Friday, July 20, 2007

DIY Listings (Y2/M3/D20)

The WSJ Real Estate Journal has a nice little how-to feature about selling your home on the Internet.

Here's an excerpt:

"Despite the recent slump in the housing market, many Americans are still paying a walloping 6% commission to real estate brokers.

"At first blush, 6% may not sound like much, but consider: According to the U.S. Census Bureau, the average price of a home is $313,000, which means the average seller has to pony up nearly $19,000 in broker fees. This is a hefty penalty for selling your own home, one that more and more Americans are unwilling to pay.

"Many homeowners are now opting to market their property directly to the consumer using online services such as Yahoo Real Estate and Craig's List. There's good reason for going to the Web: One recent survey, conducted by the National Association of Realtors, found that 80% used the Internet when searching for a new home." (Emphasis supplied).

I think it's great that people are turning to the Internet to manage their own listings. I suspect that, at minimum, most homeowners would do a more conscientious job when writing the description of their property (honestly, it fires me up every time I read a hot mess description, see e.g. the post below). However, as I've said before, I think a listing agent has value.

Sure, there are listing agents who don't truly earn their commissions; they put up lousy photos, they write lousy descriptions, and they are useless at showings (e.g. "Gee, I don't know when they put the roof on, I'm not sure how old the central air is...."). But those are the bad ones. A good listing agent puts up virtually pornographic photos of your home, gets the word out far and wide, and prices the home appropriately. It's been my experience that FSBOs (that's "for sale by owner" pronounced FIZZ-boe) get very excited about saving that 6%, but they don't pass any of the savings on to the buyer. If you aren't offering me a discount, why should I take the chance on you? You could disappear into thin air tomorrow but a brokerage will still be there tomorrow for me to sue (god forbid!).

But what do you guys think? Would you buy a FSBO? Why or why not?

11 comments:

Janeen said...

I wouldn't buy a FSBO for lots of reasons. They are hard to find because the seller usually just nails a sign to his tree. It's uncomfortable walking through the house with owner who says things to you like: "That's an expensive counter! You can't get nicer than that!" It's too creepy and personal.

Kate said...

Hi Janeen:

I have to agree that it is a little uncomfortable touring a house with the owner. You feel obligated to compliment things and especially when they something awkward like: "Why wouldn't you buy it?" The truth (it's way overpriced for this shotgun shack) would certainly offend. But is that really enough to not buy? I dunno.

east coast reader said...

There's an intermediate position between using a full-service seller's agent and a FSBO -- using a limited-service seller's agent -- at least in those states in which the Realtors haven't made life very difficult for the limited-service agents and discount brokers.

In Massachusetts, which has an open MLS as a consequence of some antitrust litigation against the Realtors, there are firms that will place your listing on the MLS for a fee of $555, plus the seller's agreement to pay a "finders' fee" of 2-2.5% to a buyer's agent if the buyer ends up being referred by an agent. If the buyer ends up contacting the seller directly, no fee has to be paid.

For the $555, you get full exposure of your property on the Mass. real estate network (the database that all the Realtors' Web sites work from) plus Realtor.com.

As a seller, what don't you get from this arrangement?
1. Market analysis and pricing suggestions. But you can do this yourself by following the market online, and for about $500, get a second opinion from an appraiser.
2. Negotiating with buyers - but it might be better to work with an attorney rather than an Realtor on this aspect of the process.
3. Having to leave your house on short notice when buyers want to look at it.

Is this worth a savings of at least 3% on Realtors' commissions? Would you get as many people to look at your house as if you listed it with a full-service Realtor?

Anonymous said...

You lawyers are all alike. Sue! Sue! Sue!

Kate said...

East Coast Reader:

As a buyer, I don't hesitate to go to Help-U-Sell, Redfin, or other similar types of listings. But, I suspect that I am not like most buyers who use a traditional agent.

And that's where the problem lies. Traditional agents won't show a house if they don't believe they will get full commission. I also think they don't like to show discount listings because they feel it is taking work away from full-service firms. So my guess is that in fact you will get less traffic at your listing.

But it only takes one person to buy your house so it still might sell just fine. Or it could take an awfully long time.

Anonymous:

Yes, I suppose we are. So, I'm going to have to object to your comment as non-responsive.

Lyle said...

I think FSBO is the best opprotunty for a deal. I use forsalebyowner.com all the time.

Maureen Francis said...

Yep, my brokerage will always be there to be sued. A true benefit of using a Realtor. Hopefully there are more.

I am 100% certain that I can offer broader and better exposure than anyone can get on their own as a Realtor. I also know that I can negotiate better than most people can on their own. In addition to some of the things you mentioned, a seller has added security when they list their home. There is an agent to prequalify the lookers and the agent is there during showings. Listed homes also tend to sell at more than 12% than unrepresented sellers, so that 6% they just saved was actually a loss. I could go on, but I will spare you.

Kate said...

Hi Maureen:

Thanks for your insight and I have to say I agree. It's not that you can't sell on your own, I just think a listing agent (a good one) will probably fetch you a higher dollar faster.

But maybe one day housing will go the way of automobiles. You know, you can go and buy one off a lot, or you could go to a private party. I suppose that will happen when private parties sell their homes at meaningful discount. Everybody knows that when a private party sells their car they offer a steep discount over the dealer's price. I wonder why people don't get that when it comes to houses.

Patient Renter said...

"I am 100% certain that I can offer broader and better exposure than anyone can get on their own as a Realtor."

Translation: I am 100% certain that your lack of experience, and might I even go so far as to say: incompetence, make it such that I can market your home in more ways than you could imagine. Signs, mailings, posters, word of mouth, the internet - these are things you can't even fathom. So don't bother trying.

Anonymous said...

Patient Renter: I guess that's why you are still renting. BTW-your landlord thanks you!

Agent 21

Maureen Francis said...

Patient renter,

I did not call unrepresented sellers incompetent, nor do I think I implied it. I have listed a lot of homes after the owner attempted "by owner." I find that those people have a very large appreciation for our efforts and results.

Since I have spent most of this decade focused on listing and selling homes, and most "by owner" sellers might sell one home in the same amount of time, I would hope that I have some better tools at my access than the average joe.