An investment of time and effort can pay off when selling home

DO IT YOURSELF AND SAVE

April 05, 1992|By Alyssa Gabbay | Alyssa Gabbay,Contributing Writer

Tom Cupp is a do-it-yourself kind of guy. In the seven years that the electronic maintenance engineer and his family have lived in their Northeast Baltimore rowhouse, he has handled most repairs and renovations himself -- converting the basement into a family room, laying a new asphalt shingle roof and refinishing the wooden floors.

So it was only natural that when Mr. Cupp put his house on the market in November, he would try to sell it with as little help as possible.

"I like to do new things, and I figured that I'd give it a shot, because I was looking at saving a lot of money," Mr. Cupp said. He eventually hired a fee broker, Columbia-based Homeowner Consultants Inc., to help him with some aspects of selling the house, but he showed it to prospective buyers and held open houses on his own.

His efforts paid off recently: A buyer signed a contract to purchase the home for $65,500, and settled last Tuesday. Mr. Cupp will end up paying $1,000 to Homeowner Consultants for its services -- about $3,000 less than if he had sold his home with a traditional broker.

These days more people are exploring alternative, cheaper methods of selling their homes -- most of which involve greater participation on their part. Some are selling their homes without real estate agents. Others are paying agents a fee to handle some but not all of the responsibilities.

The number of fee brokers -- those who charge a flat fee rather than a commission to sell a home and often require the seller to participate heavily in the process -- is on the rise in the Baltimore area.

Homeowner Consultants sold about 200 homes last year -- an increase of 20 percent from the previous year, according to owner Sandra Blaker.

And Help-U-Sell, a national fee broker, has opened three franchises in the area since January 1991 and plans to open two more within the next six months. Last September, the Timonium Help-U-Sell office handled 13 of the 131 homes sold in its market area, which includes Phoenix, Lutherville and Towson. It expects to sell at least 160 homes this year, twice last year's total, according to owner Tom Ross.

"People are much more aware of saving money these days, and this was one of the last areas where they couldn't save any money," said Mr. Ross. "We're offering them the opportunity to do that by participating in the process."

The number of people selling their own homes appears to have escalated, too. A 1987 survey by the National Association of Realtors showed that one of five sellers sold their home without an agent -- a substantial increase from the 1960s and 1970s, when an estimated 5 percent to 10 percent sold on their own.

Locally, many traditional brokers and several lenders say they have seen no change in the numbers of FSBOs ("for sale by owner"). But fee brokers such as Ms. Blaker and Mr. Ross say they have witnessed such a trend. And, there were 34 For Sale By Owner ads in a local newspaper during a recent week -- compared to only three ads a year ago.

The changes are not surprising, according to Carolyn Janik, author of "How To Sell Your Home In The '90s."

"Five or 10 years ago, houses appreciated so much that the 6 or 7 percent commission didn't hurt," she said. "But in today's market, many people have actually lost equity, so paying an agent's commission comes right out of the cash that's in hand" -- money that might otherwise be used toward a down payment on the next house.

Besides, said Ms. Janik, doing it yourself has become more acceptable in recent years. "We pump our own gas and get cash at a cash machine, so why shouldn't we sell our own homes?" she asked.

There are drawbacks to selling a home yourself or using a fee broker. As many brokers point out, putting your home on the multiple-listing service advertises it to a huge field of brokers, and lack of that exposure can be a serious handicap. (Most fee brokers allow people to multiple-list, but sellers pay more if a buyer is found through an agent from another company.)

"In this market, which is still a buyer's market, it's extremely hard to get something sold without putting it on the multiple-list," said Donn Layne, a Realtor who worked at the North Baltimore Help-U-Sell for seven or eight months before joining Gilbert D. Marsiglia & Co. Inc., a traditional brokerage in Lutherville.

If you list your home and it is sold by an agent from another company, "you're paying almost as much as you would ordinarily," since you must pay a 3 percent commission to the selling agent as well as the flat fee, Mr. Layne noted.

For example, a seller with a $100,000 house would ordinarily pay $3,950 to Help-U-Sell for its services, excluding multiple listing. If the seller listed his home and an agent from another company sold it, the seller would pay about $5,450 -- only $550 less than the 6 percent commission he would likely have paid had he sold through a traditional broker.

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