FSBO Sales Tactics Spread as Home Prices Rise
Dawn and Carl Weinberger sold their home west of Portland, Ore., by themselves in the kind of deal that gives traditional, full-service real estate agents indigestion. Using a discount broker, the Weinbergers paid $295 to put their three-bedroom rancher on the complete, up-to-date, multiple-listing service accessible only to brokers. The listing specified they’d pay a 2.5% commission to an agent who brought them a buyer.
In three weeks the house drew two bidders and sold for $202,000, just above the $199,500 listing price. Such sales tactics have spread the past few years as home prices have climbed. And they’ve become a battleground where real estate groups claiming the right to protect their livelihood and sales lists are facing off against antitrust regulators.
By suing and scolding local and national realtor groups, regulators aim to force them to accept what appears to be the inevitable dismantling of the commission system that controlled how Americans sold property the last 60 years.
The Weinbergers’ sale shows what’s at stake. In all, the couple paid $5,434 to sell their house, including the commission, listing fee and $89 for an unlimited number of professional-looking lawn and other signs from the discounter, ForSaleByOwner.com. That was $6,686 less than the $12,120 they would have paid a full-service agent charging the usual 6% commission for their area — and most of the U.S. The savings were enough, Dawn Weinberger says, to pay for cherry hardwood floors and upgraded appliances in their new home.
Real estate groups aren’t happy with such deals. They’ve tried to enforce rules limiting access to the multiple-listing service. And they’ve lobbied states, sometimes successfully, to pass laws mandating minimum real estate services or barring commission rebates. The Federal Trade Commission and the Justice Department took an interest three years ago. "We see no reason for limited-service brokerage restrictions — no evidence that any consumers have been harmed" by using discount brokers, said Maureen Ohlhausen, director of the FTC’s Office of Policy Planning.
Out in the trenches, real estate agents are less concerned about matters of principle than they are about preserving a way to make a living. "When discount agencies get involved, the commissions go down," complained Diane Saatchi, vice president of Corcoran Group, a full-service firm in New York City and the Hamptons on Long Island. Other agents say if you can’t beat ‘em, join ‘em. Times are changing. People are mad about having to pay $20,000 to $30,000 to sell their house. Either we come up with ways to assist these people, or they will find a way to get around us.
