ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, September 8, 1996 TAG: 9609090091
SECTION: BUSINESS PAGE: 1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
WHEN Sue Sykes made up her mind to move to Smith Mountain Lake and sell her South Roanoke home, she decided to market the property on her own. Her idea was to save paying commissions to a real estate agent and broker, typically a sum of thousands of dollars.
After several weeks with no buyer, however, she took what many property sellers are finding to be a middle ground between those two marketing options. Sykes switched to the program called For Sale By Owner.
Sykes used options that were not generally available or widely used in the Roanoke region until recently. Before, virtually every home seller automatically enlisted the services of a real estate agent and broker to handle the job of marketing the house.
They paid the agent's commission, generally 6 percent of the final selling price, meaning on a $100,000 house, that's a cost to the seller of $6,000.
By law, realty fees are negotiable, but 6 percent is the going rate in many Virginia markets. Kathy Nunnally, public relations chairwoman for the Roanoke Valley Board of Realtors, said the size of the commission generally depends on factors related to the sale and some agents charge less than 6 percent while others may charge more.
Today the role of the real estate agent is less of a certainty as more "For Sale By Owner" signs spring up in front yards all over the area.
Ask owners like Sykes why they undertake the chore and the answer is unanimous. They want to save money.
Sellers generally have four choices about marketing the property:
* Sell the house themselves. That usually means planting a sign in the front yard and buying classified advertising in the local newspaper. This saves commissions but also requires the most work and attention by the property owner.
* Work through For Sale By Owner, an organization that offers limited marketing services and a la carte pricing for them. Assistance takes the form of listing in a color publication, a large yard sign that can be leased and legal documents at the ready for negotiating and closing the sale.
Sellers do much of the work normally done by realty agents and generally lack access to services that exchange the listings of many sales agents.
* Use a discount broker, such as Affordable Real Estate Services Inc. in Salem. This firm charges a commission of 3.9 percent but promises essentially the same services as a traditional or full-commission broker.
* Retain a traditional real estate agent to list their home, using a variety of marketing services, including access to the multiple listing service that promotes properties of all the region's member agencies. The value of the MLS is that a large number of agents have access to homes on the market to match with buyers who seek their help.
Despite sellers' desire to save money on commissions and the growing popularity of discount marketing services, the established residential realty industry still dominates.
A national survey in May indicated that 82 percent of sellers use a traditional real estate professional. Of that number, 6 percent had tried unsuccessfully to sell on their own, said Lisa Noon of the Virginia Association of Realtors, a trade group representing many of the state's realty agents and brokers.
* * *
Some sellers, like Sykes, have tried more than one marketing option.
Sykes, whose white and magenta for-sale sign coordinates with her magenta door and porch swing, said she had "some success" working on her own. Her three weeks of newspaper advertising generated calls and brought eight to 10 people to her house on 24th Street S.W.
Her visitors, she said, showed "some enthusiasm" for the house, "but they dropped out on me."
Two weeks ago, Sykes decided to switch to For Sale By Owner, a program run by Sam and Betty Maxey. She attended their seminar and signed up for the program's advertising magazine.
"I thought I'd get more exposure" by appearing in the magazine, Sykes said, because it has a biweekly distribution of 15,000 copies at racks in 150 locations in the Roanoke area and at Smith Mountain Lake.
But two other sellers who started on their own both wound up signing with MKB Realtors instead of going to For Sale By Owner.
Mitch Wheeler said he put his house in Blenheim Road in Southwest Roanoke on the market for a month, advertising in the newspaper and holding three open houses on as many weekends.
Few people came by on Saturdays, Wheeler said, but some 25 or 30 couples appeared on the Sundays. They were "just looking," he said; only four or five of them made return visits.
"We told ourselves we'd try it for a month and see how we did," Wheeler said.
So he listed the home with a realty agent the first week in August, and it was under contract by Aug. 26. Wheeler paid 6 percent on the deal.
Jane Lemon Marmion, a Richmond real estate agent, also tried selling her late parents' home on Avenham Avenue in South Roanoke on her own starting in late spring. Two people were willing to sign contracts contingent on sale of their own houses, but Marmion was not interested in a contingency contract.
So about two weeks ago she listed it with MKB Realtors, a Roanoke County-based broker. "I wanted to go ahead and get on with it," she said.
Marmion said she didn't consider For Sale By Owner: "I would never do that." Her primary reason, Marmion said, was security. With a listing agent, nobody can get into the house except when accompanied by a licensed real estate agent. And an agent, she said, knows where the buyers are.
Most important, Marmion said, was having the house listed with a multiple listing service and thus available for showing by all 865 real estate agents in the community who are members of the listing service. "That really was critical in our decision," Marmion said.
Unlike trying to sell a house on your own, the For Sale By Owner organization offers tangible assistance short of actual marketing.
Founded in January 1994, it is operated by the Maxeys, who conduct a seminar for would-be sellers from 7 to 9 p.m. every Wednesday at their firm's office at 3212 Brambleton Ave. S.W.
The seminar, which attracted 18 people on a recent Wednesday, centers on hints to help people market their houses. "The process works," Sam Maxey told the audience. "It is a process." His advice on preparing a house for sale and pricing the property is based on more than 20 years in the real estate business.
Sam Maxey said that sellers working through the program sell in an average of 53 days compared to 132 days for houses listed with the local multiple listing service, or 2.5 times faster.
Sellers who work through his organization can rent a large and sturdy yard sign for $25. But the main attraction is the company's consumer magazine. It is published every two weeks, printed in Raleigh, N.C., with 15,000 copies distributed free in the Roanoke Valley area and at Smith Mountain Lake.
Prices for ads in the magazine vary by size and the number of weeks they run. For example, a half-page ad for eight weeks costs $300. A sixth of a page for two weeks runs $64.
