Categories
Press Coverage

Real Estate Agent vs. For Sale by Owner

With the recent appreciation in home prices, this spring might be a good time to sell your home. But which is the smarter way to do it, hire a real estate agent or list it yourself?

With sites such as Zillow and Trulia available on demand, the for-sale-by-owner process (FSBO) is increasingly popular today as more information is readily available online, and as smartphone photography has made marketing ridiculously easy. In fact, according to Eddie Tyner, president of ForSaleByOwner.com, seller traffic to its website was up more than 200% for the first quarter of 2015 over the same period last year.

One major pro of listing yourself is saving the hefty 6% commission fee that real estate agents typically charge to market and broker a deal for your home. So on a home that sells for $250,000, the brokerage fee would be about $15,000. You can avoid paying this bill entirely if you sell it yourself.

That’s quite a savings, but since selling a home is something most of us will probably do once or twice in a lifetime, many of us are uncomfortable going it alone. But is it really worth 6% of the purchase price of your home in fees to have personal guidance throughout the process? Here are some things to consider:

BETTER PRICE – Real estate agents firmly believe they can get you more money through the art of negotiation, leverage of local knowledge, use of incredible marketing tools, access to a greater marketplace and ability to qualify buyers.

“The right Realtor(R)* will always command a premium, if there’s a premium to be had,” according to Regina Rogers, vice president, Douglas Elliman Real Estate in Locust Valley, New York.

Rogers said real estate agents know how to market a home using photographs to maximize value when showing it to prospective buyers. They know it’s an emotional process, and as a third party, can better manage that. A good broker can help get potential buyers excited about a lifestyle that a house can offer. Also, potential buyers don’t always trust the homeowner, she said.

But pricing a home is also fairly easy to do yourself, according to Tyner. For about $300-$500, sellers can get an independent appraiser to give them a fair market value for their home, he said. There’s also enough data online to get a sense for what your home is worth.

“Today’s technology has empowered the consumer to do it without sacrificing results,” he said.

ACCESS TO QUALIFIED BUYERS – Good real estate agents will request financial statements to determine a potential buyer’s credit-worthiness, and, in the case of an all-cash offer, verify the funds. Most sellers would rather not waste time showing their home to not-so-serious buyers.

Rogers says a knowledgeable broker has the foresight and know-how to verify exactly where the funds to purchase the home are coming from (pending home sale, mortgage), so that it’s less likely a deal will break down at the contract stage.

The FSBO seller is on his or her own with respect to requesting financial statements from potential buyers. The ForSaleByOwner.com website refers users to an article describing the difference between pre-qualified and pre-approved buyers who will be using a mortgage to buy the home.

SAVING TIME – Personally, I wouldn’t have the time or inclination to properly stage my house, set up an inspection, manage phone calls from would-be-buyers and interview attorneys. Good real estate agents say they can guide sellers to attorneys and inspectors who are fair and reasonable, so that a seller doesn’t get stuck with one who will pad bills with unnecessary time and charges.

However, Tyner says millennials, for example, aren’t overwhelmed by the notion of a do-it-yourself home sale. They’re really comfortable with the technology and have a tough time justifying having someone else do it for them at a premium.

Choosing FSBO vs. real estate agent depends on your situation and how motivated you are to take on the process yourself. It’s nice to know there are options and plenty of information on choosing an agent or FSBO website right from your smartphone.

*Realtors(R) are licensed real estate professionals who are members of the National Association of Realtors(R) and follow the NAR Code of Ethics.

Kristin Bianco is a financial news anchor and FOXBusiness.com contributor.

Categories
Press Coverage Video

2015 Real Estate Outlook Summary

As the leading FSBO website, ForSaleByOwner.com has unique insights into all aspects of how consumers sell and buy homes nationwide. While data and sentiments on the industry seem to change almost daily, one thing is certain: big changes are coming.

This 2015 Real Estate Outlook report reflects our perspective on what’s to come and how to navigate the changes on the horizon.

1. Bottlenecks to Recovery But a Brighter Road Ahead
While the housing recovery has gained momentum, it is not yet as widespread as anticipated, largely due to consumer hesitancy and low levels in new home construction. However, consumer confidence across the United States remains high.

