Friday, May 8, 2009
When Kevin Colquitt decided to place his Gaithersburg townhouse on the market last month, he knew it would be tough. Prices in the neighborhood had fallen from the market's peak, and he faced competition from distressed sellers scrambling to accept lowball offers.
Colquitt, 37, not only has waded into one of the worst housing markets in decades, but he is also doing it without a real estate agent. He is gambling that he can save the $29,000 or so he would pay in real estate commissions if his home sells at its listed $485,000 price. "Even if it's a one-in-six chance that we can sell it by ourselves, it's a good thing," Colquitt said.
The foreclosure crisis and falling home prices have made it more difficult for owners to squeeze a profit from the sale of their homes. Some are trying to save by avoiding agent commissions. The agents representing the seller and buyer typically each receive about 3 percent of the selling price of the home, with the seller picking up the tab. While some sellers go the for-sale-by-owner route in strong markets and weak, the overwhelming majority of transactions involve agents.
Agents maintain that they earn their money. They bring a critical eye, identifying the improvements needed to make a home ready for sale and an expertise to setting the right price, argues the National Association of Realtors, which represents more than 1 million agents. Selling a home yourself is time-consuming, including developing a strong marketing campaign, according to the industry group.
Besides, said Walter Molony, a spokesman for the Realtors association, the commission can be negotiated. Some companies, such as Redfin, an online brokerage based in Seattle, offer sellers flat-fee $5,000 or $7,000 packages for selling help, including setting the price and negotiating the deal.
But for owners willing to put in the effort, the strategy can work, said Maynard Gottlieb, a real estate broker and the head of Mr. Lister, a Baltimore-based site aimed at the do-it-yourself crowd. The Internet has been an equalizer, allowing homeowners to gain extensive exposure for their homes, as well as research setting the proper price, he said. "People are pretty savvy today in being able to use the Internet to check the public records and to see what homes have gone for so they can price accordingly," Gottlieb said. "It's the same information they would get from a Realtor, but they do have to do their own homework."
Many home sellers in the Washington region are taking the challenge.
Colquitt plunged in despite failing to sell a home on his own before. In 2006, he listed his Las Vegas house himself, hoping to save a $15,000 commission. But after two months on the market with no offers, Colquitt hired an agent. Traffic immediately picked up, and the home sold quickly afterward, he said.
But the experience left Colquitt with some doubts about the process. The agent encouraged him to accept a lowball offer he was not comfortable with, he said. "I felt like in a way that he didn't have our best interest at heart; he was most interested in making a sale quickly," Colquitt said.
Now the stakes are higher as Colquitt, who will soon finish a law degree, plans a move to Dallas for a new job. The big commission is worth the extra work, he said. "It's a lot of money."
Before leaping into the market alone, owners should research a reasonable sales price and get help figuring out what kind of improvements to make, housing experts said. Comparing listing prices isn't enough -- sellers need to take into consideration sales prices, too, although those can take longer to track down.
There are some Web sites that can help determine the proper price, but the seller may still need a dose of reality about how his or her home stacks up against the competition. The seller can hire a home appraiser or use an online appraisal process, said Eric Mangan, spokesman for ForSaleByOwner.com. "The first thing a buyer looks at is the price. If you price it too high, you are going to scare people away; if you price it too low, you may lose money," he said.