnick discovered this over the summer when she sold her home FSBO in Omaha, Neb. “I thought maybe the price was too high, but I went for it anyway and I got an offer in six days,” she says. Then the mortgage company’s appraisal came in $6,000 below the offered price, so she had to adjust the price.

If you’re unsure what price is reasonable for the market and your property, Tyner suggests paying a few hundred dollars to have an appraisal done. The mortgage company may send an appraiser, but your own appraisal can give you a starting point.

Depending on your situation, you may also decide to hire a professional photographer or stager to make your home look as appealing as possible. And in some states, it may be appropriate to hire an attorney for the closing. “You can decide which parts of the process you’re comfortable with and where you need to bring in someone to help you,” Tyner says.

Once you’ve priced your home and uploaded your listing, you’ll need to get ready for showings. “The most important part of showings is making sure you’re really open on the times that you’re willing to show it,” Tyner says. “Buyers are going to want to see the house when they’re not working, often on evenings or weekends.” Stell says chatting with prospective buyers at the open house was the most awkward part of the process, “knowing they’re probably not going to say what they’re thinking.” In Schnick’s case, the buyers’ agents handled showings. “I left the house, and they brought their clients through,” she says.

If buyers use an agent, they’ll typically expect the seller to pay the agent’s commission. “If you’re unwilling to do this, you may not find many buyers wandering through the door, so decide how much you’ll pay, percentagewise or dollarwise, to the buyer’s agent,” Hodge says.

FSBO sales require more seller involvement, but Schnick and Stell say it was worth the extra effort. “I saved myself thousands of dollars,” says Schnick, who coincidentally bought a FSBO property as her next home (although she used a buyer’s agent). “I hope I don’t have to move again for a long time, but if I did, I would do it again.”

By Les Christie @CNNMoney October 11, 2013: 1:00 PM ET NEW YORK (CNNMoney)
Bolstered by the housing recovery, a growing number of homeowners are going it alone when selling their homes hoping to save thousands of dollars in commissions.

The hot housing market in Cambridge, Mass., gave Jon LaRosa the confidence to sell his condo on his own. So in late May, the 34-year-old freelance IT worker listed it for $429,000 on ForSaleByOwner.com and scheduled an open house for the weekend.

“I figured that even if I sold it for $5,000 less… I was still making out well,” he said.

In the next week or so, more than 100 people came to see the place. LaRosa received 7 offers and sold for $450,000, closing the deal by mid-July.

Not only did LaRosa get much more than he asked for, but he only had to pay a 2% commission — of $9,000 — to the buyer’s agent. That’s instead of the roughly $22,500 in commissions he would have had to pay if he had a broker.

Broker commissions typically range from about 5% to 6% of the sale price, or about $10,000 to $12,000 on an average sale of $200,000.

Usually, about half the commission goes to the listing (or seller’s) agent and the brokerage they work for. These agents get paid to put the home on the Multiple Listing Service so agents who represent buyers see the home and bite. They also host open houses and help in negotiations. The other half of the commission goes to the buyer’s agent and their brokerage.

“I think the pay structure is out of whack,” said LaRosa. “I don’t think agents put in $22,500 worth of work.”

A growing number of homeowners agree. They have turned to sites like Zillow and ForSaleByOwner to help them navigate the process on their own. Such sites offer up information on things like comparable sales and neighborhood data, enabling sellers to price and market their homes better. Sellers can also post photos and descriptions online, reaching exponentially more house hunters than they would have in the past.

“Zillow has opened up the market, becoming the consumer multiple listing service,” said Donald Van Dyne, who developed iGOfsbo, a website that connects sellers with buyers and their agents.

ForSaleByOwner’s site has seen listings spike 14% in the past year, according to general manager Eddie Tyner.

Part of that increase has to do with the housing recovery. “Historically, for sale by owner [deals] ebb and flow with the economy,” said Van Dyne. “People use it when there’s a hot market, when it’s easier to sell their homes.”

In early July, Katelyn Stanley listed her Indianapolis home on Craigslist and Zillow for $149,900. Within days, she had shown it to three prospective buyers and by July 20, she had accepted an offer for the full asking price.

Sellers say they also go it alone because they want more control of the deal. Tara and Brent Anderson didn’t want to rush the sale of their three-bedroom Dallas home, which they listed for $500,000.

“Real estate agents are willing to take a lower price to make a quick sale, but that would cost me a lot of money,” said Tara.

A study by Stanford University economists Douglas Bernheim and Jonathan Meer supports the Andersons’ concern. They found that homes on campus using real estate brokers sold for 5.9% to 7.7% less than homes sold without brokers. The National Association of Realtors, however, maintains that homes sold using agents usually fetch much higher prices.

The Andersons admit that they had to dole out some extra cash in order to get the listing in front of buyers: they paid a $750 fee to ForSaleByOwner.com to put their property on the Multiple Listing Service so more buyer’s agents would see it.

And while they didn’t want to rush the deal, they still managed to sell the house in a week, saving a little more than $14,000 in commissions.

“We have no experience selling but we felt it just makes common sense,” said Tara. “We could give the money away, or pocket it.”

By Stephanie AuWerter @Money January 2, 2014: 4:12 PM ET NEW YORK (Money Magazine)

How do I sell my home without using a real estate agent? — Bill, Chicago

With housing on the rise, more sellers are flying solo, says Eddie Tyner, general manager of ForSaleByOwner.com. The appeal of FSBO: skipping the seller’s agent commission, usually 3%, when houses seem to sell themselves.

It’s not that easy, of course. You probably should put your home on the multiple-listing service, which displays more than 90% of homes for sale; do that via sites like ForSaleByOwner.com or Owners.com.

You must avoid the mistake of turning people off with a steep price; your listing, per square foot, should be within 10% of that of similar homes nearby.

Related: Guidelines for selling your home

And you may not be up to the job. It requires a serious time commitment and unemotional negotiations.

Plus, you’ll have to overcome a perennial worry: Could an experienced agent have fetched you a better price?

What selling a $300,000 home costs:

You can pocket extra cash by selling your home yourself… if you can get the same price a broker would.
With a broker: $20,000
On your own: $11,000

Notes: In both cases, seller pays buyer’s agent commission; miscellaneous expenses are for photos and open house; without a broker.