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Going solo vs. hiring an agent

The moribund housing market has put a new spin on that eternal real estate argument: Should you hire an agent or sell the place on your own? What’s new is that, in this age of rising anxiety and falling prices, being able to hang on to the commission might well mean the difference between coming out ahead or taking a bath.

“Many people are turning to us because they’ve worked with agents for six to 12 months and they need to change direction,” said Greg Healy, vice president of operations for ForSaleByOwner.com, which provides services to FSBOs. “Hiring an agent is a luxury that many people cannot afford.”

For some sellers, every nickel can be critical in a climate of generally declining prices: The Standard & Poor’s/Case-Shiller monthly study, for example, showed Chicago-area prices dropping 9.4 percent in May from a year earlier.

Healy suggests that 20 to 25 percent of sellers now try it alone—though it’s unclear what percentage of those close the deals. The National Association of Realtors in March said the percentage of FSBO sellers that succeed on their own had fallen to 12 percent in 2007 from 18 percent in 1997.

“The odds have not been worse, in my memory, for someone to try and do it themselves,” Jim Merrion, regional director for Re/Max Northern Illinois, said of the increase in for-sale-by-owner listings. He said brokerages are seeing a wave of clients who have gone the FSBO (pronounced “fizzbo”) route and given up.

Still, a recent poll of its users by FSBO.com, another by-owner listings site, says that though the average number of days on the market for FSBOs nationwide lengthened to 114 from 93 in the second quarter, those who sold averaged 96 percent of their asking prices.

Merrion estimates that Chicago-area commissions average 5 to 5.5 percent, a figure in line with some industry studies. It’s also a number that had a big effect on Ed Corboy Jr., who in mid-July put his Wilmette townhouse on the market for $449,900, aiming to sell it himself.

He said he did extensive research, and he’s willing to give the effort at least 10 weeks.

“If I were going to list with an agent, I would have added another 10 percent to the price,” he said. “But I realize by doing that it would put me in a price bracket that’s higher, and would eliminate some potential buyers who wouldn’t qualify for the [higher] mortgage.”

And, with a 5 percent commission, would have cost nearly $23,000.

After about one month on the market, Corboy estimated he had spent about $970 for print and online advertising. And he—aided by relatives and friends—had hosted seven open houses, some of them on Saturdays. He says 45 to 50 people have seen the place.

But the asking price came down, fairly quickly, to $429,900.

At midweek, he said he believed he had two interested parties, who had asked for copies of the townhouse’s homeowners association bylaws—though no firm offers had materialized.

A couple of open-house visitors had told him they would like to buy his property—if they can sell their homes first. He says he’s not discouraged.

“I’ve done my homework, I know what else is out there, and I know I have the best value on the market,” Corboy said. “If it takes 10 weeks of open houses every Sunday, then so be it.”

That’s what Jill and Michael Sylvester thought when they set out to sell their Old Town condo in November. After advertising it online and numerous showings and open houses—and no offers—they called an agent in May.

“The reason we went on our own was to save ourselves the margin, the commission,” Michael said. “But there is a certain point where my time and my wife’s time are worth something, and we feel that all the time and effort we put into it on our own, we could have had somebody else doing it for us. The cost will be about the same.”

“They got worn down,” said @properties agent Dana Gerstenschlager, who brought in a stager to furnish several rooms of the vacant, fourth-floor walk-up, at a cost of $3,000, paid by the Sylvesters. He also has hosted open houses, sent out mailings and placed listings at numerous online sites.

The couple’s listing agreement sets the overall commission at 6 percent, Sylvester said. At midweek, Sylvester estimated the unit was getting half a dozen showings a week.

Gerstenschlager also got them to lower the price, to $500,000, including parking, from $535,000, he said.

“Today, the seller, more than anything else, needs a coach,” Merrion said. “The big mistake I see happening most frequently when properties haven’t sold is that nobody sat the seller down to give them the facts of life.”

But Healy said those “facts of life” are widely available.

“No one needs an agent, is what we tell people,” said Healy, whose firm is owned by Tribune Co., which publishes this newspaper.

He said the home-sale process has three major components. “You need to be able to price your home, market your home and transfer the title.”

For the first, the gateway to pricing information has been opened for consumers, he said. “With the advent of the Internet, you can find comparable-sale data and current market conditions at your fingertips—this is open and free information.”

The Internet also has simplified marketing, he said, with dozens of companies, including his own, that will place homes on local multiple-listing services and myriad other sites. His company offers services for FSBOs that range from $90 to $899; he said many firms will charge $200 to $300 to just place homes on MLSs.

Real estate lawyers and title companies can handle the third need—title transfer and other services for a closing, he said.

Merrion, too, sees three issues, which he says call for an expert.

“What kills a lot of FSBO deals is that they aren’t equipped to handle what I call ‘the hurdle trinity,’ ” he said. “First you have to clear the inspector hurdle, then the appraiser hurdle and the lender hurdle.

“And you’ll have other issues come up, and those really frustrate somebody who is trying to sell by himself,” he said, citing legal disclosures and haggling.

“They have a difficult time negotiating—they get aggravated with the buyer because it’s person-to-person and you don’t have the benefit of a buffer, of an agent in between,” he said.

Pricing, Merrion said, is no easy task in this market. “Sellers say, ‘what’s at the top of the market?’ And they price it that way. But today, you have to see that there are 12 other competitors and you have to go to the bottom of that list, just get under those, and you’ll automatically get more traffic.”

All this said, neither the Wilmette townhouse nor the Old Town condo has sold.