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Real e-State
In Internet age, FSBOs re-emerge as thorns in traditional agencies' sides
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Business New Haven
4/16/2001
By: Susan Cornell
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If the old adage is “A penny saved is a penny earned,” the new adage for home sellers might be “Ten, 20, even 30 grand saved is awesome.”
The latest in competitive threats to Realtors introduced by the emergence of the Internet are For-Sale-By-Owner companies (FSBOs) that offer the selling proposition of inexpensive e-marketing.
But you're neither Realtor nor attorney nor sales rep so, naturally, you opt for the traditional prudent route of employing the qualified real-estate agent. Au revoir six percent off your bottom line at closing, right? Not necessarily. Nowhere in the history of marketing and selling homes has there been such an opportunity to list one's abode and have it seen by so many, so quickly and so inexpensively.
The days when only Realtors were privy to which homes were on the market are the days of yesteryear. Today, anyone, even with little technical know-how, can view for-sale properties in a matter of seconds. Likewise, anyone who wants to list their home can do so easily, and the property can be up and viewed by millions the same day.
Regardless of who sells the home, the agency or owner, the owner prepares the house for the market, the owner makes the home “homey” for showings and open houses, and the owner hires a lawyer. The property owner is basically a do-it-yourselfer in terms of the necessary grunt work involved in the preparation for marketing the property; if he or she can prepare the home, why not go the extra mile and sell it, too?
The fact is that they are - and in ever-growing numbers. According to the U.S. Department of Commerce, one-third or more of all real-estate transactions take place without a real-estate broker. Last year alone, one million people sold their homes by themselves. For the owner who travels this road, the time involved to reach the destination can actually be lessened as the property can be offered at a lower price to yield the same amount. Bottom line: The big feathers in the cap for the FSBO alternative are time and money savings.
Surf the Web and you will find countless companies specializing in assisting homeowners in selling properties themselves. Connecticut-based ones include the For Sale By Owner Connection (Canton), For Sale By Owner Direct (Brookfield) and CTBids.com in Stratford. But the location, location, location of these companies matters not; cyberspace eliminates the significance of where these businesses are found as the competitive advantage they deliver is allowing the homeowner to utilize the power of the Internet to list the property, making it immediately accessible to buyers around the world.
As they say at For Sale By Owner Direct: “Internet advertising is more effective than traditional advertising sources because your property listing will provide detailed information and photographs to a wider audience. Plus, your advertising dollars will be targeted directly to the audience you want to reach.”
Web advertising is not the only advantage offered by the FSBO firms. FSBO Direct, for example, boasts: “Our reach goes beyond the Internet because we regularly advertise the For Sale By Owner Direct magazine also in newspapers, magazines and other printed publications. We also list on search engines, directories and on other Web sites.”
At the For Sale By Owner Connection, the target market of buyers is likewise reached by traditional print publications; the company publishes 40,000 copies every three weeks of its listings, which cover most of Connecticut. The publication is distributed free in more than 1,000 locations including banks, grocery stores, restaurants, liquor stores, etc.
The company's “standard package includes three months of advertising in the print publication and a “Sell-It-Yourself Kit,” a comprehensive bundle of real estate contracts, Connecticut Property Condition Disclosure Forms, Lead Paint Disclosure Forms, and helpful information from attorneys and mortgage companies. Optional cost “adders” include yard signs ($5) and an ad on its Internet site ($10).
The president of the For Sale By Owner Connection, Carol York, says that the FSBOs are quickly gaining momentum. “With more technology out there, you just don't need a Realtor anymore,” she says.
Another factor contributing to the increasing number of homeowners opting to sell on their own, says York, is that “People are more mobile, selling homes more frequently. Most people are in homes for seven years or less now.” This means that buying and selling and paying all those commissions certainly adds up.
Another plus for the FSBOs, York says, is that, “Buyers find it a much more pleasant experience to get the information directly from the homeowner, right from the horse's mouth, than through the middle people involved.”
But there is considerable room to grow on the technology front. York says only about 25 percent of sales were clinched because of online advertising; the lion's share of homes sold are still discovered in printed matter. “People still like to grab the magazine,” York observes.
Patti Pascuzzo, a former Realtor who is now a referral agent, opted to sell her Killingworth home through the For Sale By Owner Connection. With her real-estate background, Pascuzzo weighed the pros and cons of listing through the agency for which she is a referral agent. Even with this advantage, she suspected, the FSBO option would be a more lucrative endeavor. Pascuzzo opted for a “deluxe” package with MLS listing. The package cost $799 and the house, listed at $359,000, sold in four days.
Pascuzzo found no disadvantages to selling her home this way. Going the FSBO route, she says, “Most people would be fine. Just take the time to read what they send. For example, now that I have a contract, what do I need to do? Everything was provided, even the disclosure form which can be a $300 issue.” Pascuzzo feels that this option is “Foolproof in this market. With so many buyers out there it was easy.” And, she adds, “I can start over with a new mortgage rate, so why not?”
