They rolled the dice.
I have not done one of these in awhile but this FSBO article was too good to pass up, since it shows why FSBO’s are so much more attractive now. Below is my analysis of certain parts of the article.
During the housing boom in recent years, online FSBO sites surged, enabling homeowners to market properties on their own and save the broker’s commission, said Jonathan Miller, the chief executive of Miller Samuel Inc., a real estate research company.
The housing market now, though, is on the decline. “We are in an environment where the actual success rate in FSBOs has fallen off considerably,” Mr. Miller said. “In this downturn, there is a greater volume of listings. Sellers are going to be much more conservative when competing with more listings.” And, he added, they will be more likely to list their homes with brokers.
Jonathan Miller is correct. What usually happens in the FSBO is that owner puts out a FSBO and gets first hand experience in being agnet which is utter hell since they have to deal with the comps, advertising the apartment and showing it. This takes a lot of time to implement and routine quickly becomes very old so the seller just throws the towel in and calls up their local broker. However it is my belief that sellers who entertain the FSBO alternative will at least try it and if they are dissatisfied with the results they will be simply call a broker.
But many sellers aren’t giving up yet. In August, in response to user requests, Craigslist added a FSBO category to its real estate section, said Susan MacTavish Best, a spokeswoman for the company.
“We have seen in the last three years much more enthusiasm on the part of homeowners to post their real estate on the site themselves as a FSBO property,” Ms. MacTavish Best wrote in a recent e-mail message. “It’s appealing for owners to post the ads themselves, controlling much of the home-selling process throughout.”
There is no official multiple listing service in New York City and FSBO sales are not tracked. But in the real estate advertising section of nytimes.com, the Web site of The New York Times, the number of listings bought as individual ads tripled, to 14,117, in 2007, from 4,640 in 2002, according to internal data compiled by The New York Times. Brokers typically buy multiple ads. In the first 10 months of 2008, nytimes.com had 12,649 single listings, about the same number as for the same period last year.
Even with the advertising reach of the Internet at their finger tips, sellers are still facing a slumping market.
“It’s a little scary right now,” said Boris Schaefer, 38, director of customer relations for a German cosmetics-packaging company, who is trying to sell his five-bedroom two-and-a-half-bath colonial in Montclair, N.J. “Right after the bank crisis, traffic slowed down,” Mr. Schaefer said. “There were less people calling and responding to ads.”
After cleaning and decluttering their home, he and his wife, Silke Willms, also 38, first listed their property for $689,000 over the summer. He created a slide show of interiors and exteriors on Flickr.com, a photo-sharing Web site, and placed ads on Craigslist and the Park Slope Parents classifieds list, an online bulletin board for families living in or near Park Slope, Brooklyn, hoping to interest those looking for more space.
He attended open houses in Montclair to see how they were staged and to gauge the right selling price. “I compared those houses with the condition of our house,” he said. He and his wife held open houses and received a couple of offers, but they fell through.
Mr. Schaefer decided not to use a broker because he had the time to sell the property himself, he said, and he doesn’t want to pay a commission. “Six percent is a lot of money,” said Mr. Schaefer, who is returning to his native Germany at the end of the year for his job. (His wife and two children moved in August to start the school year there.)
Mr. Schaefer has the luxury of doing a FSBO because he has a lot of time on his hands and it appears that he knows what he is doing making an effort to research the market and creating his own advertising including the flickr slideshow. What is really cool is that his market and advertising budget is very low since a lot of the outlets he is utilizing are free. He is also German which means he wicked frugal streak within him.
Brokers say that FSBO sellers are missing out on the marketing prowess of agencies, expertise in setting a price and the ability to present a home to the right potential buyers. “I think the vast majority of FSBOs are not serious sellers,” said Ari Harkov, an associate broker with Halstead Properties in New York. “They are only willing to sell at a certain price.”
No offense Ari, but just because you share the name name of the new Chief of Staff you do not share his intelligence. First of all “this marketing prowess” is not rocket science. What the broker does at these established firms is plug in the listing in their database to see what type of price the apartment goes for on the market. Then they fill out an advertising form for New York Times ads and send it to marketing.
You can get COMPS information for free if you go to ACRIS and if you have basic understanding of excel. And it does not take a PhD to write up a New York Times ad. Hell, you can do it for free on craigslist.
As for this quote.
“I think the vast majority of FSBOs are not serious sellers,” said Ari Harkov, an associate broker with Halstead Properties in New York. “They are only willing to sell at a certain price.”
Whether they are doing a FSBO or they are represented by a broker, all sellers can become serious or not at a drop of a hat. Maybe the seller has to take the property off the market due to personal reasons or maybe the seller was only interested in getting the market value of their apartment. It could be anything. Being a FSBO is not the only requirement.
I think this quote is absolutely hysterical.
“They are only willing to sell at a certain price.”
EVERY SELLER IS ONLY WILLING TO SELL AT A CERTAIN PRICE! The reason why there is a surplus of inventory on the market is because a lot of the sellers are unwilling to budge at the asking price and we have buyers who are either unwilling or unable to meet with them. And a lot of those listings are exclusives held by brokers. Once again, it is not just FSBOS!
