With national home resale volume at near-record levels this spring, growing numbers of Americans are dusting off a technique that virtually disappeared from the market between 1980 and 1985: They are going the Fizzbo route.
Fizzbo is the pejorative term that realty brokers give to "For Sale by Owner" home transactions. It's a dirty word in most agents' books. It means no commissions.
During the Fizzbo boom years of l977 and l978, real estate analysts estimate that more than one of every 10 homes was sold in the country with no broker involved.
Economic conditions in the late l970s struck many owners as highly opportune for commission-free home deals. Mortgage money was plentiful at single-digit fixed rates. Buyers flooded the market, eager to latch onto property with strong appreciation potential. Selling a desirable house in a good neighborhood was a cakewalk in some markets, often requiring no more than a few weekends in return for financial gains in the thousands of dollars.
That all changed dramatically by 1981. Mortgage rates billowed into the 15 and 16 percent range. The deepest recession in three decades squeezed buyers and amateur sellers out of the marketplace in droves. Fizzbo fever fizzled.
The return of sell-it-ourselves activity this spring was noted in recent interviews with realty brokers and appraisers in key housing markets around the country. It's symbolic of the national economic recovery.
In the words of one economist on the staff of a major Washington-based real estate trade group, "If I can sell my house at the same price and nearly as fast as a broker, why shouldn't I? Why give away good money when the market is so ripe?"
What about the economist's point? Can you sell your house more profitably this spring on your own than you could by bringing in a broker? Should you be part of the 1986 Fizzbo phenomenon? What are the pros and cons?
Here are a few practical guidelines for anyone considering going Fizzbo in the coming selling season.
First, although it drives realty brokers up the wall to read or hear it, the fact is that, for certain homeowners, selling without a broker this year can be exceptionally profitable and efficient.
Homeowners who fit the successful Fizzbo mold for 1986 are likely to be those who can answer yes to all the following questions:Is your house in a neighborhood or community where professionally brokered properties in good condition are being snapped up at or near full price in less than four weeks after listing? Have you heard of multiple offers being made by bidders for houses in your community at or near full price? Is your home comparable in condition and price range to those properties? Are you seriously prepared to handle the key functions performed by brokers or agents? For example, are you equipped to direct would-be buyers to a variety of financing sources, including 30-year and 15-year conventional fixed-rate, adjustable-rate and government-insured loans? Are you knowledgeable about the range of rates, "points" and other fees charged by local lenders? Do you have specific names of loan officers at several lending institutions to whom you can direct your would-be buyers? Do you know what to say when a prospect asks you for seller-takeback financing? Do you have the marketing savvy, and the time to put that savvy to work? Do you know how to present a house in its most favorable light, both through advertisements and in person? Are you emotionally prepared to deal face to face with cruising bargain hunters who'll throw insulting low-ball offers your way, just in case you need to move fast? Are you equipped to negotiate effectively face to face with a buyer who may be professionally trained in real estate? Are you knowledgeable enough about the local market to price your house realistically? Are you able to fill out a real estate sales contract properly? If not, have you engaged an attorney or other adviser who can do it for you?
If you are like the vast majority of home sellers, you'll probably have racked up one or more "no" answers in the Fizzbo quiz. You may, for instance, have all the personal financing and contract savvy you need to handle your own sale, but not be in a hot enough market to put your knowledge into practice.
If comparable houses are not selling within four weeks of listing in your community, you're likely to need more than your own marketing skills. You need a marketing apparatus -- an organization that can tap into important, but distant, sources of buyers, such as employe relocation networks.
On the other hand, you may be one of the 5 to l0 percent of American homeowners who are legitimate Fizzbo candidates in 1986's rebounding marketplace.
If so, don't listen to the nay-sayers. Try to sell on your own this spring or summer. At the very worst, you always can turn your house over to a pro later on.