- The Washington Times - Wednesday, December 3, 2003

Internet-savvy sellers, prompted by current market conditions, are tempted now more than ever to market their homes without the services of a Realtor. Some have the confidence — and time — to sell completely on their own. Others opt for one of many flat-fee services offering varying levels of marketing assistance and advice that normally would come from a Realtor.

About one-fifth of homeowners attempt to sell their home on their own, according to the National Association of Realtors, although the number varies from market to market.

In Northern Virginia, Debbie Kent, owner and publisher of For Sale by Owner magazine and its companion Web site (www.gotofsbo.com) says, “If you look at the classified ads in the newspaper, you’ll see that 30 percent of them are for private sales.”

Although there are no real numbers to speak to it, some of these sellers, indeed, turn to a Realtor after an unsuccessful sales attempt.

What drives people to attempt to sell on their own? When times are good in the real estate business, it simply becomes a matter of money.

“The main advantage to selling your home on your own is obviously to save the money spent on the typical 6 percent Realtor’s commission,” says Colby Sambrotto, chief operating officer of Forsalebyowner.com, a national company. “Say the average home sells for $200,000. That means $12,000 will be forked over to the Realtors. The sellers in this scenario can save over $11,000 if they use our service to assist them with the marketing.”

The commission becomes a more sizable issue when sellers still owe money on their homes.

“If someone sells a house for $100,000, but they only have $50,000 equity in the home, they will be losing even more of a percentage of their home’s value to the commission,” Mr. Sambrotto says. “The commission comes out of the sellers’ equity because, obviously, the bank isn’t going to take anything but the full amount still owed on the loan.

“In this scenario of someone with $50,000 equity in a $100,000 home, the 6 percent commission [$6,000] will represent 12 percent of the owner’s equity,” he says.

Mr. Sambrotto points to other advantages of FSBO real estate.

“The owners control the schedule of visitors to the home rather than being on an agent’s schedule,” he says. “Plus, sometimes it helps to have the seller meet directly with potential buyers to convey what is attractive about the home and neighborhood and answer questions.”

There are disadvantages.

Sellers must be available to show their home to buyers, which can be difficult for people with busy schedules. Owners who need to relocate immediately or who are selling a distant vacation property might want to reconsider selling their own property.

Realtors say sellers will be better served by working with a professional.

“In the current market, most homeowners will make a profit by selling a home themselves,” says Mansur Habib, a Realtor with Long & Foster Real Estate Inc. “However, the prices they can obtain are statistically 10 percent below what a high-quality real estate agent can obtain, according to the National Association of Realtors.

“Therefore, they typically lose between 3 and 4 percent of their home’s value — sometimes even more, even after subtracting the commission they would have paid,” Mr. Habib says. “When sellers try to market their home at the same price or a far higher price than a real estate agent would suggest, the home will usually sit on the market for a long time until the seller decides to substantially lower the price or hire an agent.

“In pricing the property, most sellers compare their properties with properties that may have been sold by an agent whose commission was priced into the house,” he says. “Without the expertise of an experienced Realtor, they lose valuable marketing time and money.”

Some companies cater to FSBO sellers, offering assistance, marketing expertise and, often, additional advice on a flat-fee basis, which, they say, more than makes up for the lack of a Realtor.

Forsalebyowner.com offers three packages to its customers, priced from $89 to $249, which include a listing on its Internet site, virtual tours, maps to the property and a 3,000-word description. A yard-sign package is included with the more expensive option.

“We offer an efficient way to market property, including access to the largest for-sale-by-owner site,” Mr. Sambrotto says. “We have more than 1 million unique visitors to our Web site each month, and 99 percent of the traffic is buyers.

“In the past, sellers had fewer choices, just a small classified ad and maybe a yard sign,” he says. “With the Internet, sellers can include far more information about their homes to the buyers.

“This isn’t rocket science,” Mr. Sambrotto says, “and people need to realize that for the parts that could get stickier, they will have legal advice.

“Most likely, they will need a real estate attorney to handle the contracts and to represent them at settlement, whether they are working with a Realtor or not,” he says. “Our company can recommend a reputable real estate attorney to our clients.

“The hardest part of a FSBO sale is to find a qualified buyer,” Mr. Sambrotto says. “We provide a free service to sellers to check on the buyers and prequalify them to see if they can afford the home. We recommend that our sellers do not show their home to someone unless they are willing to be prequalified for both financial and security reasons.”

April Raimond of For Sale by Owner Advisors Inc. is a real estate broker as well as an owner of the FSBO company, which serves the Washington area.

“We charge a flat fee for everything, which starts at $995 and includes a variety of services,” Miss Raimond says. “The core element for the seller is that the seller must show the house and do the scheduling for these appointments.

“For the flat fee,” she says, “the sellers receive from us the use of yard sign, unlimited phone counseling and help with determining the price of the home through a comparative market analysis. The sellers need to set the price for their home as an educated decision by looking up the comparable homes sold in their neighborhood. This can be pretty easy to do if they live in a typical subdivision, but if not, we recommend that they pay for an appraisal.

