Grace Mason has nothing personal against real estate agents, except that she couldn’t find one who seemed interested in selling her modest $153,000 condo in pricey Palo Alto, Calif. “No one offered me anything in the way of marketing, and everyone charged a 6-percent commission,” she says.
So the 72-year-old retired schoolteacher decided to sell her home herself. First stop? Some computer courses at nearby Stanford University, where she learned to create her own Web page on the Internet. She scanned in six pages of pictures, and she was in business, using the 1990s cyber-equivalent of the age-old “For Sale By Owner” sign in the front yard.
Mason started the page five months ago and averages two or three hits a day and as many as 20 on weekends. “That’s a lot more than I’d have with a Realtor,” she maintains.
Though she hasn’t received any offers yet, two people have shown enough interest to visit the property in person, and Mason is confident she will get a contract soon. She has even begun shopping among brokers and lawyers for some help negotiating the deal, in exchange for a low commission. “I need every penny, especially if I eventually have to lower the price,” she explains.
Like Mason, about 20 percent of homeowners sell their homes without using a real estate agent, according the National Association of Realtors. “That percentage has remained remarkably steady over the years,” says association spokeswoman Elizabeth Johnson.
But times are changing. Mason’s home page is just one of the new ways that owner-sellers are reaching out to find home shoppers on their own. And as sellers and buyers become more sophisticated, low inflation keeps equity in check, and real estate agents lose their iron grip over the industry, many real estate professionals expect that owner-sellers will take a greater share of the home-selling market in coming years.
Already there are signs that homeowners choosing the route of for-sale-by-owners, known in the trade as FSBOs (pronounced “fizz-boes”), are becoming more confident. According to the Realtors association, the number of people who have sold their own homes and say they would do it again has risen 6 percent since 1989. (Overall, 43 percent of the people who have handled their own sales say they would do it again.)
Association studies show that more than a quarter of owner-sellers bypass agents because they are selling to someone they know, such as a relative, friend, or neighbor. Thirteen percent sell to a buyer who contacted them first. Less than 10 percent abjure agents because they don’t like real estate agents, an agent was unable to sell their home, or they hold a real estate license themselves. But 52 percent are merely looking at the bottom line: They simply don’t want to pay an agent’s commission.
With price appreciation levels well below those of the high-flying ’80s, home sellers are looking hard at what real estate agents have to offer. “When you’ve only experienced three or four percent appreciation, you don’t want to spend six percent of the sales price on a broker’s commission,” says Daryl Jesperson, executive vice president of Re-Max International in Englewood, Colo.
Consequently, owners are looking for ways to do all or part of their home’s marketing and negotiating themselves. That has given rise to discount brokerages, “flat-fee” services, and menu-based packages based on the exact amount of hand-holding a seller wants and needs. “The evolution is toward fee-for-services,” says Jesperson. “real estate agents will have to justify exactly what they are being paid for.”
Carol York of Canton, Conn., saw an opportunity to serve the owner-seller market in 1988, when she was buying and selling rental properties. “It was an untapped niche,” she says. So she began For Sale By Owner Connection, a catalog of for-sale ads given away at supermarkets and printed every three weeks. At first, the catalog attracted only 20 home ads; now it averages 240 an issue and covers much of Connecticut. “More and more, people want to deal directly with an owner,” she says. “They don’t want a buffer.”
But people also want choices when they sell their homes themselves, so York also offers an ascending level of services. Her basic sell-it-yourself package costs $300 and includes three months’ worth of catalog print ads, an ad on the Internet, a listing on an 800-number hotline, and a kit comprised of a sales contract, property disclosure forms and buyer qualification forms. Her most extensive package, for $1,000, adds a listing in the area’s multiple-listing service, a year’s worth of catalog print advertising, and yard signs.
York says that most of her customers are selling homes in modest price ranges, from $200,000 to $300,000, but that more affluent sellers are starting to join the ranks. “One house was advertised at more than a million dollars,” she says.
She also is noticing a change in how local real estate agents perceive her services. “They used to consider us a threat,” she says. “Now, they use us as a catalog of potential listings.”
But the relationship between real estate agents and owner-sellers still is uneasy. “We said we would co-operate with real estate agents, but they wouldn’t co-operate with us,” says Michael Ecoff, who has just sold his Palo Alto home. “Some were unfriendly, acting as if we were taking money out of their pockets. And some were unscrupulous, saying they had clients interested in the house but never bringing them by.”
Ecoff, an electrical engineer, took a more traditional route with his marketing plan. Aware that demand was high in his town on the peninsula between San Francisco and Silicon Valley, Ecoff invested less than $100 to advertise in a local newspaper and make up fliers. He held two open houses. Just three weeks after he put the house on the market for $465,000, he sold it for $445,000 to a buyer who paid all cash.
Then Ecoff put a contract on another for-sale-by-owner house on the same block. Although this deal is taking a little longer to consummate, since he is applying for a loan, Ecoff anticipates that the time from putting his old house on the market to moving into his new one won’t exceed two months.
Of course not everyone turns to trying to sell themselves because they are in the midst of a hot market. Some try because they are mired in a soft market and feel they need some special attention.
Robert Spear has been trying to sell his passive solar home on five acres in Accokeek, Md., a rural community outside of Washington, D.C., for a year and a half. For a little more than a year, he listed the house with a real estate agent, whom he liked, but received no offers. “We’re asking $493,000, which puts us in a very crowded segment of the market,” he says.
Spear and his wife, Deena, make violins, violas and cellos in a workshop on their property. The novelty of their profession tends to excite visitors’ curiosity, so they, rather than the agent, wound up fielding most of the questions when potential buyers toured their home. “We felt as if we already were doing most of the work,” says Mr. Spear.
Finally, in exasperation, the Spears canceled their listing and, like Mason, Mr. Spear designed his own Web page. “I’ve received 125 hits in less than six weeks,” he says. “No Realtor ever brought 125 people to visit our property.” He also has spent about $100 for fliers and other advertising.
Since going on his own, Spear hasn’t received any serious offers, but he has been inundated with letters from agents trying to nab his listing. He doesn’t want to relist, but to keep brokers interested, he is offering a 4-percent commission plus a bonus to any agent who brings him a buyer. “We’re more heartened now than we were when we listed with an agent,” he says. “Before, weeks would go by, and we’d have no activity.” Still, “if you’re under any time or financial pressure, it’s probably best not to do it yourself.”
