Dancing with the FSBO devil

Tribune Company just bought ForSaleByOwner.com. That’s a bigger deal than it may appear in the rearview mirror.

When I worked in newspaper companies, I quickly learned that FSBO was a dirty word that made publishers sweat. On the one hand, they wanted all those by-owner ads; they needed to be seen as the marketplace for homes. But on the other hand, the Realtors who paid the big bills hated by-owner ads; their lost customers were their competition. So publishers always danced a delicate two-step, trying hard not to promote the FSBO ads even as they counted the bucks from them. The terrible irony is that the real customers — home sellers — were treated like caged animals by both Realtors and newspapers.

But, of course, the cages are gone and the first to escape were the Realtors themselves. When the web came along, real estate agents realized they could deal directly with customers and no longer needed newspapers to create the marketplace. In fact, newspapers realized that they needed the Realtors’ listings for their own online sites — ads became content — and so the Realtors still ended up holding publishers by their delicates. FSBO was still a dirty word.

I saw this coming a decade ago and argued that newspaper companies should go into the real estate business themselves, becoming brokers to get listings into the closed multiple listing services and putting buyer and seller together directly because the Realtors would inevitably abandon papers. I thought I was going to be fired for speaking such heresy.

But now Tribune is going into the FSBO business.

Isn’t it fascinating how desperate companies are now willing to piss off the channels of sales, distribution, and revenue they so coddled and feared for so many year: ABC tells its affiliates to lump it as it distributes directly to consumers; Warner Brothers tells its network to lump it as it distributes around networks; and Tribune tells its Realtor-advertisers to lump it as it enables sellers to avoid Realtors. The question is whether they spent too long coddling the middlemen and forgetting who the real customer was all along.

  • There never was a FSBO devil – only newspapers who didn’t understand the real estate business, and lacked confidence in their ability to build an audience. There was, and still is, a FSBO bogeyman.

    The Tribune, and its major real estate customers understand that having FSBOs represented in the marketplace makes Realtor more effective. And the Realtors accept that major newspapers have an obligation to serve a variety of audiences.

    FSBOs are not a problem for any newspaper that has any self-respect or any confidence in its mission.

  • All this shows is how dumb newspapers still are. I don’t know how much it paid for that site, but it’s likely worthless. Even if they spent a pittance on it, they’ll likely waste lots of time, energy, and money trying to profit from it.

    There’s a plethora of sites that you can list your house for free, craigslist, etc. Search engines are not going to care where a house is listed.

    Peruse newpaper ads when looking for a house?

    Sometimes I feel like I’m living on another planet than these Luddites. Just the other day I was sitting at my souped up, multi-monitored $3,000 computer and my father asked me if I had a phone book.

    I screamed at him “this (computer) is the phonebook!”

  • bromo

    Aw. Isn’t that cute: Daddy’s little captious nut is still thowing tantrums about the big bad Internet. Awwwwwwwwww.

    Well, little boy, if you ever actually do sell a property by yourself, you’ll find out that CL, MLX, MLS listings services, are all woeful when it comes to selling a property on your own. As someone who recently (and sucessfully, I might add) sold his property sans brokers, I can tell you quite without doubt that there is actually only one place to advertise a FSBO property in the NY-Metro area: The New York Times. The only people who respond to CL ads are vulture brokers looking to find properties they can relist on their own sites for their measly 3%.

    Interestingly enough, Little Nut (so captious you are too!), fully 30% of our respondents were sourced from the NYTimes in print! That’s right: dead trees sell FSBO properties more effectively than pure play web properties.

    While Tribune will indeed probably screw this up (simply because FSBO is bad branding and because there’s so much more to making this work than just listings), a FSBO site combined with the likes of Trulia or Property Shark will eventually hurt the brokerage industry. Should a media company be bold enough to enjoin the battle against Trulia, Zillow, PS, and others, the battle for the FSBO sale will likely have longreaching consequences. (Should Corcoran or Elliman ever figure out how to coopt the FSBO crowd, the Times will have a real problem on its hands.) Fortunately for the NYT, most brokers have their eyes tightly shut against the reality of this disintermediated future, so FSBOs are caught by the only real monopoly held by newspapers until CL can figure out how to clean up its act…

    Now go to sleep little captious nutcase: you can throw that phone book at daddy tomorrow….

