‘Net adds rewards, challenges
Local buyers, sellers, Realtors turning to technology for assistance
July 22, 2007
Steamboat Springs — The transforming power of the Internet on the real estate industry should come as no surprise. According to the National Association of Realtors, 78 percent of homebuyers begin their search on the Internet.
The efficiencies the Internet provides may be especially beneficial in a housing market like Steamboat Springs, where many buyers come from afar. Mike Woolverton, president of the Steamboat Springs Board of Realtors, said he has sold homes to international buyers who haven’t even seen the property but have examined it online through virtual tours and other tools.
“It’s changed everything in our world, and it’s going to continue,” Woolverton said. “There’s no quicker way to connect.”
Doug Labor, broker and owner of Buyer’s Resource Real Estate of Steamboat, said Steamboat’s real estate market is driven just as much by second homes as primary ones, and that the Internet has especially helped not only the sellers of these homes, but also the buyers. Using the Internet, Labor said buyers can learn a lot more about a property than they can from a magazine ad. For example, Labor said buyers can use the Internet to map a property and more quickly remove properties from consideration if they don’t like the location, eliminating the need to see its location in person.
“It will save them time and money by using it correctly that way,” Labor said.
Buyers also can narrow their searches using the local Multiple Listing Service Web site. Labor said buyers looking for a particular type of property can specify everything from price to number of bathrooms. When a property matching a buyer’s specifications becomes available, the Multiple Listing Service can notify them instantly.
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Woolverton said the Internet has undoubtedly been a benefit to the real estate industry. But the technology may also pose a threat to traditional agencies. Some claim that for-sale-by-owner properties, known as FSBOs (pronounces fizz-bos), are becoming more popular as the Internet and Web sites such as ForSaleByOwner.com make it easier for people to market their own properties.
“We can provide you with massive savings,” said Colby Sambrotto, chief operating officer of ForSaleByOwner.com. “Why wouldn’t you put yourself in a position to keep 6 percent of the equity you’ve worked so hard to build?”
The Web site eliminates real estate broker commissions, which Sambrotto said are typically 6 percent, and provides homeowners a forum to sell their homes themselves. Sambrotto said the Web site charges a flat fee, ranging from $89 to $599, depending on the length of the listing and other services.
“If you can sell for the same price (as a real estate broker), you’re netting a heck of a lot more,” Sambrotto said.
But whether FSBOs can fetch the same prices as properties sold by real estate agents is a source of debate. According to the National Association of Realtors’ 2006 Profile of Home Buyers and Sellers, homes sold with the help of a real estate professional sold for, on average, 32 percent more than FSBO homes. The association claims the median FSBO selling price in 2006 was $187,200 compared with $247,000 for agent-assisted transactions. Such a discrepancy would negate any gain from not paying an agent’s commission. The profile also showed FSBOs declining, from 14 percent of home sales in 2003 and 2004, to 12 percent in 2006.
Sambrotto, however, doesn’t believe the numbers, noting the National Association of Realtors is far from an independent judge and the second largest lobbying group in the country, behind the National Rifle Association. But in the absence of any other national study on the matter, Sambrotto cannot authoritatively dispute the numbers.
Woolverton said Steamboat is special in a way that discourages FSBOs.
“More than half our market is second-home buyers,” Woolverton said. “It’s a complicated market here.”
Woolverton said second-home buyers in Steamboat are largely unfamiliar with the market, and will want to buy from a trusted real estate agent with extensive knowledge of the area. Also, many of the services that aid FSBOs don’t have a strong presence here, Woolverton said. For example, if you type a Steamboat ZIP Code into Zillow.com, a Web site that estimates the value of homes by comparing them will neighboring properties, no information is available.
Woolverton also said the 6 percent commission Sambrotto likes to cite is higher than the average in Steamboat and nationally. He said he could not discuss what the average is in Steamboat, but noted commissions always are negotiable.
There are a few Yampa Valley homes listed on ForSaleByOwner.com, including a two-bedroom condo in the 3300 block of Covey Circle listed at $419,000 by Andrew Benton. Benton said he has found a buyer for the condo and is closing later this month. He said he thinks he fetched a good price, and does not regret striking out on his own.
“The reason I did it was with the real estate market being so hot, I thought I could do it myself,” Benton said. “I was very satisfied.”
Benton said he thinks buyers appreciate the personal touch the actual owners of a property can provide in marketing their own homes. He said he was able to sit down with potential buyers and discuss over a beer the neighbors and other topics. But Benton said selling your own home is a lot of work, too.
“It is a little bit of a hassle,” Benton said. “I think the benefits of saving yourself $20,000 are well worth it.”
Benton benefited from some real estate experience he has from working for a local title company. Other sellers might have more difficulty selling their own homes.
“It’s a full-time job,” Woolverton said.
Sambrotto also acknowledged that FSBOs are not for everyone.
“We’re not anti-agent,” he said. “We work with a lot of agents. I think there’s certainly room for agents. They do a great job at what they do. They’re just expensive.”
When it comes to such an enormous commitment, Labor said any extra costs are worth it.
“I still feel it’s good to have a professional help somebody in probably making the biggest investment they’re ever going to make.”
Labor said there has been no measurable decline in the traditional real estate business as a result of FSBOs. Woolverton said FSBOs have always been around. Whether or not they are gaining in popularity because of the Internet is vastly outweighed by the benefits the Internet has brought to the traditional real estate industry, Woolverton said. But, he noted the Internet only aids some of what real estate agents do.
“You can only do so much on the Internet,” Woolverton said. “We still have to drive our car around. We still have to meet people. It helps so much, but it’s not the process.”
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