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When Realtors Fight About Commissions,Things Can Get Ugly
A Nantucket Broker Sues
Over a $15.5 Million Home;
Poison Ivy, a 10 p.m. Call
By JAMES R. HAGERTY
Staff Reporter of THE WALL STREET JOURNAL
December 20, 2005; Page A1
URL for this article:
http://online.wsj.com/article/SB113504294402026999.html
The stakes have been getting higher as prices in many markets soar. Even a simple chat with an agent at an open house or a drive past a few houses can result in a claim by the agent to have earned a commission. "It's one date and you're married," says Pat Rioux, a real-estate broker in the Boston area. Other disputes arise when home buyers at the last minute dump an agent who has done lots of work and then try to negotiate a lower price by telling the sellers they won't have to pay a commission.
How to Bargain for a House
As Market Cools, Buyers Regain
Long-Lost Negotiating Power;
Want an Audi With That Condo?
By RUTH SIMON
Staff Reporter of THE WALL STREET JOURNAL
October 29, 2005; Page B1
Sellers can also do other things to stand out, such as offering the broker a higher payout if the property is under agreement by a certain date or offering to pay the buyer's closing costs, one month's mortgage payment -- or even the heating bill, says Pat Rioux, broker-owner of ListForLess.com, a flat-fee multiple-listing placement service in Massachusetts.
Out on their own
Those who go without realtors still may opt for marketing help
By Brenda J. Boute, Globe Staff
September 11, 2005
After buying and selling two properties in Revere with the help of an agent, Mike DeSimone decided to cut out the middle man and close his next real estate deal on his own.
It meant more money in my pocket," said DeSimone, 35, who now lives in River View Fla., just outside of Tampa. "I figured there was no point in paying someone a big sales commission to do something that I could do myself."
And the payoff?
DeSimone accepted an offer within the first two weeks. A young couple bought the townhouse for $296,000, just shy of his asking price of $299,900 and considerably more than the $205,000 he paid for it in 2003. After paying the couple's agent a 2 percent commission, he walked away from the settlement table with a tidy profit: $85,080.
Tales like DeSimone's are causing some sellers to question the need to pay an agent a commission to peddle their property. Each year, about 6 percent of the 70,000 Massachusetts residents who sell their homes do so without an agent, according to John Dulczewski, spokesman for the Massachusetts Association of Realtors.
At a time when some sellers are spending big bucks to hire experts to primp, prune, and paint their homes to ensure a quick sale, others are choosing to go it alone. This plucky group is putting its marketing and negotiating skills to the test to avoid paying a broker the traditional commission of up to 5 percent.
For a home worth $364,900 -- the average price of a detached, single-family home in Massachusetts -- that could translate into a savings of $18,245.
It may seem like a good money-saving strategy for those who can't afford to pay an agent or have little equity in their home, but sellers should tread carefully. Experts in the real estate business, and not just the agents and brokers who have sales commissions at stake, are quick to point out that selling a home involves a lot of work.
''Getting top dollar for your home in any market requires brains, creativity, and hard work," said Bruce N. Hahn, president of the American Homeowners Foundation, a national nonprofit group based in Arlington, Va. ''Many sellers don't have the requisite time or inherent marketing skills to market their own home effectively."
Those with full-time jobs or many other responsibilities might want to take the traditional route and hire an agent, Hahn said, because sellers face tough questions when they put their home on the market: How do I know the buyer is qualified? How much of a deposit should I require? Who should hold the deposit? How do I market my property? What should I include in my sales contract to protect me?
With so many questions to answer, and so much at stake, sellers who forge ahead without the help of an agent might be wise to consider hiring other experts -- an appraiser to determine the right price for the property, a handyman to make necessary repairs, and a real estate attorney to review contracts.
Savvy sellers are turning to the Internet to market their properties and seeking companies that will put their homes on the Multiple Listing Service, the database used by all real estate agents, for a flat fee.
''We've put together a listing sheet with a detailed description of the home and photos of its best features -- the vaulted ceilings and renovated kitchen -- and put a bunch of 'For Sale' signs around the neighborhood, but even with all the foot traffic that comes through this area, we thought that might not be enough," said Megan Cronin. She and her husband, Paul, are trying to sell their two-family home in Salem, by the House of Seven Gables, for $589,000. ''So we paid a broker to list our home. We saw it as a way to expose the home to a large audience, and still save on commission."
In Merrimac, Helen Hodgdon owns and operates the You Decide Realty Coop, a company that places properties on the multiple list and provides assistance to sellers for a flat fee of $699.
'We help with the transaction, look over the contracts, and act as escrow agent if the seller asks us to," said Hodgdon, who has been a real estate agent for 21 years. ''The only thing that we do not do is show properties. We leave that to the owners."