  • Haha.

    I knew that it would sound like that. My father was over to see his grandson.

    Whatever the current stats on selling home through dead trees, they are only going to plummet. In case you didn’t know, newspapers are dying – if not dead. The only real substance I can see in your comment is the claim that “Tribune will screw this up”. I said the same thing, actually before you did.

    If you are going to try to rip another commenter, my own advice would be to actually disagree with their post. Furthermore, accusations of “nutcase” hold much more weight when the screamer himself doesn’t seem like he’s hollering out an asylum’s window.

    I must have smacked this bromo around in a prior thread or something.

  • Actually, the newspapers are losing money because newspapers DON’T sell homes! I mean, the percentage of homebuyers go through the internet, not the newspapers. Realtors used to advertise in the paper, only to please the client. And coupled with that, FSBO’s soon realize that when they go through the process of selling a home, the time, the money, the advertising, the knowledge and all of the involvement of negotiating and loan process will inevitably turn it over to a realtor in the end.

  • This was a smart move. they have in store what I have been envisioning for some time now. This confirms they know what they are doing. slowly but surely they will make this puppy rise.

  • As a FSBO regional magazine publisher in Western Mass., I can tell you that the largest newspaper in our area banned any advertising from our company when we began over five years ago, citing competition. We found that we didn’t need them anyway, as our magazine showed buyers what they really wanted to see…pictures and ways to link to our website. Less than 53% of buyers find a home in the classifieds these days (NAR 2005 Year of the Buyer and Seller survey), yet agents still keep those columns filled. It’s an easy way to show their clients that their property is being advertised, despite their own statistics on the effectiveness of the media.

    The internet alone is not the answer either. National FSBO websites tend to be overrun with outdated inventory, especially free listing sites or one time fee to post sites. One site we’ve followed for over three years still has the same 34 listings in Alaska that it did when it first launched here in Massachusetts. If it was so successful, why are the listings still there? Eventually sellers will realize that sites such as these are lead generators for other interests (mortgage companies, real estate agents, etc.), unfortunately, many fall victim before they realize that the majority of the homes that appear on the site are no longer available.

    Believe it or not, not everyone has easy access to the internet these days, especially now that corporations are locking down access during the workday. Homes that appeal to buyers in a lower economic bracket are most frequently sold through our extensive magazine distribution, not the internet. There is also something to be said about the ability to touch and feel a print magazine.

    It will be interesting to see what the Tribune will do with its acquisition. I’m sure the NAR and its million plus members will be watching closely to see what may become of their long standing ties to print media. As for us, we’ll continue to offer quality print and internet advertising, products and advertising support that our successful advertisers have depended upon over the years.

  • Dave Mahnke

    If, as weve always said, location is EVERYTHING, then noone needs FSBO sites (which sldom work) , overpriced realtors, OR the useless newspapers. Sell it yourself and KEEP your money

  • I came into real estate as an investor, have owned an 15-agent exclusive buyer agent company, taught home buying courses revealing many of the ‘tricks’ in the trade, been a staff writer for IRED.com and now help home sellers who want to FSBO their homes but don’t want to ignore the many qualified home buyers working with agents through the MLS.

    I live in my ideal world with many consumer choices. From the beginning I never saw one way as better than another. I believe that one resource database where everything and everyone is included is the best and most logical resource for home buyers and sellers. It doesn’t exist yet but I can dream that we can just all get along and someday it will happen.

    I don’t care what people think of FSBO only, no FSBO, Full Service, Minimum Service, Flat Fee, Fee For Service, Unbundled, One Size Fits All… I believe in consumer options and my service, flat fee MLS placement, is just one of those options. It ain’t gonna work for everyone so just deal with the fact that it should exist for some subset of the population!

    I also live in a state, Massachusetts, that seems to embrace consumer options so I don’t have to deal with fake consumer protection laws that make minimum service companys’ offerings illegal in those poor states. It is disingenuous to pass laws with consumer protection labels when they really are just commission protection laws.

  • Pat,

    I just had to say that “I Feel You!” Right On!