  • 79% believe that when they search for a home they will be able to afford it
  • 70% say that owning a home is still a big part of the American Dream
  • 91% of Americans buying or selling a home in the next 12 months would consider selling by owner

2. Increase in Inventory Will Shift Market to Buyers’ Advantage
While 2013 and 2014 were dream scenarios for sellers, a noticeable shift is taking place that may very soon give buyers more power. Signs pointing to this shift include a less frenzied purchase process, more moderate price increases and improved consumer optimism.

  • 64% of U.S. consumers who have sold by owner in the past agree that now is a good time to buy a home in their area
  • 56% of by owner sellers believe that 2015 and 2016 will be a buyer’s market

3. Smartphones and Data Empower Home Buyers to Go Agent-less
The digital age has empowered consumers with access to more information than ever before. This is certainly true for the home buying process as 92% of consumers search for homes online. This rise in information right at your fingertips has also increased by-owner home sales.

  • 27% of total searches related to buying a home came from mobile phones in June 2014 – up 19% over last year
  • Mobile queries for open houses grew 36% in June 2014 over last year
  • 32% of Americans are more likely to consider selling by owner than they were a year ago

4. Real Estate Agents’ Roles Being Redefined
Just as the Internet has given the consumer more autonomy and power in the process of home buying and selling, it has also changed the role of the real estate agent. Less than half of Americans agree that the service agents provide is worth the fee, which means that as the digital revolution continues to change the way people buy and sell homes, it will only be more critical for real estate agents to stay relevant in the marketplace.

  • ForSaleByOwner.com sellers’ average home sale price is $255,000, 8.5% higher than the typical agent-assisted selling price of $235,000
  • ForSaleByOwner.com sellers consistently receive 97% of their asking price, in line with agent-assisted home sales
  • 17% of total Americans have previously sold a home by owner, with 88% stating they would sell by owner again

5. Gen X Bearing the Burden of the Housing Crisis
There is a clear generational divide when it comes to motivations and intentions around home buying. Confidence among Baby Boomers continues to improve, while true homeownership rates for Gen Xers are at their lowest level in two decades. Although Millennials are hesitant to buy (64% are still renters), their outlook and decisions will shape the market in the years to come.

  • 21.6% of 18 to 34-year-olds said they planned to purchase a home in the next year compared to 13.6% of 35 to 54-year-olds
  • Nearly 70% of Millennials believe owning a home is still a big part of the American Dream
  • 35% of Millennials believe that the general value of real estate agents is diminishing
  • 67% would consider selling by owner

6. Bright Lights, Big Cities: Urbanization Shows No Signs of Slowing

The trend toward urbanization isn’t slowing down anytime soon as Millennials and Gen Xers either currently live in a big city or intend to do so in the next two to three years. While there has been much anecdotal evidence pointing to Boomers’ inclination to move away from the suburbs to the cities, the number of Boomers living in single-family homes in the suburbs today is at least as high as before the housing bust.

View and download the entire report here.

Categories
Press Coverage Support

Online sites help owners sell homes without an agent

By Jeff Collins, OC Register, Oct. 29, 2014

You’re gambling with a lot more money these days when you try to sell your home without an agent. Home values are three times what they were 25 years ago. Real estate deals also are more complex, and there’s so much information available now, it’s hard to make sense of it all.

Experts say these may be among the reasons why the number of for sale by owner deals are on the wane, dropping from 20 percent of U.S. home sales in 1987 to 9 percent last year.

But a host of websites now are seeking to reverse that 27-year decline by offering tools, marketing advise and exposure to homeowners selling without an agent.

While industry insiders are skeptical, operators say FSBO websites will function much like TurboTax, guiding ordinary folks through an otherwise complex process.

“Sellers have access to all the same information and resources as real estate agents,” Eddie Tyner, general manager of Chicago-based ForSaleByOwner.com, said in an email. “And the process of selling your home by owner is the same as selling with a real estate agent. It’s just a matter of who is doing the work.”

A Ladera Ranch website, Fizber.com, recently joined the fray, offering free listings and tools, and for a fee additional services for the for sale by owner adventurer.

“Whatever route you take to sell your home, we have things that will help you save,” said Fizber President Zack Zackrison.

If Fizber is to become profitable, it needs to “upsell” customers on these additional products, said CEO Evan Gentry.

