When homeowners go solo to sell their property…
Are you making a good decision when the homeowners go solo to sell?
By Leigh Kamping-Carder
Originally published by TWSJ here
Verley Platt, a 72-year-old Philadelphian, decided to go solo. In April, she listed her stone Colonial home—sans real-estate agent—for $1.1 million. A quick sale at asking price, she figured, could save her $66,000 in agent commissions—worth all the hard work. “That’s a lot to spend for someone else to sell your house,” says Ms. Platt, who runs an online business selling hats to cancer patients.
In the past few years, more luxury homeowners like Ms. Platt have taken the “for sale by owner,” or FSBO, route, according to data from real-estate website Zillow. In April, 3.5% of high-end listings—defined as the top 5% priciest homes in their respective cities—were listed by the owners, almost double the percentage in April 2012, but still a small segment of the overall market.
High-end homeowners, emboldened by a rebounding luxury market, now have digital tools that help with posting and marketing their properties. Sellers can place free listings on websites like Zillow and Trulia or pay to list on sites like ForSaleByOwner.com and Owners.com, which will place their properties on the Multiple Listing Service, a collection of local databases managed by real-estate professionals.
“Sellers believe when there is a lot of activity, it’s easier to sell houses, and when it’s easier to sell a house, then certainly you’re less likely to need the assistance of an agent,” says Eddie Tyner, general manager of Chicago-based ForSaleByOwner.com.
Still, the do-it-yourself approach is far from a sure thing. With her $1,000 investment, Ms. Platt created a website, had professional photographs taken, bought a book on staging, and radically decluttered and depersonalized her home. She also specified that showings would only be for buyers preapproved for financing and hosted a broker’s open house.
The house got zero offers the first month. In May, Ms. Platt hired an agent, which had been part of her plan if her house didn’t sell quickly. The agent added flowers and colorful throws for the sofa to perk up the interiors. New professional photos were taken. The agent then posted the home on MLS.
Within a week, Ms. Platt’s house had more showings than it did in the previous month. She is now in discussions with a prospective buyer. Looking back, Ms. Platt says she underestimated how long it would take to sell her home.
In a 2014 survey of home sellers by the National Association of Realtors (NAR), a trade group that represents agents, 47% of homeowners who decided to forego listing through an agent did so to avoid paying a fee or commission—typically 6%, split between the listing and buyer’s agents. The survey also indicates that homes listed by owners sell at a lower price than agent-brokered sales. “To expose [a luxury home] properly to the correct pool of buyers, you need a broker who has contact with those people to disseminate the information appropriately and correctly,” says Stan Smith of Teles Properties, a Beverly Hills, Calif.-based brokerage.
The for-sale-by-owner market is a small slice of the real-estate pie. Only 9% of sales at all price points took place without an agent in 2014—a number that hasn’t budged since 2012 and is down from 14% a decade earlier, according to the NAR survey. And only 2% of sellers first tried to sell their homes solo before using an agent, the survey found.
Sellers with multimillion-dollar properties are among those likely to want to control the process. “Owners of those properties tend to be professionals—lawyers, as an example—and they feel well-equipped to handle and self-manage their own sale,” says Steve Udelson, president of online real estate for Altisource, the company behind Owners.com, a FSBO listings website.
In terms of Web traffic, ForSaleByOwner.com had almost 2 million unique visitors in April and Owners.com had 189,000, according to comScore, an Internet analytics company. (Mr. Udelson says the number was closer to 319,000.)
By comparison, real-estate website Zillow had 55.2 million unique visitors in April. Realtor.com—which pulls listings from 800 MLS’s but does not let individual homeowners advertise their homes without an agent—followed with 33.8 million unique visitors. No. 3 Trulia had 29.6 million unique visitors, the comScore data show. ( News Corp, owner of The Wall Street Journal, owns Move Inc., which operates realtor.com and mobile products for NAR.)
Mr. Udelson says more sellers have embraced the “quasi-FSBO” approach: They skip the listing agent but pay a commission—often 3%—to the agent who brings the buyer.
What do you think? Is it worth it to skip the commission and going FSBO? What has your experience been like?