  • I think the challenge is not in the offering of options or in who owns what company. The challenge is in the comments above where people referenced the “useless”ness of real estate agents. Everyone seems to think that selling property is easy. The consumers believe it, and even many of the new agents who get into the business believe it. That’s why there’s such a high turnover in our new agents. No one, but those of us who have done this for years, knows how hard it is.

    Every year there are more laws put in place, more complications created, and more challenges to work through. Especially now, as prices start to drop, people come after the agent’s commission. The problem is, that the agent has already taken a pay cut when prices went down. They get paid as a percentage of the purchase price. Plus, they’re selling fewer houses, so they’re getting it both ways. And yet sellers still think that asking the agent to cut the commission further is the answer. Agents work harder in difficult marketplaces. They should be paid more, not less. That’s how it would work in other industries that are based on per-hour basis.

    But the problem is that the consumer doesn’t see the value. They have no idea how much work goes in behind the scenes. And that’s the agent’s fault for trying to make it a seamless process. The better they are at their job, the less the clients appreciate how much work there was to do. Agents need to let the client in on how much they are doing for them.

    There are many details that have to be handled in the standard transaction.

    1) Pricing the home properly (a place where many FSBOs fail miserably)
    2) Writing good ad copy (which is an art)
    3) Posting information on the MLS that makes the house look attractive to the right buyers (another art)
    4) Creating and maintaining good relationships with other agents so that they are inclined to show your houses first
    5) Having great communications and problem-solving skills for dealing with issues that may arise in negotiations, inspections, loan approval, appraisal, etc.
    6) Being able to soothe bruised egos and smooth over ruffled feathers when emotions run high and risk destroying the sale for no good reason
    7) Having relationships with good contractors so that needed repairs can be done in a timely fashion so that they don’t delay closing
    8) Having good relationships with town officials so that issues there can be resolved quickly

    There are many other skills that come into play on only a few transactions each year, but on those transactions, these skills are critical. Much of the work agents do is ongoing non-transaction-specific (like the relationship development and management), but they are still time-consuming.

    When you hire an agent, you’re hiring them for their expertise in the industry, not just to put your house in the paper or on the web. You are investing in the knowledge, experience, and problem-solving skills of that person. A good agent can mean the difference between your house closing or the deal falling apart at the closing table when all of your possessions are sitting on a truck waiting to go to your new home which won’t close because your house didn’t sell.

    Some FSBOs are experienced enough to do the majority of the work themselves. Most aren’t. This is why 85% of them end up listing with an agent eventually. The problem isn’t the FSBOs. It’s the lack of appreciation for how much work it takes to sell a home and to keep the deal together through closing.

    Kelle Sparta
    Author of The Consultative Real Estate Agent – Building Relationships that Create Loyal Clients, Get More Referrals, and Increase Your Sales, and founder of Sparta Success Systems, a real estate training and tools company that focuses on helping agents and brokers create lives and businesses they can love. http://www.spartasuccess.com

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  • Looks like our Trackback did not go through so here’s our response to Jeff’s original post: Newspapers + FSBOs + fee-for-service = consumer savings”

    Nice to see felllow real estate innovators from Massachusetts offering their perspectives on this important topic.

  • The highly profitable Autotrader.com is owned by Cox Communications — a giant media company which also owns newspapers, cable companies, the Autotrader paper magazine…and Manheim auctions. The Manheim auctions are huge — this is where car dealers go to buy used cars.

    What does Autotrader.com and Auto Auctions have to do with the Trib’s FSBO real estate purchase? Plenty.

    Look at the Cox model. They’ve been in the used car business for decades. And for over 6 years now, they’ve been selling Autotrader.com ads (as well as Autotrader print classified ads) to BOTH dealers and people who want to sell their own vehicles.

    Right now, the Trib is trying to do the same thing with real estate. Good luck!

    I haven’t seen any big media outlet integrate offline and online real estate marketing as efficiently as Cox has handled used car marketing — quite possibly because the online real estate ad market is so fragmented and there are no strong leaders who are truly consumer-data focused. Heck, even the NAR hasn’t shown any leadership here…way back when they were strongly positioned to do so.

