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For sale by owner? It's no primrose path
Special to The Seattle Times
When Jill Gross and her husband, Roger Honz, held the open house for their property in Seattle's Green Lake neighborhood, it was a seller's dream.
The weather cooperated. The bright, sunny sky enhanced the house's view of the lake as potential buyers streamed through the property, in one of Seattle's hottest real-estate neighborhoods.
Better yet, Gross and Honz already had a written offer, the result of an e-mail they had sent out with a descriptive flier attached. The open house was the backup strategy in case the initial offer fell through.
But the best part for the couple, who are moving to another house in the neighborhood with their two young children, was the chunk of money they saved by selling the property themselves.
The listed the house for $759,999, pocketing about $45,000 (the 6 percent commission they would have had to pay real-estate agents).
In real-estate parlance, a house for sale without an agent is called a FSBO, short for "For Sale By Owner." After their experience, Gross and Honz are enthusiastic proponents of FSBOs.
"I would definitely recommend that people in this market think about it," Gross said.
Sometimes selling your own home is easy, especially in a hot market like Seattle. Sometimes it's tough. Either way, it's work.
Before you put up that sign, know what you're getting into. And prepare well — that can make the difference between success and failure.
In 2005, median prices for single-family homes in King County rose an average 9.8 percent from 2004. The market is robust around Central Puget Sound, and the market still strongly favors sellers in King County as demand continues to outstrip the supply of homes for sale.
Yet when spring arrives in Seattle, agents' "For Sale" signs still sprout almost as fast as dandelions. In the past few years, the number of FSBOs nationwide has remained relatively flat.
In a National Association of Realtors (NAR) survey about 2005 home-sales trends, 13 percent of U.S. sales were FSBOs, down from 14 percent the previous two years.
While FSBOs might look great on the surface, industry experts and those who sold their own homes agree that homeowners need to consider plenty of caveats and potential pitfalls when they think about selling without an agent.
"When people start to pull back the covers on everything involved in selling their own home, they may decide that hiring a professional real-estate agent is the best path after all," said Brett Clifton, co-owner of Personal Real Estate Support Services in Seattle, which provides consumer real-estate information and links buyers with agents.
So where does a FSBO seller begin?
"I tell them that they need to think very carefully about three factors: quality, price and marketing," Clifton said.
Love is blind
One of the biggest obstacles for homeowners is their connection to their home, which can blind them to serious flaws in the structure or make them hesitant to remove furniture and other personal belongings before showing the property.
"The emotional and sentimental values invested in their home can prevent people from seeing their house objectively in terms of real-world value," Clifton said.
On the other end of the spectrum, he said, if people feel their property doesn't have much value, they may underestimate the importance of hiring an outside consultant to "stage" the home. Staging, common among real-estate agents, involves hiring a design expert who can suggest changes in furniture, paint and even the arrangement of flowers or pictures to create a more alluring environment for potential buyers.
Another critical factor is price.
The growth of Internet-based real-estate information provides homeowners with access to data that, even a few years ago, was hard or impossible to access without hiring a real-estate agent.
Today, Web sites such as Zillow.com and Redfin.com can offer fast information on the approximate market value of a house. But sellers still have to do a lot of homework — and footwork, attending open houses — to make sure they are setting the right price.
"Many FSBO sellers will shoot too high in the asking price and wind up shooting themselves in the foot," Clifton said. "The process of getting a crowd to your house in the first open house is critical, but if the crowd feels the price is too high, nine times out of 10, they won't return even when you lower the price. There is a lot of psychology mixed in with the economics, and you have to get it just right."
Getting it right also means understanding how to correctly market a house. FSBO sellers need to learn the tips and tricks — such as not skimping on advertising, avoiding details on square footage in listings and getting friends or family members to circulate during an open house, Clifton said.
FSBO sellers can get a bare-bones, do-it-yourself kit for about $600 from some online services, but the right kind of preparation may require spending several thousand dollars for marketing, fixing up the house and yard, and hiring a staging company.
Once sellers accept an offer, they face the challenge of understanding and managing all the paperwork involved in a home sale.
"The documentation in a house sale is by far the most technical part of the process," said Victoria Pearson, a Seattle real-estate attorney. "It can get really messed up if people think they can just get some generic forms and fill them out.
"People try it all the time. But there are lots of idiosyncrasies in the forms, and with just a couple of incorrect words, you could wind up in court."
At a minimum, Pearson says, FSBO sellers should find a real-estate attorney and schedule time to get an overview of relevant documents.
"It's money well spent," Pearson said. "Lawyers usually charge an hourly rate and not a percentage. This," she said, laughing, "is one instance where using a lawyer is actually a lot cheaper than going with the other guys."
For some, trying to sell without an agent became more than a headache.
Jerry Gritner, who put his house in the Whispering Heights neighborhood of Bellevue up for sale, thought he did everything he should have, including paying to list the home with the Multiple Listing Service and offering buyers' agents a 2.5 percent commission.
"I set the price based on my knowledge of the neighborhood and my experience from being in the construction industry," he said.
After several weeks with no offers — weeks in which he watched comparable houses in his neighborhood sell faster and for more money — a frustrated Gritner hired a full-service agent to take over the sale.
"The trouble is, based on what I know now and from talking to real-estate agents, if there are 10 houses on the market, and nine of them are offering 3 percent to buyers' agents while the other one offers 2.5 percent, the agents simply won't work very hard to bring buyers to the house with the lower commission."
While Gritner says he understands agents trying to make the most money they can, he's still frustrated.
"The [real-estate] industry has a grab on the market," Gritner said. "Potential sellers and buyers created this condition by letting agents take that full percentage and drive around in $50,000 cars."
Gradually, though, many industry observers say discount brokerages, the availability of information online, and competitive pressures in strong markets will combine to lower fees, create more a la carte offerings from real-estate agencies, increase FSBOs — or all three.
While those market shifts take place, there are opportunities for people who are, as Pearson says, "outgoing and confident enough" to tackle the risk and complexity of a FSBO. Like Jill Gross and her husband.
"If you are uncomfortable meeting people or handling all the details or just want it done really fast, then hiring an agent is money well spent," Gross says. "But if you learn enough about it, have the proper forms ready, and know your market conditions — well, in a market like Seattle, I'd say go for it."
Terence Finan is a Seattle-based freelance writer.
Copyright © 2006 The Seattle Times Company