Deciding who sells

Published on April 14, 2001

By Neal Gendler; Staff Writer   

Lucia Newell and Steve Wiese are sold on the idea of selling their own house.

Four days after planting a For Sale By Owner sign in the lawn, they had an offer that became a sale. Even after paying a commission to the buyer's broker, they figure they saved about $7,000.

"It was an easy experience," Wiese said. "The difficulty was deciding what to ask and where to put the sign."

Newell and Wiese decided to sell after finding a house they wanted to buy and remodel three blocks away in southwest Minneapolis. With encouragement from a neighbor who'd sold his own house, they decided to try, too, hoping to save at least part of a broker's commission - customarily 7 percent of the sale price.

Wiese had been through the sale of his mother's home after her death two years ago. "That was done through an agent, and when you see someone take 7 percent of $220,000 for walking some people through . . . . I'm a working guy and I don't make that much per hour. It's just straightforward forms, but I said, `Why don't we do this on our own?' "

"I was terrified of it," Newell said. "I said, `Steve will be at work and I'll have to do all this.' " But it worked out much better than she'd feared.

Real estate brokers say there's much more to selling a house for maximal gain than filling out forms and walking people through. And Wiese, who owns a recording studio, and Newell, a voice artist and jazz singer, weren't entirely on their own. They bought services from the For Sale By Owner Shoppe in St. Louis Park, one of several companies helping owners who want to handle all or parts of a sale themselves.

The For Sale By Owner Shoppe began in 1989 and has expanded services to include access to the Regional Multiple Listing Service (MLS) and a national Web site for homes offered for sale by owner, a term usually abbreviated to FSBO (pronounced FIZZ-bo). The site, (http://www.homeavenue

.com) launched about eight weeks ago, offers the company's services to people in other cities. It includes, for instance, a vinyl "For Sale By Owner" lawn sign.

Owner Greg Lawrence said business this year has been a bit slower than in previous years. "I think that consumer confidence is down and there's quite a bit of uncertainty as to where we're headed," he said. Added to this, he said, is that homeowners who think of selling may have "sticker shock" at the price of what they'd buy and decide just to stay put. But he said that business still is good and that 85 percent of his clients sell within 30 days.

He offers a basic "home seller's package" for $399 that includes a yard sign; three open house or "home for sale" directional signs; a guide to selling; a listing on homeavenue.com, including five photos; 30 full-color brochures with a company-provided photo; a brochure box; one free picture ad in the Star Tribune or Pioneer Press; and a legal forms package with a purchase agreement, disclosure statements and more. He also offers free weekly seminars, telephone help from his staff - which he said includes licensed agents - and a real estate attorney "hot line."

Industry leaders say two of the most important services Realtors provide are professional pricing help and exposure to the full market through the MLS, agent networking and marketing techniques.

Lawrence will provide a market price analysis for $99. "If you want the MLS added to the package, it's $399, a one-time fee until we sell," he said. "About 30 percent of our orders go right away on MLS. After a few weeks, an additional 25 percent sign up for MLS."

MLS rules require that the commission and how much will go to listing and buyers' brokerages be posted. Customarily, a sale at 7 percent brings 3.85 percent to the listing broker and 3.15 percent to the buyer's broker. Those numbers can vary, and about 40 percent of all Lawrence's customers start out refusing to pay any commission at all; some change their minds if they get no offers.

Lawrence said that cooperation from traditional agents has increased in recent years and now is "wonderful. . . .. I think they've become accustomed to showing the `for sale by owner' homes."

Lawrence said the success rate for his customers who list with the MLS is "higher but not significantly. What we have found is that the MLS is a wonderful tool for speeding up the process. Homes sell much faster. . . . The exposure is so much greater. The people who do not go on MLS and rely on their signs, advertising in the Star Tribune and Pioneer Press and on our Web site still are getting a tremendous response. And it's response enough to sell their home and in many cases avoid the commission entirely."

Realtors say homes that sell quickly get the best prices and those that linger tend to raise doubts as buyers wonder why they've not sold.

Newell and Wiese didn't use the MLS, even though they were told by agents that about 90 percent of sales happen through MLS. Wiese said they thought their asking price was on the high side, but even so, they decided to try FSBO for a month before hiring an agent.

The couple praised the Shoppe's materials, knowledge, courtesy and prompt responses. The sign was installed on a Tuesday morning, and soon people had visited the brochure box. On Saturday, the couple held an impromptu "open house," putting a small sign for it a couple of blocks away. It drew five or six visits, three from Realtors.

More weren't needed; one couple was a repeat. They'd driven by "the day after we hung out the sign, and had their Realtor call and make an appointment" for a few days later, Newell said. "They walked through and I didn't think they liked it much, but they called back and wanted to see it again and they came back Saturday when we had our first open house. When they arrived at the door with tape measure and legal pad in hand, I thought we might get an offer - and by Sunday night they made an offer."

Wiese said much of the paperwork was done by the buyer's agent; they'd already completed a Truth in Housing inspection and seller disclosures that came in the Shoppe's package. "All the documents [were] filled in. All we had to do is sign on the dotted line," he said. They had help from the law firm associated with the Shoppe and plan to have the lawyer attend the closing. "Honest mistakes can be made, so we said, `Let's spend the $600 to have someone who knows what they're doing watch over this."

He estimated their total outlay at about $1,000, not counting paying 3.15 percent of the sale price to the buyer's broker. Total savings of $7,000 will pay for a lot of work on their new house, they said. Wiese figured that they'd invested about 20 hours in selling their home - saving about $350 an hour.

Newell and Wiese said they'd sell the same way again.

"The landing is very soft; they make it very easy for you," Newell said. "It's just a great way to go. I think it's the wave of the future."