Those who advertise in the magazine also receive a kit containing documents they need for signing and closing a sale. Or, if the sellers wish, the Maxeys, who are licensed real estate agents, will handle the forms and the closing for a flat fee of $475.
Those attending a recent seminar at the Maxeys' office all said they had houses to put on the market, and many said they planned to try For Sale By Owner's program.
"It kind of intrigues us," said Dave and Karen Fulcher of Franklin County. Their reason is "saving the money."
Grace and Carl Morris of Bedford County had used an agent whose six-month contract expired last June 3 without results. Nor had they been able to sell on their own. They attended the seminar "to get information to see what we should do."
Don and Barbara Camden, who are leaving Roanoke, had been trying to sell their 110-year-old house on Mill Mountain. They said they don't want strangers brought into their restored home. With a key in the lock box, they said, any real estate agent can come in with clients. Working through For Sale By Owner, they said, they can choose the prospective buyers who visit. "We plan to be in control. This way we control it."
Robert and Mary Bonner of Roanoke County, who are moving out-of-state, said they attended the seminar to learn the skills the Maxeys have to offer. They said those hints should help them to be successful sellers and to save money they can put into another house. "It's worth a try," they said. "We have nothing to lose."
Many who have used the service are happy. Adger B. Carroll of Salem, for instance, said he had sold six houses over 20 years using the services of real estate agents. But he was happier doing it himself. He said he and his wife sold their house at full price in 10 days after it was listed in the For Sale By Owner magazine. Carroll found the requirement that he show the house himself was a positive factor, not a negative.
Some are less happy about the process.
One woman, who did not want her name used because of family reasons, said she had "no time to fool with it" because she and her husband both work and couldn't show the property themselves. She used Affordable Real Estate Services instead.
She was satisfied with the 3.9 percent commission, she said, because another broker's agent had charged her 7 percent for selling a previous home.
Marty Sutherland Seamann put her North Lakes home on the market through For Sale By Owner in October when sales are slow.
What some people see as retaining control - the need to be home to show the property - was an imposition to Seamann. "It changes your life," she said.
She switched to Affordable Real Estate Services in February, and the house sold in 60 days. She said it helped to have the house listed with Multiple Listing Service.
Cathy Rhodes used For Sale By Owner to sell a house in Troutville, but she thought that she lacked the necessary knowledge to close a deal. She was "not up on the paperwork" and didn't know how to reach the market for an older home.
* * *
Jack Richards started Affordable Real Estate Services in June 1995 after 18 years as an agent with a traditional brokerage. He conceded that some other agents were "not happy initially" and would not show his houses to their prospective buyers. Now, he says, he has no problems.
At first he charged 3 percent, keeping 1 percent for himself and giving 2 percent to an agent representing a buyer. But that didn't work because of a requirement that the seller had so pay the costs of advertising in addition to the 3 percent. It "confused the seller."
To entice agents representing buyers and to enroll more sellers, he switched to 3.9 percent. Three percent goes to the selling agent and Richards keeps 0.9 percent.
He can do that, Richards said, because he keeps his overhead low. He said big real estate firms in the Roanoke Valley have four times his overhead and "can't operate in our range."
And then "we don't make as much money as some of these people do," Richards said. For instance, he drives his clients around in an old model car.
But he said that "we are making money." One reason is that he sells 45 percent of his own listings and thus keeps the entire 3.9 percent.
* * *
Despite the increased competition from For Sale By Owner and Affordable Real Estate Services, traditional agents and brokers clearly dominate the market. Walter White, president of the Roanoke Valley Association of Realtors, said there are several reasons.
A real estate agent is better able to get "top dollar" for a home compared to someone trying to sell his own home. He said an agent knows what the house is really worth compared to "what the neighbors say."
Realtors prescreen prospects, he said, so that only those who can afford a house are taken to see it. That, White said, rules out "a lot of tire kickers and lookers."
Security is an issue, according to White. He said some people might answer ads to see what's in the house so that they can come back to break in.
He said only the 928 people who have met the qualifications to become a Realtor in the Roanoke area have access to the lock boxes. He said the boxes record the time of entry and identity of the Realtor, and this information can be downloaded and printed.
Real estate agents, he said, prequalify the clients they take to a house.
White said real estate agents have an unemotional view of a house, so they can offer tips on ways to fix problems with the property. Marketing a house is based on experience, White said.
Realtors have referral programs, he said, so that potential buyers from out-of-town come to a local agent when they arrive in town.
Closing a sale is no easy task, White said, and real estate agents know how to help buyers obtain different kinds of financing. They can handle all of the required paperwork and inspections.
Lacy Edwards of MKB Realtors called hiring a real estate agent a matter of "enlightened self-interest." Only real estate agents, he said, have the knowledge of the technical, legal and other details needed to close a property transaction.
They also have knowledge of what he called the market dynamics of supply vs. demand, interest rates and types of loans available.
Edwards said owners need a dispassionate and knowledgable person who can bargain creatively. An owner, he said, is too close to the property and takes criticism personally. And owners feel uncomfortable trying to handle their own deals.
Besides, he said, most buyers are represented by an agent because they can see multiple homes in their price range in a single day. That means many more buyers see a home listed with a real estate company.
Edwards acknowledged, however, that agents "come in different shapes, sizes and approaches." Sellers, he said, should interview two or more agents before signing with one of them. He advised looking for credentials that show experience and education, signs of sales success and knowledge of the market.
LENGTH: Long : 238 lines ILLUSTRATION: PHOTO: ERIC BRADY STAFF After several weeks of going it alone,by CNBSue Sykes is trying another option to sell her home on 24th Street
Southwest, Roanoke color