Many condominium owners selling their homes in today's market are caught between a rock and a hard place. They may have purchased their home a few years ago, when prices were at their peak. Now if they have to sell, they are facing downward pressure on their asking price, which may not match their equity, leaving them "upside down."
To make the squeeze more manageable, some homeowners are choosing to sell their homes themselves, typically through real estate Internet sites like ISoldMyHouse.com or Craigslist. If they are successful, they are then pocketing the typical four to seven percent real estate commission or lowering the asking price by that amount to make a condominium more saleable.
But many who have tried the "for sale by owner" route report that it's far more difficult and time-consuming than selling an item on eBay.
Rick LaBaire is a small Shrewsbury, Massachusetts, developer who is selling one of his homes on his own for the first time in his professional life. The reason, says LaBaire, is quite simple. "Profit margins have been squeezed so tight that I choose to try—to try without any luck yet—an alternative route by marketing the house myself."
LaBaire, president of DRL Builders, has listed a 4,800-square-foot colonial home loaded with amenities on ISoldMyHouse.com for $399,000. A "for sale by owner" sign is planted in front of the house, located on a cul- de-sac near the Worcester/Auburn town line, and workers are putting the finishing touches on the stone walls and steps which gently lead up to the farmer's porch nestled on the front of the home.
Prices Have Dropped
"It's a beautiful house. Four years ago this house would have sold for $75,000 to $100,000 more," says LaBaire.
LaBaire says he's already dropped his price substantially, but is facing tough competition in his price range from former $600,000 houses that are being sold for much less at "short sales," fast-moving sales approved by banks in which financially-distressed owners sell their homes for less than what they owe on their mortgages.
"They're hurting me," says LaBaire of the short sales and other discounts available in the Central Massachusetts real estate market. "I've brought my house down by a substantial amount. Now I'm at the point where it's lower than the cost I had to build it."
Squeezed from all sides, LaBaire says he paid $300 for a simple posting on the popular Internet site, plus an additional $325 to list with the Multiple Listing Service (MLS). Despite the listings, LaBaire says he has only seen "minimal" response.
BrokerFreeRealEstate.com co-founder Ryan Cannon says his site is attracting more users like LaBaire because of market conditions and because selling a house without a realtor is less intimidating than it used to be. "More people are willing to take it on today," he says. "The biggest thing is the Internet. They [sellers] can get all the resources they need. They can search online and see what other houses are being listed for. Also, they can hire an appraiser, spend a couple of hundred dollars and get a number on the house."
A major downside to selling on your own, admits Cannon, is the time spent fielding phone calls and showing the house, often to potential buyers who may not be financially qualified or even seriously interested. But selling by yourself can be profitable, he says. "If you have a $400,000 house today, you can save yourself $20,000. Is it worth it? For most people, it is," he says.
Realtors Offer Expertise
Massachusetts Association of Realtors President Doug Azarian agreesthat more tools are available to sellers today, but questions their quality.
Speaking about free home-pricing sites like Zillow.com, Azarian says, "Homeowners might go to fads that are available on the Internet today to get a quick idea [of how much their house is worth]. But I would suggest that you get what you pay for.
"None of those systems can actually portray the condition or location of a home. They won't tell you that the current owners have pets or that the house needs repairs. A realtor on the street who has been in these homes knows these homes and can compare them to others."
One of the key things a realtor can bring to a seller, says Azarian, is an accurate knowledge of a price that will quickly move the property, done through an expert market analysis. Realtors also have areas of expertise in prepping a home for sale and the arcane technicalities of a sale, he says. "In many cases, there's a lot of legal requirements. If a house was built prior to 1978 there's a lead paint disclosure that's required. Many homeowners may not be aware of that. There's Title 5 requirements that before a transfer of any home occurs, the septic system has to be inspected."
And in the area of exposure for a property, realtors utilize both traditional and modern marketing tools, says Azarian. In addition to having a large network of buyers, realtors can list on Realtor.com – the most trafficked real estate site in the country – and subscribe to advanced services that make sure the home for sale shows up on advanced searches on Google and Yahoo, says Azarian, who also owns Century 21 Dreamhomes in Falmouth, Massachusetts.
Azarian says that anyone who wants to sell their house on their own is welcome to, but he says many who have tried and failed are turning up in realtors' offices these days.
"If that's something they want to do, they're certainly welcome to do that. However, time has a way of costing them money," he says, referring to a hypothetical seller who may have missed a sale last year. "If they don't realize all the nuances of the market that a realtor will be able to help them with, it may cost them money as they will have to sell for less today than nine months to a year ago."
Balancing Time and Money
Joanne Riley is attempting to sell her 900-square-foot condo in downtown Hartford, Connecticut, on her own through ForSaleByOwner.com with mixed results. Posting the unit for $399,000 in October of 2007, she has had a number of people look at her condo, but no solid offers yet.
The lead designer with The Interior Edge in New York City and Hartford, Connecticut, Riley says she has dressed up her unit to make it more attractive for potential buyers, but saysthat it can be "draining" to keep it in showroom condition month after month. In addition to taking "great amounts of energy" and time, Riley says selling your own home requires a mindset that not everyone has.
"There's something of a disassociation you have to have with your house. If it's real personal and you're hanging on to it, houses don't sell and people are uncomfortable when they look at it. You have to have a disassociation to have a professional attitude: 'This is no longer my house. It's just an object, and I'm just selling it.'"
What realtors typically, do, says Riley, is encourage the seller to take the steps necessary to facilitate a sale.
"Part of the reason [real estate] agents have you de-clutter and take your personal pictures out, is you're packing up. Psychologically you're packing up and getting ready to move. That's a huge factor in creating the energy that you're moving on. If you have a blank slate, people can imagine their own furniture in there."
Those who have trouble getting the separation process going, or even getting good prospects across the threshold in the first place, may want to consider hiring a realtor, says Riley.
"Anything you can't do on your own, you should hire a professional, especially in this market. For me, I'm in a related industry. If you're not in a related industry, it's no small task [to sell your home]. I think realtors really work hard, especially in certain areas where they understand the market. They can really connect you with the right people and buyers."
It's that connection— weighed against the possibility of netting thousands more in a "for sale by owner"— that has sellers carefully considering their course of action today.