A real estate listing for a $25 million townhouse, featuring original decorative accents throughout its 6,100-square-foot interior, bears a warning: no brokers.
The 113-year-old Upper West Side home, designed in a Victorian style by the celebrated architect Clarence True, is one of scores of New York City properties that can be seen on ForSaleByOwner.com — a Web site dedicated to broker-free sales nationwide.
Other local listings on the site include a 300-square-foot co-op in Upper Manhattan that is on the market for $184,000, a 1,500-square-foot, single-family home in the Sunset Hill section of Staten Island for $527,000 and a 1,900-square-foot condo in Chelsea for $2.5 million.
Yet while For Sale by Owner (FSBO) listings are on the rise nationally because of the downturn in the economy, real estate experts said New York City seems to be bucking that trend. Sources said that they have seen a decline in so-called FSBOs in the five boroughs in the last 12 to 18 months, and that they don’t expect that skid to reverse.
That’s because historically, FSBO activity in the city has waned during economic downturns, said Jonathan Miller, the president of appraisal firm Miller Samuel.
“In a stronger market, sellers are braver — they’ll use discount brokers or try to sell properties themselves,” Miller said. “During a housing boom, the agent ends up as an order taker. In a weaker market, the marketing skills and the brand strength behind the brokerages play a bigger role.”
Left to their own devices, FSBO sellers tend to be two to three months behind the market when it comes to pricing their properties, added Miller.
Bruce Katz, a New York real estate attorney whose firm Katz & Matz facilitates several hundred closings a year, said that FSBO deals have dropped from 8 to 10 percent of his business to 4 to 5 percent during the past year. Today, most clients who list their properties as FSBO eventually end up hiring a broker, he said.
“A few years ago, when anyone could get a mortgage, there were many more people trying to sell on their own — and having a lot more success with it than they would now,” Katz said.
Robyn Stern, a mortgage broker with Manhattan Mortgage Company, said she’s also seen a decline in the number of her clients who are attempting to buy properties listed without a broker. In “skittish times,” when financing is more difficult to come by, Stern said more homeowners look to experts to market their properties and to screen prospective buyers.
Even in the best of times, FSBO sales, which tend to be more prevalent at the lower end of the market, represent only a small fraction of real estate transactions in New York City. That is, in part, because of the prevalence of co-ops in which prospective buyers must gain board approval based on financial and other factors. Sellers have long relied heavily on brokers to screen would-be buyers, who in turn rely on brokers to help them with sometimes idiosyncratic co-op applications.
“Often, the seller doesn’t know how to do the transaction — especially in a co-op, where there are very specific rules that many times the seller is not aware of,” said Tamir Shemesh, a managing director at Prudential Douglas Elliman in Manhattan.
Nonetheless, those who are going FSBO in New York have plenty of company on the national front.
ForSaleByOwner.com and HomesByOwner.com say they’ve seen a burgeoning interest in their sites nationwide. They point to National Association of Realtors data showing that more people finding their homes are ending up purchasing without the help of a broker or agent.
Executives at the companies say that amid a housing-market downturn — when a standard 5 to 6 percent fee commanded by many brokers can make the difference between breaking even and selling at a loss — business is good.
At ForSaleByOwner.com, a seller can pay as little as $89.95 and as much as $899, depending on the package, to list their
home on the site and on partner sites.
Some sellers in New York say that the Internet has made tasks traditionally the domain of real estate pros — like marketing the property, showing it to prospective buyers and determining which among them is financially qualified to make a purchase — more doable without a broker.
“[It] can be easily accomplished by the seller himself,” the owner of the aforementioned Upper West Side townhouse, who wished to be identified only as James, wrote in an e-mail.
The townhouse was listed at ForSaleByOwner.com last month. Within two weeks, the owner reported that the listing generated more than 850 page views and one offer.
Philip Donnellan, a real estate broker who specializes in foreclosures, is the Long Island-based franchisee of HomesByOwner.com. The site lists FSBO properties on Long Island and in Queens.
“A lot of people have upside-down mortgages or very tight margins — maybe their home is worth $400,000, and they owe $350,000,” so the money they save on paying a commission to a realtor could make a big difference, Donnellan said.
“Others think they could do a better job than a realtor would, and save themselves a lot of money.”
In the end, though, many clients who list on the site ultimately join forces with one of the real estate brokers who scan the FSBO portal looking for business, according to Donnellan. He said he bought rights to the local listings at HomesByOwner.com, in part, to find new business for his own
discount brokerage firm.
Dorothy Somekh, a senior vice president at Halstead Property, echoed this view. “With FSBO listings, all the brokers try to pounce,” she said.
Indeed, one FSBO seller, whose one-bedroom Battery Park City apartment was listed for $999,500 at ForSaleByOwner.com last month, reported getting bombarded with e-mail and telephone inquiries from brokers looking for exclusives, and from real estate investors looking to purchase properties at 30 to 40 percent below asking price.
The seller, who purchased in a new development 18 months ago, was looking to flip her contract. She decided to put her home at Riverhouse in Battery Park City on the FSBO site and to give the listing to a non-exclusive discount broker (rather than give it as an exclusive to a Corcoran or an Elliman) because, she said, “We’re in a rush to sell, and we wanted to hit it from all angles.”
As it turned out, however, the building ran late, so she is in the process of invoking a clause in her contract allowing her to walk away. “We should,” she said, “get our deposit back.”