Categories
Press Coverage Support

Websites aim to be the TurboTax for selling your home – without an agent

By Jeff Collins, Orange County Register, October 24, 2014

The last tenants were just too much. So, after spending $3,000 repairing the damage they left behind, Huntington Beach landlord Kelly Pointer decided to sell her three-bedroom rental.

And – because she doesn’t want to pay a commission – she’s selling it herself.

If it works out, that could translate into savings of up to $34,000. “We could save an enormous amount of money by selling it ourselves,” said Pointer, 52.

There’s nothing new about “for sale by owner” deals like Pointer’s, or FSBOs (pronounced fisbos) as they are called in the industry.

But Pointer isn’t just putting out a sign like they did in the old days. She posted a listing on Fizber.com, an Orange County-based website that gives do-it-yourself home sellers a forum that looks and acts pretty much like listings on real estate sites such as Redfin and Realtor.com.

Fizber.com is one of a score of sites catering to homesellers without agents. With names like ForSaleByOwner.com, FSBO.com and Owner.com, site operators believe they’re harnessing the power of the Internet to reverse a 27-year decline in the number of FSBOs in the U.S.

While industry insiders are skeptical, operators say FSBO websites will function much like TurboTax, guiding ordinary folks through an otherwise complex process.

“Sellers have access to all the same information and resources as real estate agents,” Eddie Tyner, general manager of Chicago-based ForSaleByOwner.com, said in an email. “And the process of selling your home by owner is the same as selling with a real estate agent. It’s just a matter of who is doing the work.”

A group of Ladera Ranch investors acquired Fizber in late 2012, spent a year revamping the website and relaunched it in December. By mid-October, the company claimed more than 12,000 listings from across the country.

While many of the FSBO websites charge for listings on their venues, listings on Fizber are free. In addition, the listings automatically get uploaded to other free sites such as Zillow, Trulia, Homes.com and Yahoo Real Estate.

The site also is geared to helping sellers price and market their homes, guiding them through the FSBO process and providing free tools to upload photos, create fliers and brochures and produce home-tour videos.

Sellers have the option of offering commissions to buyers’ agents, which still is half the amount they would pay when using their own agents.

Fizber then charges sellers who want additional supplies and assistance: Contracts or other legal forms; yard signs; posting listings on the broker-run multiple listing service (which all agents see); services for paperwork, escrow and title; and, should clients decide they want an agent after all, links to a network of discount brokers who charge smaller commissions.

“Whatever route you take to sell your home, we have things that will help you save,” said Fizber President Zack Zackrison.

If Fizber is to become profitable, it needs to “upsell” customers on these additional products, said CEO Evan Gentry.

“All the data is showing us we’re on the right path,” said Gentry, who projects the firm will turn its first profit by June 2015. “And the customers just love it. It just tells me there’s so much potential. People are selling homes and saving thousands of dollars.”

Waning FSBOs

But getting more people to sell their own homes may be an uphill battle.

Figures from the National Association of Realtors show that the number of sellers marketing homes without an agent has dropped steadily since 1987, when 20 percent of U.S. homes were sold by owners.

In 2013, the latest NAR survey shows, that number had fallen to 9 percent. And only 6 percent of those sales were transactions between strangers, as opposed to deals between family and acquaintances.

Experts were at a loss to explain the reason for the steady decline, which occurred through good markets and bad, seller’s markets and buyer’s markets.

But experts agreed that possible factors include ballooning home values, increasing deal complexity and the explosion of information available to consumers.

People want the extra assurance and liability protection they get from an agent, said Leslie Appleton-Young, chief economist of the California Association of Realtors. And the abundance of information on the Internet could drive sellers to a professional to help make sense of it all.

“If you go back 40 years, forms that now are 20 pages were one page,” Appleton-Young said. “I think the complexity of the transaction is a big part of it.”

Steve Harney, a retired Long Island broker who now runs the Keeping Current Matters real estate news site, recently published an article listing five key arguments against doing a FSBO.

Among his chief reasons: Most do-it-yourself sellers lack the negotiating skills and online know-how to successfully market a home and navigate the contract and escrow process.

Harney believes also that buyers’ agents are reluctant to show FSBOs to their clients because there’s no guarantee they’ll get paid a commission and because they’d rather deal with professionals than with amateurs. If there isn’t a seller’s agent, Harney said, the buyer’s agent “will have to do twice the work.”

