For Sale by Web

Connect Magazine , Vol. 2, Issue 5

For Sale by Web

Net-based house hunting empowers buyers and sellers alike

By Tracy Mayor

When R.T. Brown found out a few years back that he needed to sell his Beverly, Mass., house in a hurry, he didn’t pick up the phone and call a Realtor. He booted up his home-office PC instead.

Moving his family so his wife could begin full-time graduate school study, Brown was intent on getting every penny of potential profit from his starter home. So he went do-it-yourself digital.

He listed his home on the Boston-area Craigslist and on a regional for-sale-by-owner web site that promised to deliver him only pre-qualified buyers. He build a simple but functional Web site that included a gallery of photographs he shot himself with a digital camera and uploaded to the site, along with highly personalized descriptions of the 3-bedroom cottage-style home, and all his contact numbers: phone, fax, mobile, email, and IM. He mass emailed a link to the site to a selected group of personal and professional contacts, and he sent out a broadcast fax to the top dozen local real estate brokers, offering 2 percent commission if any of them could present him with a buyer.

Granted, Brown was perhaps a bit more bold than the average first-time-seller—he’s a mortgage broker by trade, now based in Amherst, Mass. Still, within three weeks, he had found someone willing to pay 97 percent of his asking price, a first-time home buyer who had seen Brown’s listing on the isoldmyhome.com web site. Both parties hired real estate lawyers to help with the contract particulars, and the deal was sealed with zero complications.

It’s hard to think of a commercial industry in the United States that’s been more transformed by the Web and other digital-age technologies than real estate. The process of purchasing the biggest item most Americans will buy in their lifetimes--their biggest investment as well--is now almost completely digitized, from first browse to moving day.

Sellers use the Internet to give video cybertours of their homes, complete with voiceovers and soundtracks, cheaply and easily casting the widest possible net in the deepest pool of would-be buyers. Not to be ‘netted out of a job, Web-savvy Realtors have responded with state-of the art Web sites, blogs, email alerts and podcasts that emphasize their inside expertise that can’t be found—even Googled—anywhere else. And buyers condense some of the most tedious and time-consuming parts of the looking process into a few evenings’ worth of surfing.

“The Internet allows buyers to scope out neighborhoods, compare prices, find a Realtor if they want one, prequalify for a mortgage. That’s a lot of business to get out of the way before you even leave the house,” observes Matthew Fitch, a principal with Simplified Lending Solutions LLC in Dover, N.H., a multistate mortgage brokerage that itself does nearly all of its business online, over the phone or via fax. “The whole process is about as automated as it can be at this point,” Fitch says.

As for that dream house itself: rather than driving through neighborhoods with a real estate broker looking at one unsuitable house after another, buyers these days winnow down their list of potential domiciles from their PC or notebook before they ever set foot out of doors.

Around the country, Multiple Listing Services—local or regional listings of all properties handled by licensed Realtors--are now up and running online. In some parts of the country, buyers who want to view listings must register with a particular site, receive a password from a Realtor, or be willing to have their contact information passed on to real estate and mortgage brokers in their area. In other places, MLS listings are open for all eyes to see, explains Todd Costigan, senior manager of the Center for Realtor Technology at the National Association of Realtors (NAR) in Chicago, which provides a search engine of virtually all MLS properties from its own web site, http://www.realtor.com.

On the other side of the equation are sites that list properties that are FSBO—that is, for sale by owner. Again, some sites are free and open to the public, while others charge a flat fee to let sellers list their properties or require buyers to prequalify with either a broker or mortgage vendor before searching the database for their perfect home. Two of the many such sites: isoldmyhouse.com and forsalebyowner.com.

While all of this free, or nominally priced, Web-based information has anecdotally inspired people like R.T. Brown to skip the Realtor, the NAR’s Costigan, predictably, argues that the Web hasn’t obviated the role of the Realtor, just changed it. “The Internet hasn’t necessarily taken away the role of the Realtor, it has changed how buyers work with Realtors,” he says. “The Net makes buyers much more informed and that shortens the buying cycle. People come in, they’ve spent time looking online, they say, here are the homes I think I’m interested in. The broker or agent brings in knowledge, experience, and information about the property that’s not in the listing.”