“Most important,” she says, “we offer assistance in negotiating the contract, reviewing the contracts and making a counteroffer. The important thing for sellers to realize is that everything must be in writing in this business; nothing can be verbal at all.”

The staff at For Sale by Owner Advisors includes Realtors. They can offer customers access to the Metropolitan Regional Information Service (MRIS). Access to this listing service provides a wider advertising market for a property but will likely result in a purchaser who will be represented by a buyer agent.

The seller will then need to pay the commission — typically 3 percent — to that agent at settlement.

“We feel we can offer the best of both worlds to our customers, who can choose if they want their home listed on the MRIS or not,” Miss Raimond says. “Sellers can choose to sell the house on their own with our services, or they can decide to market their home through the Realtors’ system. If an agent comes in with a good offer, then the seller can choose to accept that offer and pay the buyer agent’s commission.”

Help-U-Sell, a franchise with several branches in Maryland, is expected to expand into Virginia in 2004. It offers another approach.

“We do not charge an upfront fee at all,” says Mike Kennedy, the Washington regional owner of Help-U-Sell. “We charge a flat fee to sellers rather than a commission because the seller must do some of the work.

“The fee is paid only if the house sells, regardless of the price of the house,” he says. “Help-U-Sell will charge a flat fee to a seller at settlement, and in return, the seller will receive all the same things that a traditional Realtor would provide, such as writing all contracts, negotiating, ratifying the contract, qualifying all buyers, tracking buyers on a daily basis and following up with home inspections and appraisals and going to settlement to represent the seller.

“We give the sellers brochures, signs, sign-in sheets and advertising. In return, we ask for the seller to participate by holding open houses and showing the house to potential buyers,” Mr. Kennedy says.

Each franchise of Help-U-Sell is individually owned and operated, so fees can vary depending on the location.

“A typical fair flat fee is approximately $4,950,” Mr. Kennedy says. “The whole point of using our service is to save money, and with the market so good right now, everyone sells their home. On average, about 50 percent of our customers sell their home to a buyer without a buyers’ agent, which saves even more money. Even when they do have to pay a commission, the worst-case scenario on a $300,000 home, which would typically cost $18,000 in commissions, would cost $14,000 with us.”

Ms. Kent’s For Sale by Owner, with Virginia locations in Woodbridge, Sterling and Fredericksburg, offers a menu of services for fees ranging from $60, for a basic Internet and magazine ad, to $475, for contract and closing services, along with a variety of other options.

“Anyone can sell their own home with the right marketing. Our typical client is anyone, from the timid person to the CEO,” Ms. Kent says.

“Where we come in is in providing an affordable means by which to market your home, getting the word out via as many methods as possible,” she says. “We help our sellers target the street traffic with professional signage. Our highly distributed magazine is available for free and is strategically located at high-traffic pickup points.

“We can help get the words out via the Internet, complete with slide shows on eight major sites,” Ms. Kent says. “We hold training and educational home-selling seminars for our sellers, where we arm them with the information they are going to need to prepare, market and sell their homes. Home pricing and appraisal services are offered.

“Contract-writing and settlement services are also available for a nominal fee from our in-house legal department, as well as pre-approval and financing services through our in-house mortgage company. We are there to hand-hold and provide moral and technical support all along the way.

“The seller becomes his or her own agent,” Ms. Kent says. “They show their own home. Who better to answer questions about the neighborhood, the home and its features? Our way is just taking a common-sense approach to home selling. We are attempting to demystify the process.

“Frankly, in this high-tech age, I see it as the way of the future,” Ms. Kent says. “Based on the seller’s home location, time frame and finances, he or she can tailor a package to meet their needs.”

At Virginiafsbo.com, Steve Sherwood has been providing a free package of assistance to FSBO sellers for the past seven years.

“I provide a booklet of advice on what a seller needs to focus on in order to sell his house, plus signs and an 800 number with the ability to provide potential buyers with recorded information about a property,” Mr. Sherwood says. “I advertise properties on my Web site, plus about 100 others that are available.

“I’m also a mortgage broker, so I provide prequalification for all buyers and contract advice for the sellers,” Mr. Sherwood says. “I hope that as long as I provide the sellers with good advice, I’ll have a shot at handling their loan on the home they buy, plus the loans for the buyers that I prequalify.”

Now, more than ever, sellers have choices when it comes to marketing their homes.

“Real estate is complicated, and some people are afraid of selling their home on their own, especially if they have an expensive home,” Miss Raimond says.

“Some people don’t want to deal with selling their home at all and choose to use a full-service Realtor. The Internet has increased everyone’s options, and most of our customers are pretty computer-savvy,” she says.

“I think offering FSBO services and allowing customers to do some of the work themselves is the way the real estate business is going,” Miss Raimond says. “People want to make more of their own decisions these days and have more control.”

LOAD COMMENTS ()

 

Click to Read More

Click to Hide