Harney argues further that homes sold by an agent tend to go for more money – offsetting the cost of a commission – because buyers expect to get a discount when dealing with an owner.

“There is a whole process to selling a house,” Harney said. “Realtors have a whole book of forms. Do you know all those forms? Do know what you’re allowed to say and what you’re not allowed to say? Did you study this for years? You just looked online and said, ‘This doesn’t look so hard.’”

Sellers not intimidated

But San Francisco broker George Devine believes FSBOs can work for some who have the time to do the work involved.

“This is like filing your income tax return,” said Devine, author of the book, “For Sale By Owner in California.” “Can you do this by yourself? Sure.”

But there still are plenty of people who hire accountants – or do Turbo Tax and hire an accountant to look over their work. “Most people do something in the middle,” Devine said.

The new websites might increase the number of sellers able to do such deals.

ForSaleByOwner.com’s Tyner said his site has 3 million unique visitors per month. “In 2013 alone, ForSaleByOwner.com customers sold approximately 9,000 homes worth a combined $2.3 billion,” he said.

Chris Ling of Huntington Beach used Fizber to sell a family-owned Costa Mesa home in March. He got $625,000 for it and saved about $20,000 in real estate commissions.

But, he said, “I’m not the average person.” He’s had lots of experience, selling nine FSBOs over the past 20 years. And he has a real estate license, though he’s not a practicing agent.

Ling, 50, had been advertising the three-bedroom, 2.5-bathroom home on Craigslist when Fizber contacted him. He decided to list it there as well since the listing was free.

“It was a no-brainer. Why would you not do it?” Ling said.

Seller Alan Wilsig recently listed his his three-story, 7,500-square-foot home in lower Manhattan for $43.5 million on Fizber, the website’s biggest listing ever. It’s the third home he is selling without an agent.

“No one can explain the house as well as I can,” Wilsig, 49, said in an email. “It would literally need to be an agent’s only listing, and I’d need to train them for 30 days. There was just no need to be captive to one listing broker’s marketing prowess and network.”

Kelly Pointer had been renting out her three-level townhome in Huntington Beach for 20 years when she soured on being a landlord. Several friends have successfully sold their homes without an agent, so she and her husband decided to give it a try.

After posting the listing on Zillow, Fizber contacted Pointer, promising more exposure.

Since the couple put the home up for sale, they’ve had multiple showings and held several open houses, but no offers.

“I’ve had two friends who sold homes as for sale by owner and saved a lot of money,” Pointer said. “Hopefully, if we find a buyer without an agent, then we can save 6 percent.”

Categories
Other Products & Services Press Coverage Support

For Realtors, an Unwelcome Trend

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.

Categories
Other Products & Services Press Coverage Support

How to Sell Your Home Without an Agent

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.”

Categories
Other Products & Services Press Coverage Support

For Sale By Owner: Homeowners Ditching Brokers

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.”

Categories
Other Products & Services Press Coverage Support

Sell Your Home Without a Real Estate Agent

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.

Categories
Press Coverage Support

More homesellers are going it alone — should you?

By Mandi Woodruff, Yahoo! Finance, March 25, 2014

When Loretta Harrison, 66, decided to put her 1.2-acre North Carolina home on the market last year, she took the traditional approach — she handed the listing off to a realtor, who, for a 6% commission, promised to find them a buyer.

Six months later, she wasn’t impressed.

“I didn’t feel like [the realtor] was doing anything more than what I could have been doing,” Harrison told Yahoo Finance. “I did a lot of research and I thought I’d give it a shot.”

Last month, she and her husband listed their home, a three-bedroom, two-and-a-half-bath property, with MLSmyhome.com. The service posts “for sale by owner” listings on a range of sites for a flat fee of $199 for six months.

Going the DIY route to sell your home is never 100% easy, but thanks to a bevy of FSBO-targeted services today, it’s getting there.

Zillow.com, which lists both FSBO and agent-backed listings, saw the rate of FSBO listings on its site nearly double between January 2012 and February 2014, from 2% to 4%, according to data compiled for Yahoo Finance. ForSaleByOwner.com saw 24% growth in 2013 and 13% year-to-date, according to the site’s general manager, Eddie Tyner. In major real estate boom towns like New York City, the gains have been even bigger. A report by StreetEasy, a popular New York listings website, noted a 30% growth in FSBO listings in 2013 alone.

