Talk about fierce competition. Down the street from Shawn and Tracy Richardson’s house, which they are trying to sell by themselves, is a collection of houses that marketing officials dubbed Designer’s Row during the recent Parade of Homes.
In the bid for buyers in the Seminole County, Fla., subdivision, the odds stacked up like this: The Designer’s Row houses were brand-new; they were decorated to the hilt by top interior designers; and they were featured for several weeks in a major advertising campaign sponsored by the development, Tuscawilla. On the other hand, the Richardsons’ house is two years old; they have a modest collection of furniture; and their marketing campaign has consisted of a for-sale-by-owner sign in their front yard and an occasional classified ad.
Here are the results to date: The Designer’s Row houses all have been sold-at full price-according to Tuscawilla Realty. The Richardsons’ house, which went on the market in September 1992, is still for sale. The price for their four-bedroom, three-bath house (complete with a screened pool) is $241,900, down from $269,800 when they originally put it on the market. The couple had listed the house with a real estate agent but let the listing expire after the agent brought by two prospects in 90 days.
“We realize this is not the easiest way to go, but right now, it’s our most viable option,” said Shawn Richardson, 35, a theatrical lighting designer. “At the price it needs to be to sell, we can’t afford the agent’s commission and still get the equity out that we need.”
As the Richardsons have discovered, selling a house on your own is no cakewalk. Even advocates say it requires a serious commitment of time and money to attract prospective buyers, negotiate a deal, complete a contract and close the sale.
The rewards
In real estate parlance, people who try to sell a house on their own are called FSBOs-For Sale By Owners-pronounced “fizzbos.” FSBO transactions account for an estimated 16 to 19 percent of all real estate transactions in the nation, according to the National Association of Realtors, which conducted a series of studies on the issue in the 1980s.
Advocates say successful FSBOs are well-rewarded for their efforts.
“It does take work, but think about it: What job can you do for several thousand dollars that doesn’t take work?” asked Liane Bennati, a principal of the Tampa-based Buy Owner Inc., a FSBO advertising service with franchises throughout Florida and in six other states. “If you can show your own house to prospective buyers, you can sell your own house. And the difference is that you put several thousand dollars into your own pocket instead of into a real estate agent’s pocket.”
Bennati recommends that FSBOs budget at least 1 percent of the selling price for marketing costs. Those costs may range from spiffing up the house with a fresh coat of paint to putting up a yard sign to printing fliers to running classified advertisements in newspapers and free real estate magazines.
One of the first tasks is to set a price. Without an appraisal, it’s not always easy to know how high to set a price. One way is to take the price you paid and adjust it for the rate of inflation for each year that you have lived there. You can find out what inflation has been from the public library, Bennati said.
Another way-not recommended by real estate agents-is to invite several agents to your home for a listing appointment. Agents generally will arrive with a list of recent sales in your neighborhood and usually are willing to recommend a price at no charge. You aren’t obligated to sign a listing agreement, but remember that you are taking up the agent’s time. It might be a good idea to go ahead and interview the agents in case you decide to list your house later.
“One really easy way (to set a price) is to do some research in your own neighborhood,” Bennati said. “Call the FSBOs and the numbers on real estate signs in your neighborhood and find out how much those houses are listed for.”
Real estate agents say most people considering the FSBO approach are unaware of the mountain of details and effort that goes into accomplishing a real estate transaction. Not knowing the details holds the potential for trouble, they say.
Disclosure woes
“The biggest thing that worries me about FSBOs is all the legal cases having to do with seller disclosure. The courts are holding that sellers have to be very upfront with any known defects in the house, and that’s something that Realtors are very attuned to,” said Gary Williams, president of the Greater Orlando Association of Realtors.
“If you sell a house and the buyer comes after you later for some defect, then you’re on the hook by yourself.”
Williams said FSBOs may think they are saving money by not having to pay a commission, but they usually are not trained in negotiation and may wind up with a lower price than they could have obtained by using an agent.
Williams also said Realtors are cognizant of the public sentiment that they don’t earn their commissions. But he said that occurs mostly because some agents don’t communicate with their clients well enough about how much work they have done.
“A lot of the work we do is behind the scenes. You know, for every prospect that an agent brings by your house, they may have talked to five or six prospects trying to get them interested in coming to see your house,” Williams said. “And what people have to realize is that this is a very competitive market. There are lot of choices out there.”
But just because it sounds hard doesn’t mean it can’t be done. Bob Schmidt, a copywriter for an Orlando advertising and public relations firm, sold his wife’s two-bedroom, two-bath condo in 1991-at about the same time the United States was going to war in Kuwait, when real estate sales were dropping.
Schmidt said he originally listed the condo for $85,000 with a real estate agent, but it didn’t sell. When he decided to sell it on his own, he dropped the price by $4,000, (eventually selling for $79,900). Schmidt bought a yard sign and several other FSBO signs to post in the neighborhood. He also printed fliers and posted them in apartment clubhouses and laundries.
“Then we sat and held open houses for three consecutive weekends,” Schmidt said. Once he found a buyer, it took another six weeks to negotiate the deal and close the sale. Overall, Schmidt estimates that he spent about $500 and 60 hours selling the condo.
“It was worth it from the standpoint that we really needed to sell because we were buying another house and we didn’t want two mortgage payments when we moved in,” Schmidt said. “But quite frankly, I wish the real estate agent had sold it for us.”
A quick sale
The task was easier for Ray and Nancy Gorney of Forest City, Fla., who sold their four-bedroom, two-bath house for $94,900 two weeks after putting it on the market.
Nancy Gorney said the couple went the FSBO route after interviewing several real estate agents who wanted to price the house for $10,000 less than what they sold it for.
“We were a little insulted,” Gorney said. “We thought the real estate agents wanted us to put a low-ball price on the house just so they could sell it and get their commission easier.”
The Gorneys used the services of Buy Owner Inc. Their house was listed in the company’s monthly magazine, a free publication circulated in convenience stores. It was registered in the company’s national computer database and it was featured once in the company’s weekly television show. They also got a yard sign. For those services they paid $899.
“The man who bought our house saw it in the magazine. It was just what he wanted and he came over the same day,” said Gorney, who plans to build a new home with her husband on a tract they own in Lake County.
“He offered us full price, and we closed the deal at a title insurance company.”
Buy Owners’ Bennati said FSBOs can choose from a menu of advertising services offered by the company. For $299, the company gives you a yard sign, tips on holding an open house and lists your house in the computer database. For $499, you get that, plus a credit-card-sized listing in the free-distribution magazine. For $599, you get additional exposure on the television show. For $899, you get a half-page ad in the magazine and longer exposure on the television show.
“We are strictly an advertising service. We are not real estate brokers,” Bennati said. “That’s why there are no commissions involved.”
