Tony LaBrasca sold his Schaumburg ranch home, on his own, in less than 24 hours.
LaBrasca`s newspaper ad and borrowed ”for sale” sign first appeared on Friday, May 4. By Saturday afternoon, he had a $10,000 earnest check in hand, having agreed with the buyer on a price that was only about 2 percent lower than what he had asked.
For his trouble, LaBrasca figures he saved about $14,000 in real estate broker commissions-about $10 for every minute the house was on the market.
”The first weekend we listed it, we got a lot of calls and two couples came to see it,” said LaBrasca, who had sold two previous homes through Realtors. ”On Saturday, I had a handshake and a $10,000 check. It was a shot in the dark, but what a great shot.”
The contract was signed May 15. Financing was approved three weeks later. He`ll close in August.
Simple.
The flip side
Cindy Zlabis` advertisement for her split-level Downers Grove home also appeared for the first time that same day-just across the page from LaBrasca`s ”For Sale By Owner” ad.
Zlabis and her husband fielded 10 or 15 calls, though none was very serious. Then the calls stopped altogether. They showed the house once in eight weeks.
By the first week of July, the couple gave in and hired a real estate agent to market the home. In all, they lost more than $100 in advertising and two months of precious time trying to sell it themselves.
”We were selling it without really knowing what we were doing,”
admitted Zlabis, whose initial motive was to avoid paying the real estate agent`s commission. ”Now we can`t wait for someone to come to us anymore.”
Hoped-for savings, transformed into real losses of time and money.
Simple.
Two simple, different stories from the same page of the classifieds about what can happen when people shun brokers and hang out their own ”for sale”
signs.
On the one hand, quick sales can be made and thousands in commissions saved; on the other, homeowners can suffer from their own inexperience and poor preparation, and eventually end up paying a broker`s commission-or worse, getting a poor price, being misled or entangling themselves in costly, complicated and often doomed transactions.
The greed factor
”People often get into these situations motivated purely by the greed of saving the 6 percent (commission),” said Terry Winkler, a Washington, D.C.-based real estate attorney and resale housing analyst. ”But the people who are successful, meaning they get the most return with the fewest problems, are the ones who aren`t blinded by the money. They know exactly what they are getting into and when to get the right kind of help.
”As by-owner and assisted-sale brokerage become more popular,” Winkler continued, ”people have to realize that there`s more to it than just a sign on your lawn.”
More than ever, For Sale By Owner deals (commonly referred to as FSBOs, or ”fizzbos”) are becoming a staple of the real estate marketplace. Nearly 20 percent of 72,000 homeowners who responded to a recent survey by Consumer Reports magazine said they sold their own homes during the late 1980s. They cited dissatisfaction with the real estate industry, bad past experiences with brokers or too-high commissions as the overriding reasons for going it alone. A trio of options
Meanwhile, the steady rise in the number of fizzbo sellers has wrought market changes as well. As a result, sellers have separated themselves into three general types.
We can call them the ”Fizzbo Rambo,” the ”Dater” and the ”Helping Hander.”
Moving in descending order from most to least difficult, each group has its own set of shared problems and advantages. One common thread, however, is that most real estate brokers regard them with disdain.
Citing the dangers of everything from lawsuits by unsatisfied buyers to the prospect of being taken for thousands of dollars in equity, licensed real estate brokers say they have little respect for their freelance competition.
”This is a story that has been written a million times,” said Thomas Hughes, executive vice president of the Chicago Board of Realtors. ”But amateurs really don`t know how to market realty. The average person has no idea as to the amount of time and effort necessary to sell property.
”I think that`s probably what I witnessed on the corner of my own block,” Hughes said. ”The For Sale By Owner sign had been there for 60 days when it was replaced by a broker`s sign. Within eight days there was a `sold` sign.
”The major danger in selling a home on your own is that you won`t get a price comparable to the price a broker would establish on a professional basis. The use of a broker is really the safest, most efficient way to go.”
Gentle persuasion?
And, like swarming bees to honey, brokers are sure to arrive in droves once a homeowner stakes his own sign on the front lawn, according to homeowners who have gone the FSBO route. They come to cajole, reason, warn and scare with cataclysmic horror stories of fizzbos gone awry.
Still, many sellers who manage to stick to their guns say they are satisfied with the results of their individual efforts.
Before placing your ad and staking the sign, however, the experts say you should stop and make good decisions about how you plan to go about it.
”The best neighborhood for fizzbo sellers is one where the market is strong and there are already other homes on the market,” said Winkler, who has followed trends in resale housing for more than 18 years. ”In that case, there is already strong interest and a good flow of potential buyers in the area and less of a reason to find a Realtor.
”Besides, in most instances, fizzbo sellers can piggyback on the Realtor; that is to say, brokers are already in the neighborhood showing other homes to buyers. The fizzbo seller gets the added exposure to these people without the cost.”