Given the fact that demand for real estate is up while the inventory of homes on the market remains pretty tight, it’s not all too surprising to see a boost in FSBO listings.

“Whenever there is limited inventory in a particular market, it is not unusual to see more sellers that feel empowered to sell the home themselves hoping to save half or all of the commission,” said Jonathan J. Miller, president of Miller Samuel Inc., a real estate appraisal and consultancy firm. “Of course we see the opposite occur when inventory is readily available, so the use of the FSBO method tends to be subject to market conditions.”

In January, Michael Mayer, 59, listed his Riverside, Calif., home on Owners.com for $400,000. Within four days, he had an open house and sold it for $387,055.

“In my previous life I had sold real estate, and so it wasn’t really that big of a leap for me to go ahead and list it,” Mayer said. “I was happy it sold so quick.”

Owners.com and services like it, such as ForSaleByOwner.com and USrealty.com, typically charge a flat-rate fee to help consumers list their homes on multiple websites. For next to nothing, you can do the legwork yourself, too, and post ads on Zillow.com and Craigslist.

“Today, most buyers are going to start their home search online and the majority will do it before they ever hire a realtor,” Tyner says. “There are a lot of ways to get your listing in front of buyers without having to pay a commission.”

But, not surprisingly, among real estate brokers, FSBO listings are like six-figure thorns stuck in their sides.

“I just cringe whenever I hear about [FSBO] listings,” says Michael Corbett, a real estate author and host of NBC’s “Extra’s Mansions and Millionaires. “To me there’s no advantage. It’s kind of like representing yourself in court. You really wouldn’t want to do that.”

True, there are some benefits of having an agent that you can’t replicate online. But there will always be a place for the DIY homeowners looking to cut out the middle man.

The pros of going with a real estate agent:

“Agents talk,” Corbett says. “I’ve had many houses that sold to a client of an agent in the same office because they talk, they network, they can create a buzz about your house coming on the market, things you can’t do yourself.”

Real estate brokers (at least in theory) know the local market and how to price a particular property so it will sell and sell fast. When homeowners try to set their price, they can get caught up in their own personal attachment to the home and wind up overpricing it. That’s often what causes listings to languish for weeks or even months without a sale. The FSBO industry suffered a pretty big blow in 2011, when Colby Sambrotto, cofounder and former CEO of ForSaleByOwner.com, ironically wound up hiring a broker after he tried and failed to sell his Manhattan property.

His problem: not pricing it right.

FSBO listings have a history of selling for much less than broker-backed listings ($184,000 compared to $230,000 in 2013), at least according to report by the National Association of Realtors. Note, though, that the study doesn’t account for how much money FSBO sellers saved on broker fees.

“I often find FSBOs achieve lower prices than those sold by a broker, but not as a rule,” Miller said. “One of the reasons for the lower price [is] FSBO sellers don’t have a negotiating buffer between the two parties, which is probably one of the biggest advantages of using an agent that is not understood by the consumer as well as filtering out “lookers” and those who aren’t qualified.”

Lastly, there’s a bit of an awkward factor that comes into play when you’re selling your home without a middleman. You’ll have to handle your own open houses and field phone calls from brokers who will know the business better than you.

“You can’t just sign a paper and sign over your house. There are so many levels. Home deals are big financial transactions,” Corbett says. “There’s a lot of negotiating going on … and each one of those negotiations has to be handled professionally and non-emotionally and it’s very hard to represent yourself.”

The pros of FSBO sales:

Still, you can’t deny the cost-benefit of going it alone. Even though you may still have to pay your buyer’s agent a commission (3% usually), that’s still half what you’d wind up paying if you had your own broker’s commission to cover as well.

Just be sure you’re getting what you pay for. A key feature to look for in a FSBO service is the ability to get your home listed on local multi-listing service (MLS) websites, which is where selling agents search for properties for their clients. You will pay a fee for the service, but without it, you might as well just put up an ad on Craigslist and call it a day.

Mayer, for example, paid $395 for a package on Owners.com, which granted him exposure on his local MLS.

