By JIM RENDON
Published: September 26, 2013
With inventory hitting new lows, the housing market in New York City has taken a dramatic turn in favor of sellers. Buyers face fewer options and stiffer competition. And that can get homeowners thinking about the value of their increasingly expensive broker.
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“Every time the market tightens up like this we see more people trying to sell their own homes,” said Jonathan J. Miller, the president of Miller Samuel, an appraisal company. Sellers see a real benefit to cutting out a broker, especially if they are confident their home will sell easily. “The impetus is always to save money,” Mr. Miller said.
In New York City, the savings can be substantial. According to the latest Douglas Elliman market report, the median sale price of a Manhattan home in the second quarter was $865,000. A seller paying the standard 6 percent commission on an apartment priced at that median would owe nearly $52,000 in brokers’ fees.
Handling a sale alone has become much easier in recent years with so much information available on the Internet, said Sofia Song, head of research and communications at Streeteasy.com. Its paying subscribers have access to the same data that brokers can use when trying to determine the value of a home. Owners can easily look up “comps” — recent sales of comparable properties — to get a sense of a property’s value. And real estate blogs give readers a daily peek at the temperature of the market.
More sellers seem to be giving it a shot. According to Ms. Song, the number of people selling their own properties in Manhattan and listing them on Streeteasy has increased over the first eight months of the year compared with last year. The biggest jump came in July, with listings up 43 percent over the previous July. Broker listings fell by double digits over the same period, largely because of the drop in total number of properties for sale. For-sale-by-owner listings at nytimes.com, however, fell by 20 percent in the first eight months of the year, compared with the same period last year.
One owner/seller, Francesco Sarti, has a one-bedroom two-bathroom loft at 420 West 25th Street. When Mr. Sarti, 44, a financial analyst, bought the apartment in 2008, he did most of the research. “I realized that I wanted to experience the same process on the sell side,” he said.
Mr. Sarti used Streeteasy to research comps and settled on a price of $1.64 million. He took his own photos of the apartment. He listed the apartment in March but took some time off from showing it over the summer. (He also lists with nytimes.com.) He has had about eight open houses, each of which drew about a dozen people.
In the beginning, Mr. Sarti dealt only with buyers who were not represented by a broker, to avoid having to pay that broker 2 to 3 percent of the sales price — the usual cut when two brokers are involved in a deal. But he soon realized he was losing out on too many potential buyers. Now he takes all comers and is willing to pay the commission of the buyer’s broker, in his case as much as $49,000. The only downside has been facing off with aggressive brokers hoping to get the listing for themselves. Two brokers copied his ad and put it up on their own Web pages. Those ads were then picked up by listing aggregators like Trulia, and getting them taken down from the different sites was time-consuming. He also has to be available for open houses and to show the home at night.
“You have to have an interest in doing this,” Mr. Sarti said. “Otherwise you won’t have the motivation to do the open houses and everything else involved.”
Brokers, predictably, are not happy about the for-sale-by-owner, or FSBO, trend. Jordan Cooper, a partner of Cooper & Cooper Real Estate, says sellers are taking a big risk. Sure, he said, some owners are capable of selling their own homes, but brokers are professionals who provide a skilled service. “Would you represent yourself in court?” he asked.
A good broker could not only help sellers reach the right group of buyers with effective marketing, Mr. Cooper said, but also help them navigate the complexities of getting the highest price through best and final offers. And, most important, a broker could determine what offers are most likely to lead to a closing — landing a mortgage and, in the case of a co-op, board approval.
When it comes to co-ops, good brokers know how to put together a strong board package, including what information to highlight, what to have references mention and what not to mention. They can also help coach people for the interview. “What does the average owner know about putting together a board package?” Mr. Cooper asked. “If you choose the wrong buyer, you are out of luck.”
Sellers often think that they can turn to their lawyers for help, but that is not always the case, said Michael Moshan of the law firm Gold Scollar Moshan. “Attorneys generally don’t participate in vetting buyers and their financials and submitting the perfect board package,” he said. Lawyers for those who sell their own properties do more of what he calls “hand-holding,” but they have a narrow area of expertise. “Finding the right buyer is its own skill,” Mr. Moshan said.
Mr. Miller said that he believed that many sellers eventually hire a broker after they realize how much work selling a home entails. Indeed, the data from Streeteasy show that a much higher percentage of FSBO ads were discontinued without a sale than is the case with brokers. In June, 37 percent of FSBO ads expired without a sale, versus 7 percent of broker ads.
Michael Laffan, 57, a retired New York City firefighter, tried selling his Red Hook, Brooklyn, town house several ways. When his family decided to move to Georgia, he listed the house for $755,000 with a family friend who was also a broker. He soon found himself locked into a contract for nine months with a buyer who was ultimately unable to complete the deal.
In September 2012 he tried selling on his own. In an ad on Craigslist.com, he listed the home for $900,000. He had a number of interested potential buyers, including Orren Azani, a broker at Douglas Elliman Real Estate who lived nearby. Then Hurricane Sandy hit. Remarkably, Mr. Laffan’s home was not flooded, but many of the businesses that draw buyers to Red Hook were devastated. Mr. Azani was unable to move ahead with the purchase because of flooding in his own home.
Eventually Mr. Laffan tired of the effort — his wife and sons had already moved to Georgia and he was paying for two homes. “I thought, ‘Let’s try to make this thing go,’ ” he said. He listed the house with Mr. Azani, who had several offers lined up after the first open house. The property went into contract three weeks after it was listed, selling for $875,000, and Mr. Laffan finally joined his family in their new home in Georgia.
This article has been revised to reflect the following correction:
Correction: October 6, 2013
An article last Sunday about what it takes to sell your home without a broker misspelled the given name of the head of research and communications at Streeteasy.com. She is Sofia Song, not Sophia.