Last July, Ken Endo listed a home in the suburban Vancouver community of Crescent Beach with a real estate agent.
The well-preserved 1,000-sq.-ft. bungalow, built in 1955 and renovated a few times, belonged to his late mother-in-law and father-in-law and was left to his wife Linda and her brother. Endo thought the Lower Mainland's hot real estate market and the seaside area's scenic features and laid-back lifestyle would lead to a deal in a few days.
But three months and 30 to 40 calls from prospective buyers later, he was "shocked" the home still had not sold. In fact, the Endos did not receive a single offer.
So, Endo terminated the 90-day listing arrangement with his real estate agent and decided to sell it himself.
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| Wayne Chose, Business Edge |
| BC Homes for Sale.com partner Maria Schollen's site handles all sizes of properties. |
"We thought we could take up the challenge and it worked out better than we thought it would," says Endo.
In November, he posted the property with BC Homes for Sale.com, one of many websites across Canada that list properties for sale by owner (FSBO). After eight to 10 showings, he sold the house in January for the full list price of $575,000.
Endo is part of a growing group of FSBO sellers who are seeking to spare the expense of real estate commissions and take more control of deals. FSBO site operators say their listings are increasing as sellers gain more knowledge of the industry and have greater access to prospective buyers through the Internet.
Numerous FSBO sites list properties in all provinces. Sellers list their for-sale-by-owner properties for fees that can range from under $50 to a few hundred dollars. Several FSBO listing firms also provide yard signs, flyers and other marketing materials, but most web operators do not receive commissions when properties sell.
"If anybody claims (selling your own property) is an easy process, it's not - but people save money," says Maria Schollen, a partner in Maple Ridge, B.C.-based BC Homes for Sale.com.
Schollen says her home-based company, which she operates with business partner Robert Harrison, a full-time firefighter, enables sellers in rural communities to reach larger urban markets. The listed properties range from $50,000 mobile homes to million-dollar single-family dwellings, "and everything in between," says Schollen.
She says it's hard to determine how many deals the site produces, because most sellers let ads run for the full six months even after properties have sold.
BC Homes for Sale.com, which has been in business for nine years, only lists B.C. properties. The website acts only as a listing service and does not provide referrals to mortgage brokers, home inspectors and other service companies, as an agent often does.
Schollen says her company takes that approach for legal reasons. If someone calls asking for assistance finding additional help, she refers them to the closest real estate association.
Many other FSBO listing companies take the same no-referral approach. But several sites offer articles on how to sell your own home while also providing links to other real estate industry resources.
Michael Lawrence, marketing director for Toronto-based PropertySold.ca, says about 20 per cent of properties listed in the last three months have sold. But most deals still involve agents, he adds.
"In frank terms, many people simply lack the work ethic or marketing savvy to successfully promote their home sale," says Lawrence.
He says PropertySold.ca is designed to complement - rather than replace - agents.
He says his site can offer Multiple Listing Service-equivalent aid at a much lower cost, while the company also encourages FSBO sellers to purchase classified ads in newspapers and promote their properties via other means.
Launched in 2004, PropertySold.ca listed only Greater Toronto Area properties before expanding nationally in January. President and CEO Vadim Kirichenko and vice-president Boris Michailov - who have backgrounds in information technology and run other websites - and a silent partner who is a real estate agent, started up with $50,000.
The group initially planned to operate a real estate magazine enhanced by a website, but the magazine ran into financial difficulties after a few issues because the company gave away free listings.
The site became more popular among advertisers and the magazine stopped printing, says Lawrence, a civil engineer who joined the company and became a co-owner this year.
The site lists a range of properties, but Lawrence says it tends to attract advertisers who want to sell specialty properties, such as waterfront homes.
Yard signs play an important role in attracting advertisers.
"If they see something in the real world that backs up what they see on the Internet, it increases your credibility," says Lawrence.
He contends it's not that difficult to sell your own home or other property - if you give it the exposure that it needs. "It all depends on what kind of a dealmaker you are," says Lawrence.
Gary Bain, a Calgary-based agent, says an FSBO deal's chances of success depend on the seller's real estate knowledge.
"If it's an arm's-length situation where somebody is dealing with somebody that's reputable, or they've got somebody working for both of them, there's not usually a problem," says Bain, adding a lawyer often gets involved early in FSBO transactions.
Bain, who operates GM Bain Real Estate Services Ltd., has participated in many FSBO deals. In such cases, he says, the buyer may sign a contract, the agent could get paid from the transaction fees, or the commission that the seller pays the agent could be 50 per cent less than usual.
Bayne says many FSBO sellers don't know about, or understand, changes in real estate law that have occurred over the past decade - for example, new rules covering environmental conditions or condominium ownership.
"I find that people (who sell their own homes) have no experience or very little experience," says Bain.
As a result, he says, many sellers whose properties have personal or sentimental value often receive less than they would through an agent.
In FSBO deals, Bain contends, a buyer may be vulnerable because he has nobody acting for him, or a shrewd buyer can fleece the seller.
"The buyer all of a sudden has the upper hand because he knows values or has done this real estate business many times, or maybe the buyer wants to beat up the seller (price-wise) ... and the seller has nobody to protect him," says Bain.
On the other hand, he says, an agent, who could lose his licence if he acts illegally or makes a mistake, is bound to act in a client's best interest.
Bain has seen several FSBO deals fall through over as little as a $1,000 or $2,000 difference in the selling price.
"The friction or the stress between a buyer and a seller comes to a point where (the deal) breaks down, whereas if (an agent) were involved, they would be able to bridge the difference because they don't have an emotional involvement," says Bain.
He says sellers have to understand that an agent's fees are negotiable right up to the time of closing. And, there's "no comparison" between an agent's network of past clients, industry contacts and referrals and an FSBO's potential-client base.
He advises FSBO sellers to hire a licensed appraiser - at least once and possibly twice - to determine the correct property value.
"I don't think any consumer knows the right price," says Bain. "With the way prices have gone up in the last little while, we in the business don't even know the right price."
But Bain stresses that his comments simplify matters, and no two deals exactly alike.
In Endo's case, the buyer approached him after she saw "for sale" signs on the property. He says one key factor enabled him to sell the house after the agent could not.
"I think it was the fact we had a much more vested interest in it, and we put a lot of time and effort into it, to be honest with you," says Endo.
He also relied on his previous experience selling his late mother's Vernon, B.C., home with an agent, techniques he uses in his sales position with Canada Post, and lessons he learned while observing agents as they showed the house.
"It can be done," says Endo, of selling your own property. "And you can have quite a success at it."
(Monte Stewart can be reached at monte@businessedge.ca)
