Peter G. Miller
OurBroker®

The promo from the publisher could not be more clear.

"Internet resources make selling a home without an agent painless and profitable," it said, flogging a book for self-sellers.

Can this be true? Both painless and profitable? Where is this real estate utopia?

"Hard statistics are difficult to come by, but given the rapidly increasing numbers of online listings available, it would seem that this is the new and fastest growing source of buyers," writes Robert Irwin in the third edition of his guide, "The For Sale By Owner Kit" ($17.95, Real Estate Education Company, Chicago, IL).

"If selling online is good enough for the agents," says Irwin, "it should be good enough for FSBO sellers."

It's an interesting premise, and one worthy of exploration.

The term "FSBO" means "for sale by owner" and there have been a number of commentators who have suggested that the Web represents a new and useful marketing tool for self-sellers. And there is, after all, some logic to this thought because -- as Mr. Irwin points out -- if brokers can market effectively on the Internet, why not owners?

Superficially it would seem that the Internet is ideal for FSBOs. There are a number of sites which accept free ads from self-sellers, and owners can certainly build their own web pages to market homes. But a closer look at the marketing process suggests that internet exposure is not likely to generate a large number of brokerless sales.

To see why, consider the other part of the marketing equation -- those who buy. If you're a purchaser how many homes do you want to see?

Surely there are purchasers who buy the first house they see and are content with their decision. But such buyers are hardly common. A study by the National Association of Realtors shows that an average buyer searches 14 weeks before purchasing. (See the 1997 edition of NAR's "The Home Buying and Selling Survey.")

Now you have to figure that someone looking at real estate for 14 weeks is probably going to check out more than one home. And online, the equivalent of looking for 14 weeks means examining as many Internet listings as possible.

The online advantage that brokers have is that they are able to showcase enormous numbers of homes in one place. Just look at the recent monthly stats for Realtor.com:

• 1.3 million listings
• Listings from 516 MLSs in the United States, Canada and Puerto Rico.
• More than 324 million hits
• More than 120 million home views
• More than 8 million home searches performed during almost 4 million visits
• On average, homes on Realtor.com were viewed 91 times.

In comparison, there are few sites that carry a large inventory of FSBO offerings and finding self-seller properties one-at-a-time in a given community is tedious.

The most effective marketing tool for FSBOs -- who represent about 15 percent of all existing sales -- is likely the local newspaper classifieds. Local newspapers and shoppers (free newspapers) typically combine all realty ads in one place, making FSBOs part of the range of choices sought by purchasers.

While it may be counter-intuitive, the Internet does not automatically create a marketing advantage. Until there is a national site with extensive promotion which offers enormous numbers of self-seller properties -- say 150,000 or more -- efforts to move FSBO properties online are unlikely to be a major factor in the realty marketplace. And given the cost to create a leading, well-known Internet site, the plausibility of building a major FSBO site sufficient to impact the marketplace seems more remote each day.

Question Of The Week

Q We were interested in purchasing a home, but the property was sold to a local real estate broker (not our broker) -- probably for less than we would have paid. Is this fair?

A If the broker worked for you as a buyer representative, then no, I would not be comfortable with such a purchase.

But that is not the situation you describe.

What you describe is this: There was a property for sale. The seller wanted a given price and terms. One buyer, who happens to be a real estate licensee, made an acceptable offer. You did not make an offer. What you might have done cannot "count" because no offer was made and price alone may not be a sufficient reason to accept one offer over another.

The fact that someone has a realty license does not mean they cannot purchase property. It does mean they have disclosure obligations, and it also means that they cannot violate client interests. But in this situation, you were not a client of the broker who purchased the property.

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Published: December 15, 1998

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

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Editor's Note: This article reflects the opinions of Peter Miller only and not necessarily the views of this or any other publication, organization or Website owner.

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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