Asked how great a threat the FSBOs pose to the traditional agency, Pascuzzo says, “This depends on the market. With this market - who needs a Realtor?”
Says Dave Lindsay, a first-time do-it-yourselfer who sold his Norwalk home in two months, “Being able to advertise online to massive numbers of potential buyers is going to change the real-estate industry. Of course one needs to have the personality and the comfort level to be one's own salesperson, and be able to negotiate civilly. But I would recommend this route to anyone willing to commit to the time and effort which will pay off with a large financial savings over a traditional real-estate transaction.”
Lindsay blazed his own trail using a combination of techniques. He undertook “extensive online research and followed a number of the home-selling tips available online, such as baking cookies and playing pleasing music during the viewings.
“Our attorney provided real-estate forms at no charge [binder, disclosure forms, etc.],” says Lindsay. “I borrowed a sign stand from a friend and bought a FSBO sign and added our phone number and URL. Since this is my profession I had an advantage over others in that I shot digital photographs of the interior and exterior of the house, wrote some copy describing the house, the location, etc. and built my own web site which displayed all the details. We used this URL in all our flyers and advertising.
“We advertised first for a Sunday open house in real-estate classified sections in Norwalk, Stamford, Hartford and the New York Times,” explains Lindsay. “We also distributed flyers at local restaurants, offices and businesses. Other marketing tools were e-mailing everyone we knew, posting free ads on the online sites that offer this service, and also putting a free notice in [my daughter's] weekly school newsletter [circulation: 400 families].”
Another player is FSBODirect.com. One needn't be technically savvy, or even own a computer, to tap into the Internet to sell a property. Instead, at FSBODirect.com, “You do not need to have access to e-mail or to the internet to list your property. Your listing will include color photographs of your property, a generous property description, detailed specifications and your contact information including phone number, e-mail link (if available) and personal Web site link (if available).”
FSBODirect.com charges a flat rate of $60 to list on its Web site, with no additional charges or fees. The listing includes three photographs, description and specifications, contact information and location. The ad will run until the property is sold for up to one year.
CTBids.com is another player. Owner and developer, Duplan Debelle, saw that most of the FSBO sites were nationwide or worldwide and not necessarily updated frequently. Debelle spotted a niche - a Connecticut-only site where “listings won't get lost as they do in the nationwide sites.”
CTBids.com, Debelle says, was made “as easy as possible” for the homeowner. And, since it is a “database-driven, dynamic site, people can edit their own listings.”
CTBids.com differentiates itself by including a database of businesses a home-buyer would need in relocating. Contractors and service-providers such as attorneys, architects, movers, oil suppliers, etc. advertise on the same Web site that lists land for sale, single-family homes, apartments, multi-family homes and farms. While CTBids.com does not offer the complete package including contracts, disclosure forms, etc., the company has created an inexpensive advertising medium and a one-stop shopping directory useful to both buyers and sellers.
Advertising on CTBids.com at present goes for the low, low, low price of free. In the future, however, it will cost between $35 and $55 (depending upon who scans or edits the photographs - seller or CTBids). There is no time limit for the listing to buyers or tenants. CTBids provides an easy way post an ad and to update one's listing independently, something most do not offer. Further, the link can then be included in printed ads along with the homeowner's e-mail address.
Debelle says that he actually “got the idea from talking to realtors.” He admitted that the future impact on realtors is yet to be determined and adds that his “site is getting a lot of traffic and attention.”
When going the independent route, good extra-credit reading material for the seller includes the following books: For Sale By Owner: How To Sell Your Home Yourself and Save Thousands of Dollars of Real Estate Commissions (Lee Burbridge); How To Sell Your Home Fast, for the Highest Price, in Any Market: From a Real Estate Expert Who Knows All the Tricks (Terry Eilers); and How To Buy & Sell Your Home Without Getting Ripped Off! (Patricia Boyd and Lonny Coffey).
Are FSBOs really a threat to the traditional broker? The National Association of Realtors (NAR) thinks so. In fact, the NAR last year added two new spots to its public-awareness campaign, one of which was designed to persuade would-be do-it-yourselfers why it makes sense to use a Realtor.
According to the NAR press release, “The FSBO spot illustrates the convenience and expertise Realtors bring to complex transactions. It makes side-by-side comparisons between selling a home with and without the expertise of a Realtor, and lets viewers draw their own conclusions about which method is preferable.”
Still, a growing number of Connecticut companies offer e-marketing alternatives ranging anywhere from free to a few hundred dollars. This burgeoning “selection, selection, selection” of options, features, add-ons and packages is part of an evolving game.
For the seller who can nail down if he or she wants to sell real estate tapping into the power of the Internet and going the FSBO route, the savings can be tremendous. It's being proven daily that the savvy seller can save the hefty six percent - if he or she is willing and able to expend the extra elbow grease.
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