As The Web Grows
FSBOs Decline

Peter G. Miller
OurBroker®

Listings and information online were supposed to make brokerage obsolete.

"The broker is out of a job as he knows it," MSN Real Estate Forum Manager Gary Brown told the Real Estate Intelligence Report in 1995. "There will still be a need for some broker services, but brokers will be out of the matching process and some of the peripheral services. Brokers may be go-betweens and help in negotiations. They may fill out forms."

As well, said Brown, "what you definitely aren't going to see anymore are those big commissions -- 6 or 71/2 percent. It's going to be more like a few hundred dollars."

Nielsen Media Research and CommerceNet now estimate that 79 million people over age the age of 16 are now online in the U.S. and Canada. With so many people online, and with so much realty information available, should not brokers be taking a beating? Should we not see a huge increase in sales by self-sellers, so-called "FSBO" (for sale by owner) transactions?

What we "should" see, and what we do see, are different.

A study done every two years by the National Association of Realtors, shows that FSBOs represented 19 percent of all sales in 1991. But in the 1997 edition of the Home Buying and Selling Process, only 15 percent of all owners sold by themselves -- a drop of more than 25 percent that occurred precisely as the Internet evolved into a major medium.

The best test of ideas is to see how they work in the marketplace. Knowledgeable buyers and sellers -- individuals not hindered by lack of information, a shortage of choices, or monopoly restraints -- have been exposed to Internet information and listings for several years. The results? Consumers have voted with their dollars and it is clear that the predicted demise of brokerage is about as likely as an Edsel in every garage.

Question Of The Week

Q We have an old house that we want to tear down and replace with a new home. Is there any way to get a tax deduction out of this process?

A Possibly.

Some neighbors took this approach: They went to the local fire department and asked if a home they wanted to demolish could be a donation. The fire department said "yes," came in, and burned the house to the ground. Why? As a training exercise.

This form of donation is, er, unique, so be certain to speak with both local fire officials and your tax professional. It may be possible to deduct the difference between the value of the improvement before the fire, and after. Since the property was going to be demolished anyway, the deduction is likely to be small.

Weekly Resource

Almost daily one reads of some software package that can be infected with viruses, Trojan horses, or harmful coding. It's tough to keep track of what has been infected, or where to find patches and fixes, but a good source is BugNet.

Editor's Note: Content on this page reflects the opinions of Mr. Miller only and not necessarily the views of this or any other publication, organization or Website owner.

Published: September 1, 1998

Use of this article without permission is a violation of federal copyright laws.

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .

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