By Dennis Rodkin, Crain’s Chicago Business, Aug. 28, 2014
Condominiums have been selling quickly and at good prices in Lakeview this year, so Matt Sulkowski recently decided to see what he could get for his two-bedroom unit on Sheffield Avenue. Figuring the place would pretty much sell itself, he decided to go without an agent and listed the property on a couple of for-sale-by-owner websites.
“I can get it in front of a number of eyes myself,” Mr. Sulkowski said. “An agent wouldn’t get too many more.”
Mr. Sulkowski’s no-agent strategy has been gaining popularity this year. In the second quarter, 42 percent more Chicago-area homes were listed on forsalebyowner.com than during the same period in 2013, according to the site’s managers.
By comparison, conventional multiple-listing service listings in the nine-county area during the second quarter were up just under 12 percent from a year before, according to reports from Midwest Real Estate Data LLC.
More sellers are going it alone amid a recovering residential market. Some neighborhoods, including Mr. Sulkowski’s, have been experiencing a runaway sales pace, making it appear that merely dangling a property in front of buyers is enough to get it sold. At the same time, price declines after the bust have left many homeowners with less equity, and some sellers may be trying to maximize their proceeds by eliminating some of the commission they have to pay out at closing time.
‘THEY EXPECT IT TO SELL’
Whether they believe they don’t need an agent or can’t afford one, homeowners find that the strategy of marketing a home themselves may “feel like the reasonable path to try,” said Igal Hendel, a Northwestern University economics professor who has written about FSBO sellers.
“They expect it to sell,” he said, and if they can maximize their proceeds by paying less in commissions, “that is what they will try first.”
Another factor in the increased use of an FSBO site may be consumers’ comfort with the Internet’s growing role in all aspects of the real estate transaction, Mr. Hendel said.
Many home sellers “realize that a lot of the tools that used to be exclusive to agents are now available to anybody if they’re willing to spend a little time doing research,” said Eddie Tyner, general manager of forsalebyowner.com.
That was the case for Mr. Sulkowski, who works in commercial real estate. Several condos have sold in his and similar buildings recently, so establishing an asking price via comparable sales wasn’t daunting, thanks to sale records widely available online, he said.
“It’s easy to see whether you’re overpricing or underpricing it,” he said.
Yet Mr. Sulkowski is still waiting for a buyer. He has yet to receive an offer for his condo, which he listed in June for $484,900. He has reduced the price twice, cutting it Aug. 25 to $449,900.
Indeed, though FSBO listings are up, the real question is whether the homes sell. Sales through forsalebyowner.com rose 16 percent nationwide in the second quarter from the year earlier, Mr. Tyner said. Nationwide home sales of all types, both using agents and not, were down about 1 percent in the same timeframe, according to the National Association of Realtors, or NAR.
Forsalebyowner.com — not to be confused with a competitor, FSBO.com — is a Tribune Publishing Co.-owned venture that is the largest of the Internet sites for sellers without agents. Forsalebyowner.com would not provide its number of listings, only percentage increases.
NAR estimates that FSBO sales accounted for 9 percent of U.S. home sales in 2013. The association declined to provide historical figures.
Selling without an agent may save sellers money, but it costs them time. The seller has to prepare the listing information, disclosures and photography, host showings and open houses and scrutinize offers when they come in. A real estate lawyer and other professionals can help with some of those tasks, although the seller still has to manage them, in place of a listing agent.
Maureen and Len Gaudio of Elmhurst sold their first home without an agent, a Chicago condo, way back in 1994. They are now trying to sell their fourth, a house on Church Street in Elmhurst that they have listed on owners.com for $725,000.
“It’s commissions,” said Ms. Gaudio, a marketing consultant. “We don’t feel they’re justified. We can do most of the work to sell it.”
Sellers in Illinois can pay as much 3 percent to a listing agent and 3 percent to a buyer’s agent, but many agents work for less. If a buyer is using an agent, the Gaudios will still pay the agent a commission. In that situation, they would save about $21,000, assuming the house sells at full price. They could save twice that amount if the buyer is unrepresented.
Yet listing a home online isn’t free. Each of the FSBO sites has a menu of prices, depending on the level of exposure and other factors. At forsalebyowner.com, prices range from a basic listing for about $80 to $699 for one that includes placements on the big real estate portals including trulia.com and realtor.com.
At that level, “you’re getting as many people seeing it as your agent could get,” Mr. Tyner said. His firm estimates that its site saved users a combined $70 million in commissions on approximately 9,000 sales in 2013.
Justin Zintak quickly found out how much exposure FSBO listings get when he listed a Huron Street condo in River North, which he co-owns with his mother, for $1.4 million on forsalebyowner.com. Within 12 hours he received five or six calls from real estate agents warning that he won’t get the property sold without an agent.
“I’m pretty sure there’s a convention where they all get the same notes on how to solicit people who are trying the for-sale-by-owner” option, he said.