    Just think if the NAR’s Realtor.com site had employed the Autotrader model six years ago: Realtor.com would let all Realtors list their homes for free — and solicit them for advertising upgrades (links to their home pages, building their sites with integrated house listings, etc.). And Realtor.com would charge the FSBO’s a modest fee for listing their homes at the site….and they’d get it, because that’s where the eyeballs would have been. Realtor.com would have won market share, eyeballs, credibility…and endeared themselves to their members.

    If the NAR — who are supposed to have a strong focus and understanding on the real estate business — can’t seem to get it together for its Realtor members — how the heck is a media company with nothing on the inside track supposed to succeed?

  • These real estate agents think that by spamming a blog thread they can convince the public they aren’t mostly scumbags.

    Kelle Sparta says consumers are too dumb to see how much work agents do.

    She even says that agents have taken a pay cut when prices go down as if no one remembers the 100% raise they have gotten in the last 5 years. I’ll bet she uses her March 2000 brokerage statement to calculate how much money she “lost” in the stock market too.

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  • Not a Nut

    Captious… well actually Kelle didn’t say that. At first it seemed real estate agents should be offended by your name calling – but as it’s apparent you can’t read I guess your name calling really isn’t much of an insult afterall.

  • It’s a smart move. All the research points to home buyers using the Internet more and more. Although some markets are further along then others, there’s no doubt that the Internet has a very bright future in real estate, and the Tribune just picked up the top trafficked fsbo site because it’s got a strong financial future and could eventually be tied into their regional classified listings.

  • Real Estate agents provide a service.

    It is really that simple. When they don’t perform, they should be fired. You can do it yourself, no doubt about it. You can remodel your whole home yourself -easy as pie? Time consuming?

    I truly believe that there are plenty of instances where selling a home yourself makes sense. There are however also plenty of times where it just doesn’t.

    Hold your Realtor accountable. Ask questions and seek knowledge.

    The market is changing all over and I agree with Liz. Often Realtors do things just to prove to a seller that they are trying to sell the property.

    These are the old school Realtors, they will need to change. I ask my listing clients why they want an add in the paper, why do they want a brokers open with food? All you see are hungry agents with close to no interest in the property.

    I disagree that most agents are “scumbags”.

    Look for the good ones and you will have a strong and hard working professional at your side.

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  • The owner has full rights to sell his/her home directly or through a real estate broker. They can save a minimum of at least 2-3%. That was a good move by the Tribune.
    There are other MLS listing service providers who have a wonderful package. I came across an MLS in Illinois, which has a flat fee for listing in their database. Many of them, also provide other seller services like Market Watch, Lockbox, Premium listing, CMA etc. These might prove very useful to the seller and also the buyer.

  • I don’t believe a thing real estate agents say. I don’t hate them just the tricky and unexperienced ones. Which in my opinion is most of them. Take the “no obligation market evaluation” for example, the oldest and most unoriginal term you will see advertised. Do they think people are stupid? The real definition should be, “yes I will come over to your home, tell you what it’s worth, then I will bug the hell out of you until you list it with me”. In the meantime, they will send you some “awesome” fridge magnets, calendars and pencils just so you don’t them. I have written at length about this, I’m NOT selling anything, just a frank, real world discussion.

  • tom

    There has been a couple of resources/sites mentioned in the comments, but an example that I personally think is really headed in the right direction would be afsbo.com. Although in beta with not a lot of scale yet, I like how they are taking data (listings) and intelligently serving them to their users…and of course without fees or commissions. I would say in addition to the Real Estate market, they are a FSBO alternative to eBay, which has the same stench that Realtors do these days. Anyway, just my $0.02.

  • Dan

    There’s no doubt changes need to happen in real estate. But, it is the real estate agent that will claw our way out of this market. Their livelihood depends on it. But, sellers need a way to hold their agents accountable for their marketing plan. And, agents need a way to better educate their sellers on the market, what they’re doing to sell their home, and stay in constant communication. Update Lane (www.updatelane.com) just launched its beta and does exactly that online. Sellers should expect their real estate agent to provide Update Lane for them. They’ll be able to track their agents marketing activities, read feedback from showings, track their competition, and access all documents in one place online. The beta is free and once the site launches, it’ll only cost the agent $10 for a listing. So, real estate agents have no excuse and should provide the service.

    Happy selling!