After a series of disappointments, Mr. Schaefer had been considering going with a real estate agent after all. But at one of his open houses, he met a broker who lamented that her agency had only five houses go into contract over the previous four weeks.
“That explained to me why the last weeks were so quiet,” Mr. Schaefer said. “I am thinking if there are no buyers out there, the Realtor cannot do a better job than me.”
In other words everyone is getting clobbered in this market and having a broker doesn’t improve your chances so you might as well go on your own and see if you can save the 6%.
“It’s all common sense,” said Matthew Morse, 46, a magazine editor. He and his wife, Sarah, sold their two-and-a-half-bedroom one-bath co-op in Brooklyn Heights on Pierrepont Street in June.
“We put it on the market at $799,000,” Mr. Morse said. “We didn’t want to go below asking, but we ended up selling it for $737,500. I don’t think a broker would have gotten full asking price, and they would have chopped off 6 percent.”
The couple created a Web site with photos and a floor plan, advertised the apartment on nytimes.com at the beginning of May and then held open houses every weekend. Before each open house, they cleaned their apartment and crammed their children’s toys into closets.
Apart from the time it took to show their property for six weekends in a row, “the most annoying thing were the real estate agents and brokers who constantly called and harassed us to get our business,” Mr. Morse said.
Other FSBO sellers agree, saying they have scores of business cards from agents angling for a listing.
Every broker is licking their lips like a Republican staring at tax cuts when it comes to acquiring a FSBO listing. A FSBO listing is the attractive for every broker for two reasons. First of all it is actually the easiest listing to acquire. All a broker has to do is leave a business card, do a pitch and then leave and let nature take its course. What usually happen is the FSBO seller will become so overwhelmed is that they will waive their white flag and call in a broker.
The second reason why getting a FSBO listing is so attractive is that whenever they deal with someone that claims that brokers are bunch of over paid tour guides, the broker can simply tell the story of how they got a FSBO listing that was surrendered to them by a seller. Hence, proving their added value.
Still, Mr. Morse said that if he were selling in today’s market, he would go with a broker. He said he would worry about how long it might take to find a buyer and did not think he could put in the time needed. “It’s a whole brave new world out there,” he added.
But Greg Healy, the vice president of operations of ForSaleByOwner.com, sees that brave new world in a different way. “This market has been really tough,” Mr. Healy said. “We are seeing a strong surge of people who need to sell by owner.”
The number of sellers in the five boroughs of New York City advertising on ForSaleByOwner.com has increased by 22 percent so far this year over the same period last year, Mr. Healy said.
Customers surveyed by the site said they had seen their retirement and college savings hit hard by the financial crisis, Mr. Healy said. They are trying to get every penny they can from the sales of their homes.
“I think there are people out there who can do this,” said Lawrence Burak, 61, who listed his East End Avenue one-bedroom one-bath apartment for $850,000 on ForSaleByOwner.com at the beginning of October.
Eschewing open houses to avoid the possibility of damage to his home, Mr. Burak, a sales and marketing consultant in broadcast media, is showing his apartment by appointment. He believes the strongest selling point of his eighth-floor 950-square-foot co-op, as described in his ad, “is the totally unobstructed, and never to be obscured, northeastern view of the East River.”
A few people have come to see the apartment, he said, but he has not received any offers. “The view is worth the asking price,” he said. “To this day, when I look out the window of where I live, I never tire of it.”
For Allison and Marc Milgrom, the owners of a duplex apartment in Park Slope that is listed for $599,000, working with brokers over the summer was frustrating. “I felt like I had all the marketing ideas,” said Ms. Milgrom, a stay-at-home mother. “They did everything I asked, but didn’t offer anything more. They just didn’t seem to have a lot of experience.”
Unfortunately this is par for the course for a lot real estate brokers which is to do what they can and never go any further.
Once the listing expired, the Milgroms decided to take a stab at selling the apartment themselves. But when it came to writing a description of their co-op for a listing, they found themselves in a quandary. “At first we described it as a ‘two-bedroom, plus office apartment,’ ” Ms. Milgrom said. The apartment has a master bedroom on the ground floor, and a windowed 400-square-foot lower level that could be renovated into a bedroom and office space. “But families with kids came by and were disappointed that there weren’t two real bedrooms.”
When they changed their listing to say “one-bedroom plus” instead, they received more inquiries from couples and individuals. There were a few offers, but none have come to fruition.
The funny thing is that this dilemma of how to market an apartment the Milgrom face is what every broker faces. For example, I was once working on a exclusive that was listed as a one bedroom co-op. The problem was that the bedroom itself was really small and could barely fit a single bed let alone a double. Yet it was marketed as a one bedroom and was never sold. Eventually the seller grew frustrated and gave it to another broker.
FSBOs are not a slam dunk. There are advantages to having a broker. For that 6% commission a seller is saving time and aggravation from selling the apartment on their own. However with current market conditions, it might not be a bad idea for some sellers to give a shot on their own because at this point they have nothing to lose.