You Decide was the perfect fit for Elyse Simmons, 47, who was wary about selling her two-bedroom Peabody condo on her own, but didn't want to pay a hefty real estate commission. ''I can call Helen at any time, and she advises me. She even pre-qualifies people, so I'm not wasting my time showing the condo to people who aren't serious about buying."
Several sellers in the region who chose to go it alone said getting their properties placed on the Multiple Listing Service and publishing detailed descriptions and photographs of their homes on the Internet were key to successful sales.
''I believe our condo sold because of Pat's program," said Karen Pesa, 30, of Wakefield, referring to Pat Rioux of ListForLess.com, a company that charges sellers a flat fee of $555 to place their homes on the multiple list and market the properties on real estate websites. ''The couple who bought our home had seen it on the Internet.
''Some full-service realtors will insinuate that people need them more now because of the recent slowdown in the market, but that is not true," said Rioux. ''No matter what the market is doing, a home will sell if it is a good value for the money."
DeSimone's advice: ''Make the house as presentable as possible. Do your homework and price it right. In the end, it's all about patience and timing."
© Copyright 2005 Globe Newspaper Company.
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Spring looks good about now
After 'spooky' fall, realtors see hope for housing market
By Chris Reidy, Globe Staff | January 30, 2005
The all-important spring home-selling season could be off to an early start -- if more snowstorms don't chill it, some brokers said last week.
Last September and October, Massachusetts home sales slowed, and real estate agents wondered if it was a temporarily lull, caused by the distractions of a presidential election and the Red Sox World Series victory, or a sign of a hot market losing steam.
The lull was "spooky," said Pat Rioux, broker/owner of ListForLess.com, a Marlborough firm that helps home owners sell their houses themselves.
But activity has accelerated. While some homes can languish on the market, particularly those priced above $1 million, others sell quickly.
"My take is we're starting the spring market a little early," Rioux said.
Rick Fedele, president of Summit Mortgage of Boston, agreed.
"Spring is starting out a little faster this year," he said. "We're very active in preapproving people for mortgages."
The robust housing market can't last forever, some economists say. Home prices are rising faster than personal incomes. Massachusetts is losing population; its economy is only slowly creating jobs.
But officials at the National Association of Realtors predicted again last week that 2005 will be the housing market's second-best year ever, behind only 2004.
One reason is that mortgage rates continue to hover near historic lows. Low rates make homes more affordable. According to Freddie Mac, the giant mortgage buyer, the average for a 30-year fixed-rate mortgage was 5.66 percent for the week ending Jan. 27, vs. 5.68 percent for the comparable week last year.
Rates are expected to drift upward, perhaps to 6.5 percent by year's end, Fedele said. That could moderate the pace of the housing market but not cause a downturn.
Fedele noted that a consumer-confidence index last week came in at a higher level than expected. Combine low rates with confident consumers, and what's likely to result is a healthy spring housing market.
In regional consumer-confidence surveys, New Englanders can have gloomier outlooks than folks elsewhere. But Fedele thinks most locals remain confident enough to house-hunt. In addition, he said, more houses are on the market, particularly condos. More supply gives buyers more choices and encourages them to go shopping.
Northpoint Realty Development is currently marketing 290 condos in four projects it's developing in Andover, North Andover, and Newburyport, and Northpoint broker Gerry-Lynn Darcy said she's seeing signs of activity.
"We're seeing a surge in the early spring market," she said.
At the three sales centers that have been open at least a year, traffic this month has been running about 30 percent ahead of January 2004 levels, she said.
Martha Hoyt and her husband, both in the software industry, owned a two-family home near Somerville's Davis Square. They decided to sell one unit as a condo. With an asking price of $385,000, they put the two-bedroom condo on the market just before Thanksgiving with ListForLess.com. The plan was to consider hiring a broker if they didn't get a nibble after several weeks.
By mid-December, the condo had attracted two offers, and a sale is set to close this week. "I was pleasantly surprised by how many people showed up at our open houses," Hoyt said.
Chris Reidy can be reached at reidy@globe.com.  |
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READY, SET, SELL
Should I hire a broker or do it myself?
May 9, 2004
...As more sellers try to avoid those fees, websites dedicated to FSBOs are growing, and some in the real estate industry are offering up a la carte menu of services. The dozens of choices include:
* ListForLess.com, which provides an MLS listing-only service for $495. Patricia Rioux, the site's broker-owner in Marlborough, said that last year 72 customers took advantage of her service. Of the total, 23 sold their homes through the MLS, 24 sold on their own without a broker, and 15 did not sell of went to a full-service broker, she said.
