Brokers are watching as online real estate firm ForSaleByOwner.com expands in Manhattan, but they say they’re not shivering in their shoes.
ForSaleByOwner.com has more than doubled to 55,000 the number of properties listed nationwide on its Web site since 2004, making it the largest database of homes for sale without a broker, according to company data.
The company’s move into the Lincoln Building at 60 East 42nd Street is its first expansion since its 1999 opening at 60 Madison Avenue in 1999. The office will house 15 employees in graphic design, programming and administration in its new space.
“After a period of rapid growth, in which time we saw our traffic, revenues and staff more than double, we knew it was time to expand our work space,” said Colby Sambrotto, the company’s chief operating officer.
Real estate brokers around the country have watched the growth of the for-sale-by-owner phenomenon, especially in suburbs, with some trepidation.
ForSaleByOwner.com aims to eliminate conventional brokerage from property transactions, bringing buyers and sellers together on-line in a no-commission marketplace.
The National Association of Realtors has gone so far as to predict that one out of every four homes may soon be sold in broker-less transactions. Data collected by NAR showed that among property owners who sold their homes in 2003, some 14 percent or one in seven bypassed agents.
These numbers have scared broker associations in some parts of the country, like Texas and Oklahoma, where they have pushed minimum-service legislation that has raised eyebrows and triggered threats of a lawsuit against NAR to be filed by the U.S. Justice Department.
Manhattan, a singular marketplace, is seen as far more impervious to the for-sale-by-owner phenomenon, however.
“Like everything else in real estate, mostly everything comes to the city last,” said Dottie Herman, president and chief executive of Prudential Douglas Elliman Real Estate in Manhattan and Long Island. “On Long Island, people have been trying to sell on their own for 20 years, so it’s not anything new.”
Jill Feldman, a ForSaleByOwner.com spokeswoman, said it’s difficult to determine the percentage of Manhattan property transactions captured by ForSaleByOwner.com.
“It’s really just starting to catch on in the city, but I’ve seen a lot of listings on Long Island,” she said. The phenomenon is more prevalent in lower-priced sections of Long Island, Herman said. Elliman agent Tina Canaris, who operates out of the Merrick office on Nassau County’s south shore, said she encounters homeowners selling their own homes, but brokers aren’t threatened by the phenomenon.
“In our area, knowledgeable people the way they go to a doctor or an attorney don’t want to do their own thing,” Canaris said. “Most sellers see value in using a broker.”
ForSaleByOwner.com claims it has increased the number of higher-priced homes listed on its Web site. There are 467 homes listed for more than $1 million on the site. Of those, 72 are in Florida, 48 are in California, 44 are in New York and 31 are in New Jersey, Feldman said.
That may indicate luxury homebuyers perhaps even in Manhattan where the average price of an apartment is now above $1 million are becoming more comfortable buying on their own without a prestigious real estate firm behind them.
But brokers believe it more likely that some homeowners may attempt to sell their home, listing it on a Web site, but backing out when they realize how time-consuming and difficult it can be.
“Either someone sells right away, which could happen in a hot market, or you end up with a broker,” Herman said. “A lot of people say, ‘I just want to try.'”
A hot real estate market with little inventory has a lot to do with growth of for-sale-by-owner transactions, Herman said.
“When there’s not a big supply, and there’s big demand, it’s a lot easier to sell something, because people don’t have a lot of choices to begin with,” Herman said.
In the current Manhattan market, where 85 percent of listings are co-ops, buyers may not be comfortable going through board qualifications without an expert looking out for their interests.
“It’s much more difficult in the city, because you have co-ops,” Herman said. “I don’t think I’d want to be a buyer coming into the city without a broker’s expertise at all.”
Warren King, a broker with the Tribeca office of Brown Harris Stevens, said many buyers in New York City are foreigners, who need the detailed neighborhood knowledge of a good broker.
“Buyers feel like they’re more protected with a broker, especially since Manhattan attracts an international buyer,” he said.
Herman pointed out that selling your own home requires a lot of time. It’s difficult to do without at least one person home during the day which may be tough to swing in Manhattan.
“If you work, you could do it, but you’d never have any time to sell it,” she said.
Even if ForSaleByOwner.com doesn’t take Manhattan by storm, King said he believes there is always at least a limited DIY appeal in any market.
“I’m sure anything will catch on, because there will always be people who are pennywise and pound foolish,” King said. “Even if you had DYO Dentist.com, there would be people who would go there.”