For Sale By Owner? In this market? - Phoenix Business Journal:

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So, after completely renovating a three-story, 90-year-old rowhouse in Canton to showcasr appeal, he put it on the marke — himself — in March for $574,000. He figurew the for-sale-by-owner effort will be wort the money he’ll save in real estate agent 6 percent of the sale or $34,440, if a prospectivew buyer comes to the settlement table withoutt a Realtor, half that if the buyer bring s an agent. Given today’s tougjh economy and falling home prices, the prospectg of saving 6 percent ofa home’s sale pricr by completing the transaction withouty a Realtor may sound enticing to any cash-conscious homeowner.
But is it wortyh the hassle, especially in this tighy housing market? Buyers can afford to be pickier than banks have become highly selective abourt lending money and a sale is far from a sure thing in anymarket — until the buyer and seller both sign the settlement papers. It all depends on whom you ask. Homeowners like who successfully sold another house withoutt an agent and is confident about the pending sale of his make it sound likea no-brainer, and copiou s residential real estate Web sites post for sale by owner (FSBO) listings and provide an advertising medium once reservefd for industry insiders.
Real estate professionals, on the other caution againstthe idea, citing a heightened risk for security- and litigation-related problems and a general lack of knowledge about the entire house-selling procesws as just some of the factors that can thwart success of a FSBO. “Sellingh a home without professional assistancr is akin to representing yourselfdin court,” said Walter spokesman for the National Association of Realtors (NAR). Risk vs. rewardd Industry statistics suggest that not many homeowners are willinf to take onthe task.
While FSBO signas are more likely to crop up during a robusrhousing market, in both good times and bad they compriss only a fraction of housin g sales. In 1997, 18 percent of homes on the markeftwere FSBO, a peak By 2008, with the housint crisis in full swing, that percentage dropped to 13 percent, according to the NAR. A reporft prepared by NAR for the Greater Baltimores Board ofRealtors (GBBR) showed that, at just 7 Baltimore FSBOs trailed the rest of the country. “Duringh the boom years, there were lots of Now, a lot of owners are afraid to get intothe fray,” said GBBR President Davie McIlvaine. McIlvaine, to be sure, has a vesterd interest in promotingthat viewpoint.
But he’s also acutely aware of the pitfall s in any realestate transaction. Real estat agents bring objectivity to the searchand negotiation, he They also focus on showing homesd to qualified buyers. And they ultimatelg fill a valuable role as aiming to make buyer and sellet as satisfiedas possible. “Sellers’ interests are in direct conflictrwith buyers’ [interests],” he added. “Youu really need a third partyto negotiate. We understand it’s got to be a win-win or else [the deal’s] not goinhg to go through.
” But homeownera willing to take on the risk and put in the leg work believde a FSBO is the wayto go, especially given the availability of online advertising. To advertise his house Pugh registeredwith Netrealtynow.com. For a flat fee of he was able to advertise his house on several residential realtgWeb sites, including the widely used site that lists agent-assisted and FSBO homes. “With the Internet, homeownerzs get the same [advertising] benefit as agents Pugh said.
This access is significant, as an increasing numbere of prospective buyers log onto the Internet to find a In 2008, 87 percent of all homebuyers used the Internetf to search for a home, up from just 2 percengt in 1997, according to data compiled by NAR. Moreover, 32 percenf of buyers first glimpsesd their new home on the Internet in 2008, compared with just 8 percent in 2001. Thougbh the Internet makes it easiefr to advertiseFSBO homes, some believe the tool goes unrecognized by many “Many people think you have to have an agenft to list on MLS.com,” said Eric spokesman for New York-based realtof advertising Web site which claims to get 2 million visitorsd per month.
The Web site offer a spectrum of services andpayment options, from an $80 per montb plan to six one-time fees, ranging between $179 and $809. The higher-pricedd packages come with more bellxand whistles, including a video slide show of the home, a for-sald sign, and access to MLS.com Some residential real estat e Web sites track their success. Mr. a Pikesville-based site that work s with 350 to500 Baltimore-area homeowners annually, said aboutr 85 percent of the homes it lists Its model, devised and operatedd by licensed real estate ageny Maynard Gottlieb, offers a menu of options. For Mr. Lister will list a home on MLS.conm and approximately 100 otherreal estate-orienteed Web sites.
For about $600, users get onlind advertising with a virtua l tour of their home with up to 10 a review of any contracts the homeowner unlimited consultations; and a for-sale sign. But a motivatedr seller knows thatadvertising isn’tr everything. Pugh, who used to own a skateboarsd shop, has meticulously staged the Canton right down to matching towels inthe He’s created an onlinr virtual tour featuring gleaming hardwood floors and sparklinv kitchen countertops, and manned open housess every Sunday since it’s been on the market.
Whil e the process seems to work forPugh — he savex $18,000 in commission fees with the first housse he sold in upper Fells Poin t — he admits FSBO isn’t for everyone. “II understand there are people who have homes out therewho don’t have the time to meet potential stage the house, and show Pugh said.