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More Homes Listed 'For Sale by Owner' to Avoid Broker Fees

By Amy Zimmer | March 12, 2014 8:01am
 Buoyed by the hot market, a growing number of homeowners are avoiding brokers when selling their homes.
For Sale By Owner Sales Becoming More Popular in Hot Market
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BROOKLYN — Samantha Saturn has nothing against real estate brokers, but she doesn't think she needs one to sell her 1,379-square-foot, two-bedroom home in the heart of Williamsburg.

She created a website for her apartment at 244 North Fifth St. — which she priced at $1.395 million, based on similar sales in the area — and recently began putting the word out through local online parent networks to drum up interest for the first open house, scheduled for March 16.

Armed with a do-it-yourself attitude in a hot sellers' market, a growing number of New Yorkers are opting to list their homes "for sale by owner" — or FSBO (pronounced fizz-bow) as it's called in real estate parlance. The 1,044 New York City FSBO listings on Streeteasy in 2013, for example, represented a 30 percent increase from the previous year, according to data the real estate search site compiled for DNAinfo.

Many homeowners list their homes themselves to avoid brokers' fees, which cost roughly 6 percent, usually split between the owner's and buyer's brokers. Agents, however, caution that knowing how to price an apartment, stage it and manage multiple offers often requires professional expertise. Some agents even get pushy with owners, trying to get their listing, sellers and real estate experts said.

"I think brokers are amazing and I don't deny their value at all," said Saturn, who is limiting any prospective buyer's broker to a 2.5 percent commission. "It's really just a financial decision. The money I need to invest in our relocation is significant at this point. So to save five figures helps. By the end of it, I may see there are skills I need and have to hire a broker."

Saturn has been able to devote time to researching real estate after she left her full-time marketing job in December. While working freelance, she's been preparing for her family's move to Nashville (where's she's originally from) and carting out boxes of stuff that have accumulated during the eight years she's lived in the apartment — especially many of the toys belonging to her 2- and 5-year-olds.

Saturn hired a top-notch professional photographer to shoot the freshly painted home, which is in a five-unit luxury building with an elevator that opens to each apartment.

"It's a special, quiet gem in the middle of an explosive neighborhood," Saturn said.

Her main concern with the sale process is how to deal with the possibility of multiple offers.

"What if six people are standing there? What do you do? Those scenarios I don't know," Saturn said, adding, "I should be so lucky if that's my biggest problem."

Dealing with bidding wars, getting the highest and best offer and sorting qualified buyers to make sure a deal closes is where brokers' "added value" comes in to play, said Douglas Elliman's Jessica Cohen.

Plus, some owners may not save that much if they have to pay a commission to a buyer's broker, she noted.

"After they've done all the work, at end of day," Cohen said, "they're not actually translating into the savings they think."

Joelle Hawkes wasn't interested in the highest bidder when she put her 700-square-foot one-bedroom unit in a pre-war Prospect Heights' co-op on the market in August, without the help of a broker.

She found an "awesome" buyer, who had a good job and no debt, who offered the full asking price of $449,000 after the second open house. Hawkes had a third showing — just "to be safe" — but instead of trying to spur a bidding war, Hawkes let other interested house-hunters know she was considering someone else.

"It was the best thing I've done and the biggest savings," Hawkes said. "My expenses were under $1,000."

To sell her home of seven years at 375 Lincoln Place, Hawkes set up a special email account for the apartment and took her own photos, moving her son's crib out of the living room for the shots. Her husband drew the floor plan.

She bought ads on several real estate platforms. It cost $299 to list her home on Streeteasy for four weeks, $260 for a listing in the New York Times online listings, $599 for six weeks on Zillow and it was free to post on Craigslist. Her home was also featured in a DNAinfo New York's Open House Insider column.

Hawkes spent $50 on a storage unit for books and tchotchkes, getting the first of two months free. The movers simply picked up stored boxes on the way to her family's new home on Long Island.

She said having served on her building's co-op's board helped her know what she was looking for in a buyer.

Hawkes was explicit about limiting buyers' brokers to a 3 percent fee, but saw very few of them come with potential buyers. She did, however, have brokers call, saying they had clients, but when they arrived it turned out they were just trying to get her listing. She said she got wise pretty quickly and began demanding the reported clients' names before agreeing to show her home.

"I decided to try it my way first and it went so fast," Hawkes said of the quick sale. Her entertainment-related job often has her working from home with people in Los Angeles, leaving her mornings free.

Vickey Barron, of Douglas Elliman, encourages brokers to take a different approach to FSBO listings: to offer helpful advice for free, such as tips on putting together a board package.

"I want to encourage ethics, honestly and kindness," said Barron, who teaches a FSBO course at the Real Estate Board of New York and to Douglas Elliman brokers. "If you take that approach, and [owners] end up with a headache, you will be the first one they call."

Barron said she's always hired a broker to sell her own homes — and she's one of the top brokers in the industry.

"If I shut that door to an agent," she said, "I might be losing the ideal buyer who could give me an extra $20,000."