Indeed, around the country, tech-savvy real estate brokers are making the most of Net-related technologies to tout their insider knowledge and offer a degree of service that they hope surpasses a night of random Web wandering. Britton Jackson and Matt Fuller, for example, use multiple tactics to convince buyers and sellers of their grasp of the always-hot San Francisco real estate market. The broker partners run a full-service Web site—www.jacksonfuller.com--that makes liberal use of humor to introduce the pair, offer up client referrals, provide news articles relevant to the Bay Area real estate market, and provide links to mortgage-rate data, a mortgage broker with whom they work, and MLS listings. The pair post a blog that critiques new listings around town and offers email updates to buyers interested in up-to-the-minute changes to listings.

When it comes time to secure a mortgage, the Net-savvy home-buyer’s biggest problem may well be having too many online options, not too few. Virtually every bank and financial institution that writes mortgages now allows consumers to apply online, from behemoths like the Bank of America and Citibank to smaller operations like the First National Bank of Omaha.

But just as typically, home buyers end up using the services of a mortgage broker, independent contractors who shop among several different financial institutions to find their clients the best deal. Brokers too are all over the Web—linked from every MLS and FSBO Web site, running down the right side of every real estate-related Google search, and popping up in an apparently endless storm of ads that feature every visual gimmick from dancing dollar signs to jumping monkeys. Some of the bigger players in online mortgages are front-end sites like http://www.lendingtree.com and http://www.mortgage101.com, and, for refinancing, http://www.lowermybills.com. Such sites promise consumers they’ll get to choose from a minimum number, say, three or four, serious offers from qualified mortgage brokers.

From there, independent brokers like Brown and Fitch take over, shopping for the best deal to offer their clients and, they hope, sealing the deal. If all checks out, there’s just one final step, one that, so far, has resisted the urge to go digital: the old John Hancock on the bottom line of that 30-year promissory note. “You do still need to sit in front of a real live notary public and put your original signature on the documents. There’s not yet a widespread substitution for that step,” Fitch says. “At some point, the rubber does have to meet the road.”

Sidebar 1: Try This at Home . . .

Houses and mortgages are the two big chunks of the home-buying process that people can now shop for online. But don’t forget the Web can take the hassle out of myriad other house-shopping tasks, including:

* Scoping out the community. Look through state and local government sites for data on school test scores, environmental concerns, average household income, tax base, crime data, and more. Many local real estate agents collect this information on their own Web sites as well.
* Finding a home inspector: Many local inspectors now maintain their own Web sites, or try front-end sites like http://www.homeinspections-usa.com, http://www.InspectorsGuide.com, or http://www.inspectorLinks.com
* Checking your credit: Credit reporting companies allow consumers to check their credit once a year for free through http://www.annualcreditreport.com To drill down deeper, pay the $44 or so to obtain a credit score—the number the banks actually use to approve or turn down your loan—from http://www.myFICO.com.
* Qualifying for a better loan: You might be eligible for an FHA loan (http://www.hud.gov/fha/loans.cfm), which allows first-time buyers to put just 3 percent down, or a Veterans Administration loan (http://www.homeloans.va.gov).
* Getting all the news: Plug the name of your prospective city or town, street or neighborhood, local school or developer that built your house into a Web search engine and see what comes up. You might find out there’s a nasty political fight in town that keeps the streets unplowed in the winter, that the neighbors have petitioned three times to open a pig farm next door, or that your builder spends more time in court than on the job site.
* Taking a virtual look around: Try out the new aerial and satellite map services like Google Earth or MSN Virtual Earth to look at your new neighborhood from the air. There might be more going on behind those white picket fences than you can see from the curb. Say, is that a pit bull in the yard next door?

Sidebar II: Information Sources Used in Home Searches

Real estate agent - 90%
Yard sign - 74%
Internet - 74%
Newspaper - 53%
Home book/magazine - 40%
Open house - 51%
Builders - 37%
Television - 26%
Relocation company - 16%

Source: 2004 National Association of REALTORS® Profile of Homebuyers and Sellers