Real estate's sell-it-yourself trend, which grew rapidly among dollar-wise homeowners in the late 1970s, has been one of the major casualities of 1980s tough market.
Telephone discussions with brokers and attorneys in 15 cities point to sharp drops this year in the percentage of home sellers attempting "for sale by owner" transactions with no help from professional reality firms.
An average of one out of 10 homes across the country sold "direct" -- with no agent involved -- during the latter half of the 1970s, according to estimates by the Federal Trade Commission.
In some affluent suburbs of Chicago, Washington, San Francisco, Los Angeles, Seattle and in south Florida, the percentages went much higher at the peak of the market in 1978-79. Owners found their properties easy to sell in a atmosphere of high consumer demand and moderate mortgage rates.
In parts of Chicago's western and Northern Shore suburbs, according to the sales manager of one of that area's largest brokerage firms, "there were entire blocks where 20 to 40 percent of the sellers had decided to do it on their own to save commissions."
Today, by contrast, says Jack Hallahan of Rich Port Realtors, "there's hardly anybody in those same neighborhoods going 'fizzbo'" -- for sale by OWNER (FSBO).
"Sellers find that they can't arrange the financing required to make transactions go in the present market, they can't get the buyer traffic and they're in very deep water when it comes to pricing their house and negotiating the deal," he said.
Discount brokers who specialize in assisting budget-conscious home sellers with parts of their transactions confirm that the 1980 market has slashed do-it-yourself activity. But they expect a gradual upturn in business in the coming 90 days as interest rates level off and sellers regain confidence.
Robert Dean of Homeowners, inc., a Falls Church firm that counsels "fizzbo" clients on marketing techniques for as little as $75 and handles sales at discount fees, said he has had only a handful of true do-it-yourselfers in the past several months.
The problem confronting such sellers in a market like the present one, in Dean's words, is that "they're likely to lose more money on pricing, financing arrangements, negotiations, time delays and legal costs than if they went the usual route and signed up with a discount or full-fee firm and paid for some professional help. It's a penny-wise, pound-foolish sort of situation."
Real estate lawyers who have been called in to represent do-it-yourself sellers -- after their sales contracts have been signed and the deals struck -- say that most sellers should avoid the "frizzbo" approach for their own financial protection.
A Los Angeles attorney said he sat across the table recently in a home sale negotiation with a direct seller, and "knocked $14,000 off the true market value and got another $3,000 in financing concessions" - simply because the seller was representing himself, and was highly vulnerable.
Had the seller been represented "by almost anyone in the business -- another local real estate attorney, a broker or a sales agent -- I wouldn't have been able to get so much off the asking price, especially on top of the large second (deed of trust) and low rate we also negotiated," the lawyer said.
Do-it-yourself sellers can do very well for themselves in 1980 market, experts agree, but only if they have a solid working knowledge of financing alternatives for a slow market, know the market factors determining real estate valuations for their community and street, and know the local laws regulating housing transactions.
They should also consider the following basic, headache-saying tips:
Selling a house completely on one's own is like doing brain surgery completely on one's own. At the very least, hire an attorney active in local real estate before drafting a contract or even deciding what contract form to use.
The lawyer also should be able to help you check out the credit status of serious purchasers, put you in touch with lenders, and structure your financing if your mortgage is assumable or if your plan to assist buyers with secondary loans.
If you are unalterably opposed to using full-commission real estate brokers, consider using one of the numerous discount brokers available in most markets. Discount brokers may not have access to the local multiple listing facilities -- an important drawback -- but they should be able to guide you through the financing, advertising and negotiating phases of your sale, for a flat fee.
Pay for a professional appraisal report to find out what your house is really worth in today's market. There are no easy rules of thumb you can use to figure out the "right" price for your home in a market with fewer than normal buyers and higher than normal interest rates.
An appraisal may cost you $150 to $250, but it could give you the facts you need to save thousands. Appraisers are listed in the Yellow Pages under Real Estate, and often advertise the specific neighborhoods whose sales price trends they know best.