And if you already know an interested buyer, half the battle is already won. Forty percent of homeowners who sell without an agent know their prospective buyer, according to the NAR.

Whether or not you decide to list your own home, keep in mind that it probably won’t be a cakewalk.

Here are a couple of tips to get started:

Make sure the price is right. You can’t price your home based on a whim, and it will take careful research to be sure you’re in line with the value of comparable homes in your neighborhood. Use sites like Trulia or Zillow to search for home prices in your zip code. “And if you feel like those [online] tools aren’t working, pay the $300 to have somebody do an official appraisal,” Tyner says. “Ultimately, that’s going to be the number the bank or mortgage lender will come back to. It might be a good investment.” To find an appraiser, check out appraisers.org.

Hire an excellent lawyer. With or without an agent, you can’t complete a home sale transaction without a good real estate attorney. Services for a typical home sale cost around $250 to $500, Tyner says. Ask friends and family for referrals, or try sites like the National Association of Consumer Advocates or The American Bar Assocation.

“The availability of technology in general has made everything more transparent,” Tyner says. “All the information somebody would need to [sell their home] is available to them if they’re willing to put in the work to do it.

Categories
Press Coverage Support

ForSaleByOwner.com Wins FSBO vs. Realtor Debate Held By U.S. News & World Report

Consumers Read Both Sides and Decide that Agents Aren’t Needed to Sell a Home

NEW YORK, July 29, 2008 – ForSaleByOwner.com (http://www.forsalebyowner.com), the nation’s leading “for sale by owner” website, has been declared the winner of a real estate debate hosted by U.S. News & World Report on the topic, “Do You Need an Agent to Sell a Home?” ForSaleByOwner.com debated against a representative of real estate brokers and agents and collected 66 percent of the votes cast by U.S. News & World Report online readers.

“The Internet provides the resources and promotional power consumers need to sell their homes themselves,” said Greg Healy, VP of Operations, who debated against Jay Thompson, a Phoenix real estate broker. “Studies by two of our nation’s most prestigious universities concluded that “for sale by owner” consumers get more money for their home than sellers who used agents.  The debate provided us with the opportunity to communicate these important facts.”

“We thank Luke Mullins of U.S. News & World Report for allowing us to represent the ‘for sale by owner’ industry.  We also thank Jay Thompson, who did an admirable job representing Realtors and brokers, for participating in the debate.  During these difficult economic times, it is more important than ever for consumers to fully understand their choices when selling their home, and we believe the debate successfully highlighted the issues for readers,” added Healy.

ForSaleByOwner.com competed in the “Housing Rumble,” a regular feature on the U.S. News & World Report’s “Home Front” blog that matches up opposing sides of an issue and lets readers decide the winner. Moderated by Associate Editor Luke Mullins, the debate took place July 14-21, with each side getting three turns to make arguments and debate statements raised by the other side. The debate can still be found on the “Home Front” blog.

Luke Mullins said, “The Home Front would like to congratulate Greg Healy and Jay Thompson for passionately and intelligently articulating their positions. Both men demonstrated themselves to be classy and tough competitors. Healy should expect to receive Housing Rumble championship belt in the coming weeks, after it has been smelted and insured. We trust he will accept our invitation to defend his title.”

Data from the National Association of Realtors has found that more than 84% of buyers use the Internet to search for a home, up from just 2% in 1997. Additionally, Northwestern and Stanford universities have each conducted studies real estate transaction done by “for sale by owner” sellers and those represented by real estate agents. Each study found that FSBO sellers and agents are equally effective at maximizing the sales price of a home and, once commissions are factored, “for sale by owner” sellers received more money for their home.

About ForSaleByOwner.com
ForSaleByOwner.com is the nation’s leading for sale by owner website. Since 1999, ForSaleByOwner.com has saved home sellers more than one billion dollars by providing premium Internet marketing services, property pricing reports, real estate guidance and information, downloadable legal forms, as well as live customer support, to help customers independently sell their own homes. The company offers a wide range of listing packages at varying prices that provide advertising, information, tools and resources to empower people to sell their homes themselves. In contrast, a person selling a $300,000 home through a real estate agent would be charged a 6% commission fee and pay approximately $18,000. Prospective homebuyers can browse property database, available at http://www.forsalebyowner.com, at no charge.