Going it alone

Many homes along the tree-lined streets of Spokane’s Cannon Hill Park neighborhood recently have been listed for sale, some at prices beyond $600,000. Signs posted in front advertise the names of well-known real estate companies, such as Tomlinson/Black, Coldwell Banker and Keller Williams.

But many also sport an increasingly familiar red and white sign anyone can buy at the local hardware store for as little as $5. The signs announce that the home is being sold by its owner and include hand-written names and phone numbers.

“We’re aware that the housing market is very good right now and we thought we would see if we could do it without working with a Realtor, which is an additional expense,” said John Goeller, who is offering his 3,000-square-foot home at 810 W. 17th for sale at $325,000.

Spokane and Coeur d’Alene’s residential real estate markets are running at record-setting paces, prompting many people to try to sell their homes on their own. Fueled by a desire to save thousands of dollars in commissions, homeowners are heading to the hardware store to buy signs or forking over a few hundred dollars to post their homes on the Internet. And though many transactions will successfully close with no hitches, real estate professionals — including attorneys, title agents and Realtors — caution that there’s more to selling a home than posting a sign in the yard.

“If real estate were really easy, there would be no need for us,” said Bruce Hardie, owner of Keller Williams Realty in Spokane. “But there are always deal-killers that come up and it’s our job to make sure we get through that.”

The homeowners who opt to go it alone have an increasing amount of resources at their disposal. With the expansion of companies that list homes on Web sites, complete with photo tours, or on the Realtors’ own multiple listing services for a reduced price, homeowners can choose the services they want to use to sell their home. That may include the assistance of a Realtor, perhaps at a lower-than-average commission, a listing on a local or national “For Sale By Owner” Web site, or just posting a sign in a yard.

Costs lower, but there are pitfalls

“You look at it and you think 6 percent for a Realtor. For my house, that would be 12 grand,” said Trevor Smith, a Coeur d’Alene resident who recently put a $199,000 price tag on his house at 722 N. 7th. “I bought that house for sale by owner, so it made me a lot more comfortable.

“There were a few glitches, but nothing major,” Smith said of his earlier experience. “It seems like title companies do a lot of the work.”

That’s something of which Kristy Johnston, a senior escrow officer with Alliance Title in Coeur d’Alene, has become acutely aware. A year ago, Johnston said, she received perhaps a call per week from buyers or sellers wanting advice on owner-listed properties. Now she’s fielding five to eight calls a week, she said. The influx of calls has increased her workload, Johnston said, because sellers need to be walked through the paperwork necessary to close their sale.

Still, Johnston said she understands why people want to sell their homes on their own. One client had no sooner leaned her “For Sale By Owner” sign up on her garage three months ago than a person driving by saw it and bought it, Johnston said. The sign wasn’t even filled out with a name and phone number yet.

“As a title company, we always try to recommend they work with a Realtor,” Johnston said. However, “when you have situations like that, it’s difficult to recommend they use a Realtor because it’s already sold.”

Real estate professionals say many homeowners are not aware of the forms that need to be filled out to close a home sale. Generally, they also don’t track changes to laws regarding what needs to be disclosed about a property.

“A new law just came across today. If you’re within a mile of a farm, you have to disclose that,” said Rob Higgins, executive officer of the Spokane Association of Realtors.Though Washington real estate laws require more disclosure than Idaho, both states’ lists are fairly extensive. Coeur d’Alene real estate attorney Denny Davis said Idaho laws require that homeowners disclose everything from the condition of appliances to whether a property is subject to annexation to the condition and age of the roof. Homeowners are also required to tell potential buyers about problems with the foundation, any existing easements or zoning issues, hazardous materials on the property or pest infestations.

Davis advises clients to put all the terms of the offer they want to accept in writing and to include the property’s legal description. An official purchase and sale agreement also needs to be completed. Though he said he sees no problems with people trying to sell their homes themselves, he said investing a few hundred dollars to talk to an attorney could be money well-spent.

“If it were me, knowing what I know now, I’d want to go talk to one,” said Davis, who has been an attorney for 28 years.

Many of the for-sale-by-owner Web sites refer clients to real estate professionals, including attorneys, appraisers and title agents.

FSBOs still a small share of the market

In Spokane, many of the owner-listed homes use the services of spokanebyowner.com, a Web-based company that Ron McIntire started in 1998. If a client agrees to work with his company exclusively, $189 will get a homeowner selling a property worth more than $100,000 a custom-built Web site with a photo tour of the home.

“This year, I’ve already done almost as much volume as I did last year,” McIntire said. In June, he said, his Web site listed more than 260 properties for sale, compared with about 1,450 active listings on the Spokane Multiple Listing Service. “We’ve grown by a minimum of 30 percent every year we’ve been in business,” McIntire said.

But for sale by owners, commonly referred to as FSBOs (pronounced fizz-bows), are not a majority of the market. In 2003 and 2004, FSBOs represented 14 percent of the market nationwide, according to the National Association of Realtors. Higgins, of the Spokane Association of Realtors, said FSBOs generally run 12 percent to 17 percent of the Spokane market, although his organization doesn’t track them.

Those are numbers that Chris Nye disputes. In 2001, Nye founded MLS4OWNER.com, a Washington state Web site that lists homes on local multiple listing services. Nye began offering Spokane properties on his Web site in November and he estimates the FSBO market in Washington state to be 20 percent to 25 percent. His own business has been growing by 30 percent per quarter he said. In addition, he said, with the Internet being used to sell everything from diamonds to cars to home loans, why would real estate be any different?

“You’re going to get conflicting information in this field, always,” Nye said.

Hardware store owners in Spokane and Coeur d’Alene report rising numbers of for-sale-by-owner signs going out the doors. B.J. Mossman, who owns the Coeur d’Alene Do It Center on Fourth Street, said last year he sold 38 for sale by owner signs. This year, already, he’s sold 111.

“There’s just tons of for sale by owners out there,” said Mossman, who is also shopping for a home.

Realistic pricing is paramount

In such a dynamic market with escalating prices, competition is creating some unrealistic pricing, said Richard Kohles, president of Coeur d’Alene’s Multiple Listing Service.

Both Coeur d’Alene and Spokane have seen the numbers of Realtors jump recently. Over the last two years, the number of Realtors represented in Coeur d’Alene’s Multiple Listing Service grew by 60 percent and the number in Spokane’s Multiple Listing Service, by 30 percent.

With below-average inventory levels in both cities, many Realtors are struggling to find properties to sell. That means some agents are accepting listings at unrealistic prices, Kohles said. Homeowners who sell their own homes and estimate the prices themselves may exacerbate that situation, he said.

“What’s been going on is that people have been hearing the prices have been going up,” Kohles said. “Realtors have priced things over market value and at the same time, the sellers are pricing it above the market and now some of the inventory is sitting there.”

But many homeowners trying to sell their own home, like the Goellers on Spokane’s South Hill, say they did their homework before listing their home. Homeowners say they’ve driven around town to examine similar properties for sale, watched the prices of properties in their neighborhoods or had market analyses done.

“I think the temptation here is to be greedy, which we don’t want to be,” said Gail Goeller, John Goeller’s wife. “But we don’t want to get less than what the house is worth.”