It`s in these strong markets where you`ll be most likely to find the Fizzbo Rambo, the owner who takes on all the responsibility of the sale. From making signs to placing ads to showing the house to settling the contract details, Rambo goes it alone.
But unlike in the movies, Rambo can get into trouble in the real estate jungle. Only those people with a lot of free time and real estate expertise should stand confidently in Rambo`s shoes, because fizzbo sellers and anti-fizzbo brokers agree that the obstacles to successfully completing a deal on your own are daunting.
Can you price the house? Do you have the time and sales savvy to show it? Can you tell if you`re dealing with a qualified buyer or a dreamer? What about handling all the details involved with a real estate contract?
Pricing your home, the first important step, can be started with a little neighborhood reconnaissance. By finding out what other sellers are asking
(almost always more than what they`ll get), you can be sure to stay within the price range of the area. Newspapers also print the selling prices of homes, gathered from public records.
Once you know the price climate, the experts recommend that you get a precise fix on what your home is worth. For a couple of hundred dollars, they say, an appraisal isn`t a bad idea.
”I actually had Realtors come in and do the appraisal for me for free,” said LaBrasca, a Rambo himself. ”They each gave me a complimentary appraisal when they came and made their pitch. I just said `no thanks,` then used the numbers when I was showing it.”
Once you`ve established the asking price, and what the home is actually worth, the next decision is marketing. How are you going to let people know your home is for sale? Brokers are probably right when they say you`re already at a disadvantage by not being included in one of their multiple listing services.
Signs on the lawn and in the neighborhood are fine, but local newspaper ads are a better bet, say those who have sold successfully. Use ad space to your advantage by pointing out the best aspects of your home.
Meet your match
However, most people would rather leave the marketing to others, because it is often the most difficult part of the process. If Rambo decides it`s too much to handle, he usually joins the ranks of the Daters.
Daters, those sellers who seek the marketing help of real-estate matchmakers, may find buyers just a phone call away.
Buy Owner, a Florida-based company with offices in the Chicago area, and Minitel, a national real estate computer database, offer some of the most advanced and far-reaching matchmaking capabilities.
Minitel, one of the most popular computer ”bulletin boards,” offers personal computer owners access to a database containing information on thousands of homes. For a flat $100 fee, a description of your home (broken down by state, city, price and size) will be listed on its national computer network-open to anyone who calls up and asks the right questions.
”If I live in Houston and am looking for a three-bedroom condominium in Chicago, I can enter my criteria and the service produces all the appropriate listings for me automatically,” said Jane Shapiro, president of Dial Direct Response Marketing, which operates the service.
”All the information, including a full description of the property and whom to contact, appears on the screen almost spontaneously,” she said.
”There`s no quicker or more efficient way I know of to identify FSBO property and bypass real estate broker commissions.”
Buy Owner also pairs buyers with sellers on a local level for a nominal fee. Similar to a multiple listing service, homes are listed by size, location and amenities. Buyers simply call the service to request information about homes in the area.
Everything but
For the third group of sellers, the Helping Handers, who are looking for someone to show them the way through the entire fizzbo process, there are still plenty of places to go without paying full commission.
For a fee that usually ranges from 1 to 2 percent of the asking price of the home, companies such as Help U Sell, Direct By Owner and Homeowners Concept offer virtually all the services of a broker-except they`ll never visit your home.
”We handle all calls and make all the appointments,” said Mike Grady, owner of Direct By Owner in Arlington Heights.
”We also can handle most aspects of the sale, including financing. Everything, that is, except chauffeuring people to the home. People want the information that brokers usually offer without the pressure a salesperson seems to bring into the relationship.”
Legal assistance
Buyers, sellers, attorneys and helping-hand firms are unanimous on another point: Once you`ve got a buyer on the line and you`re looking to sign a contract-Rambo or no-get a lawyer. Even if you have picked up a store-bought contract that seems to be fine, get legal assistance, they say. It is said that a man who has himself as an attorney has a fool for a client.
In the meantime, you`ll probably be receiving calls from those agents who`ve noticed the sign on your front lawn. Many times, an agent may promise to have a buyer waiting in the wings, if only you`ll sign a listing contract. According to the magazine Consumer Reports, one way around this-if you don`t mind trading a sure buyer for the commission-is to offer to sign a contract for a specific buyer only. If the named buyer actually closes on the house, then the broker gets the commission. Otherwise, you`re under no obligation to the agent.
And, the experts say, be patient. Selling on your own can take a while, so start early if you have a deadline to meet.
”What people should remember is that it`s very serious business selling your biggest investment,” said LaBrasca. ”But if you want to sell the home with the percentage edge that you have with a by-owner sale, you can give a little.
”Be flexible and you won`t have to put up with the aggravation of open houses and coffee parties, and you can spend the extra money on your next house. It just takes some effort and a little luck.”