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Should I hire a broker or do it myself?
By Thomas Grillo, Globe Correspondent | May 9, 2004
Christopher Granda and Bonitta Steuer considered listing their three-bedroom Colonial in Arlington with a real estate agent. But when confronted with the prospect of paying a $30,000 commission on their $615,000 asking price, the couple decided to sell it themselves.
''When we figured out how much we'd have to pay a broker, it just didn't make sense," said Granda, a 43-year-old environmental consultant. ''Even if we both took a two-week vacation and spent that time preparing the house for the sale we'd come up way ahead."
As home prices have soared and commission rates have stayed about the same, Granda is not alone in trying to save money.
The Massachusetts Association of Realtors says that 9.7 percent of sales last year were For Sale By Owner, or FSBO transactions.
A Boston Globe review of Bay State sales (of single-family homes and condominiums that were reported by the MAR), plus a study of records at the state Registry of Deeds, suggest the number is closer to 25 percent.
The MAR reported 66,635 homes sold in 2003. The Warren Group, a Boston firm that tracks closings through the registry, said 87,091 single-family homes and condos were sold last year. The difference represents transactions made without a real estate broker and shows nearly one in four homes were sold without a broker.
Some realtors are so concerned about the proliferation of FSBO websites and the loss of business that the trade association recently invited Joeanne Fossland, a consultant from Advantage Solutions Group in Arizona, to present ideas on how to turn FSBOs into broker listings.
Charles Cross is the kind of consumer realtors hope to reach. For the $95 cost of a listing on ISoldMyHouse.com, the corporate lawyer sold his North Smithfield, R.I., home recently for $225,000.
''We paid less than $100 instead of a 5 or 6 percent commission. The savings was enormous," Cross said. ''There's lots of information available online, and you have to wonder why anyone would use a real estate broker for essentially showing your home."
Peter Casey, president of Prudential Wilmot Whitney Real Estate, in Weston, said that in a hot real estate market it's easier to sell your own home.
''If houses are flying off the shelf, FSBOs can do well," said Casey. ''But when sales are slow, that's when a home must be marketed [by a professional] and not just offered for sale. It's the difference between an order taken and a salesman."
Typically in Massachusetts, commissions are 5 to 6 percent. The traditional way to sell a home is as follows: An agent lists the house, which triggers placement on the Multiple Listing Service, and takes out newspaper ads and schedules open houses. Upon the sale, the listing agent collects a 2.5 or 3 percent commission from the seller. The agent who delivers a buyer (sometimes the same agent) gets the other 2.5 or 3 percent.
Considering the median price for a Massachusetts home was $340,000 in April, that's at least a $17,000 commission. In Greater Boston communities such as Newton, Lexington, and Concord, where the median is closer to $700,000, the commission can reach $35,000.
As more sellers try to avoid those fees, websites dedicated to FSBOs are growing, and some in the real estate industry are offering up a la carte menus of services.
The dozens of choices include:
ListForLess.com, which provides an MLS listing-only service for $555. Patricia Rioux, the site's broker-owner in Marlborough, said that last year 72 customers took advantage of her service. Of the total, 23 sold their homes through MLS, 34 sold on their own without a broker, and 15 did not sell or went to a full-service broker, she said.
Assist2Sell.com offers commission rates of 2 to 3.5 percent, depending on the level of service.
For a flat fee ranging from $4,250 to $9,450, depending upon the price of the home, HelpUSell.com in Concord will do all the work of a traditional broker with one exception: The seller must show the home to prospectivebuyers.
(And that's just one of the downsides of selling a house on your own. You will be responsible for scheduling and showing strangers around your house at a time when you'd rather be golfing. Several do-it-yourself sellers said they gave up every weekend until their house was sold.)
''The demand is being driven by consumers who don't want to pay commissions based on the high prices of properties in Massachusetts," Rioux said. ''Realtors failed to take into account that home prices skyrocketed but their fees have stayed the same."
Judy Moore, president of the Massachusetts Association of Realtors, said the largest transaction of most people's lives --a home sale -- should be handled by real estate professionals.
''From pricing the home, marketing, getting the best price for your home, and closing the deal, a realtor is best equipped to get the job done," she said. ''Our research shows that 82 percent of sales are through agent contact, and agent-sold homes get a 21 percent higher price than those sold by owners. When consumers know the facts, they will choose a real estate professional."
Granda and Steuer, though, are determined to sell their house themselves. They paid $80 to post the home on ForSaleByOwner.com and held an open house last Sunday that attracted 27 people.
''We haven't received any offers but we got a good response," Steuer said. ''We'll see how it goes before we go to Plan B, a listing on MLS." |
© Copyright 2004 The New York Times Company
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