My Dog Tess - Buying a House

The Chapel Hill News

August 14, 2004

Home sales a la carte
Real estate marketing option for do-it-yourselfers makes inroads among home buyers.

When Beth-Ann and Jason Kutchma wanted new ceilings and an updated bathroom in their house in Hillsborough, they researched the how-tos, purchased the supplies and did the work themselves.

And when the Kutchmas were ready to sell their spruced-up home, they stayed in do-it-yourself mode. Rather than list their tidy house with a traditional real estate agent, they found a fee-for-service agency that uploaded information about their house to the Multiple Listings Service online for $500. They had a buyer within three days.

"That avenue that we took selling our house had been closed to the public," Jason Kutchma said. "(The fee-for-service agency) has been great because of the advent of the Internet. It opened up a door for people who are relatively self-sufficient."

Hillsborough and Durham have each had a fee-for-service agency for a couple of years. As of this month, Chapel Hill has one, too. Cole and Beverly Buchman opened a Help-U-Sell franchise at the corner of Franklin and North Columbia streets in mid-August.

With the high price of housing in Chapel Hill, combined with the low performance of the stock market and other investment opportunities in recent years, homeowners want to get the best return on what is likely their most valuable asset when it comes time to sell their home. The standard real estate commission of 6 percent of the sales price can tot up to tens of thousands of dollars in Chapel Hill, where the average sales price of a single-family house tops $300,000. Although fee-for-service agencies that charge a set fee regardless of the value of the house have been around since the 1970s, only in the past couple of years have they started to catch on.

Two years ago, Help-U-Sell's franchise in Charlotte was its only office in North Carolina. This year, talks are under way to open offices in Cary and Fuquay-Varina and two in Raleigh, in addition to the Buchmans' office in Chapel Hill. My Dog Tess, a fee-for-service agency that started as a one-man operation in Durham two years ago, has expanded to four agents. Assist2Sell, listing houses mainly in Hillsborough and Chapel Hill, sold 10 houses last year. This year, owner Ryan McDonnell has had 22 closings.

The Buchmans, who do not yet have any listings, plan to grow Help-U-Sell using Beverly Buchman's experience in direct marketing. (Her former position with Knowledge-Based Marketing brought the family to Chapel Hill five and a half years ago.) The idea of saving money and paying only for services used has wide appeal, according to Cole Buchman. Because "there are a lot of markets where the home will sell itself," he said, he and his wife plan to focus their efforts on getting the word out to potential sellers.

"We will do a heavy analysis of data in our target area, and we'll segment our customer base to determine who is more likely to sell their home, and we'll do target direct mail campaigns," he said.

One lucrative market may be baby-boomers who want to retain as much of the equity in their home as possible as they move toward retirement, Cole Buchman said. At the same time, he touted the potential of sellers passing the 6 percent commission savings on to buyers in the form of a lower sales price. The Kutchmas, however, listed their house in Hillsborough at the market price of $105,000, rather than lowering the sales price by 6 percent.

Six years ago, the Kutchmas bought a house from a friend of a friend without using a real estate agent. The transaction went smoothly, and when the Kutchmas decided to sell the house earlier this year, they were reluctant to pay a 6 percent commission.

"The money issue made us decide not to use a traditional agent," Jason Kutchma said. "The money issue is a pretty big deal."

The Kutchmas had been searching for a new house online and went to see a house that was listed by My Dog Tess. What they heard from the homeowner about the fee-for-service concept convinced the Kutchmas to list their house with My Dog Tess. Barry Slobin became their agent.

Slobin, a commercial photographer who owns Paint the Earth, joined My Dog Tess in November 2003, around the time he was thinking of selling his house. When he sold his previous house 10 years ago in California, he used a fee-for-service agency and wanted to do so again. By the end of his interview with My Dog Tess owner Glenn Wallace, Slobin not only gave Wallace the listing, but decided to get his real estate sales license and become a My Dog Tess agent.

"I think the model makes so much sense," Slobin said, although he admitted that the fee-for-service concept is not for everybody.

"This model is less suited for someone who hasn't bought and sold before than someone who has done it once or twice," he said. "You have to be not afraid to negotiate a little bit, to conduct some of the business regarding contracts."

Slobin said traditional real estate agents have responded well to the competition from fee-for-service agents. Only one agent in his experience was unhappy to see him on the other side of the deal; she thought she would end up doing more of the work for the co-brokered transaction.

"There's enough business out there for everybody," Slobin said, "and this model is well-suited for some people."

According to research conducted by the N.C. Association of Realtors, fee-for-service agencies comprise no more than 10 percent to 15 percent of real estate sales in any given market. Tim Kent, NCAR's executive vice president, said the overwhelming majority of the state's 30,000 Realtors are full-service agents, because full-service brokerage is the preferred choice of most consumers.

"Technology has expanded the availability of real estate information to consumers," Kent said. "It has not eliminated the complexity of real estate transactions, nor has it replaced the need for hands-on service from a Realtor."

In a fee-for-service arrangement, sellers decide on what services they want to spend money. Listing the house online through the Multiple Listings Service, something only a licensed real estate agent can do, is a service many sellers opt to pay for. Holding open houses and showing the house to potential buyers is a task some sellers choose to do themselves, though Kent says that opens homeowners to considerable risk.

"Why in the world would you want to open your doors and show a total stranger the inside of your house?" he said. "Fee for service is an option; it's not a panacea."