Buyers and Sellers
Decide to Go It Alone

The gathering James Uehling attended recently at his private club in upstate New York seemed like nothing out of the ordinary. Just drinks, hors d'oeuvres and the usual chatter about jobs, kids and the weather.

Oh, and he also found a buyer for his house: his next-door neighbor.

"I learned he was losing his lease and wanted to buy a large place," says Mr. Uehling, a corporate branding consultant. "So I casually suggested he consider buying ours, and now he has."

Call it selling through the grapevine. With so many buyers chasing relatively few properties, more people are cutting out the broker altogether and selling directly to acquaintances, friends and neighbors. In some places, it's become not just feasible, but fashionable -- especially upscale areas like Greenwich, Conn., New York and Alexandria, Va., where attractive properties are at a high premium, and real-estate talk often hogs the spotlight at backyard barbecues and dinner parties. Indeed, while such deals were once far more common at the lower end of the market, they're now often considered a mark of insiderdom and sophistication. After all, it means the parties are so wired that they know what's up before a house ever goes on the market.

Ann Dozier Michael, an agent in Alexandria, Va., says buyers in some coveted neighborhoods are constantly dropping hints at soccer practice, writing letters to prospective sellers and even knocking on doors. In that environment, she says, "it's no wonder sellers think they don't need an agent." In other cases, as with singer Billy Joel's $32 million house in East Hampton, N.Y., the price is so high that only someone in the seller's social circle could afford it anyway. Mr. Joel sold his place, without a broker, to comedian Jerry Seinfeld last spring.

Skipping the broker can be a considerable cost-saver, of course. Rising property prices make the standard 6% broker's commission seem suddenly more significant -- on a $500,000 house, for example, it works out to $30,000. On Mr. Joel's house, the standard commission would have worked out to about $1.9 million. "A million here, a million there, pretty soon you're talking real money," says New York broker Michele Kleier.

Complications of Going It Alone

It isn't only about money. Cutting out the middleman sometimes just seems simpler. Attorney Michael Blair and his wife intended to use a broker to help to sell their co-op apartment in Manhattan. Then a funny thing happened on the way to the market: After interviewing brokers for weeks, the Blairs sold it to a married couple they'd met at a cocktail party. They worked out the price in one phone call and signed the contract within the week. "It was really painless," says Mr. Blair.

Still, selling solo is fraught with potential complications. For one thing, without the traditional paperwork and bidding process, it's easier for either side to pull out.

In other situations, sellers find themselves outmaneuvered in bidding wars, or have difficulty assessing a buyer's finances. And without agents to act as go-betweens, relations between neighbors, friends and acquaintances can quickly sour.

Matthew Cirino, an executive at an investment bank in New York, thought it would be simple to sell his apartment directly to neighbors last year. It was a snap at first: Just two weeks after he told people in the building the apartment was for sale, a married couple called and offered to buy it. The Cirinos stopped showing it. But the neighbors' interest cooled when they learned that repairs were planned on the roof garden right above the Cirinos's apartment, and they started dragging their heels. "A polite pause turned into a bit of frustration on our part," Mr. Cirino says.

After two months of delay, and despite assurances from the Cirinos that the repairs wouldn't be a problem, the neighbors ultimately decided not to buy. The Cirinos listed their apartment with a broker, Richelle Spindell of Douglas Elliman, who sold it in a few weeks. Mr. Cirino attributes the failure of the initial deal to perception problems, saying buyers often think sellers are "being cheap" when they don't use a broker. "They suspect there's something wrong" with the place, he says.

And sometimes it doesn't go any better for the buyers. Scott Holden, a 29-year-old commercial insurance agent, and his wife, Landon, tried and failed to buy a house directly from people in Belle Haven, their neighborhood in Alexandria, Va. The Holdens figured they could get a better price if the seller saved a commission. But the deal fell through because the owner "was being cagey about how much money he wanted" and then "tried to set up a bidding war," says Mr. Holden. "Everyone ended up getting frustrated and walked away."

Friendly Deals

Of course, sometimes having friends involved in the deal can be an advantage. In Manhattan's tight market, accountant Steve Sabba bought a co-op apartment effortlessly. It didn't hurt that his stockbroker -- who tipped him off about the place -- lived in the same building and was on the co-op's board. "It's stupid to pay a broker when you don't need one," Mr. Sabba says.

Some brokers are trying to fight back with deals that give them a small part of the action, even when the transaction is between acquaintances. In Chicago, Rubloff Residential Properties occasionally takes a lower commission to handle the paperwork after a buyer and seller agree on a price. Sellers "mean to list it, and then they mention it to friends, and the next thing they know they have three offers and it hasn't even gone on the market," says President James Kinney, but that doesn't mean they don't want help with the transaction.

Other brokers are striking even more unusual deals. Jean Ruggiero, a broker with William Raveis Real Estate in Greenwich, Conn., made one client this offer: She would list the property, but if he found the buyer himself, she'd give him part of the commission.

Such alternatives can start to look appealing after a few months of going it alone. In June, Mike Lantz and his wife, Sherry, decided to try selling their own four-bedroom house in leafy Bend, Ore. They spread the word to friends, neighbors and a guy at the local convenience store. "The actual amount of work some of these real-estate agents do is very limited," says Mr. Lantz. All a seller really needs, he says, is "a little common sense and some basic third- or fourth-grade math skills."

Within a few months, Mr. Lantz ate his words -- he listed with a discount broker.

Do-It-Yourself Home Sales

Six to seven percent may seem like a lot to pay at a time when houses are virtually selling themselves. Here are a few ways to save while making sure the deal gets done right:

• List with a discount broker

Some companies, such as Wall Street Properties in Bend, Ore., will list your house in the local multiple-listing service for a low fee. Commissions range from about 1%, if the owner finds the buyer, to about 4 1/2% to 5%, if a broker sells the house.

• Negotiate a lower commission with a regular broker

Most brokers would rather take a reduced commission than be shut out. If you have some leverage -- several interested buyers that you found on your own, for example -- but don't want to negotiate or do the paperwork, this may be an option.

• Negotiate a flat fee with a broker

Some brokers are willing to handle a specific part of a sale for a set fee, such as preparing a package for the board if the property being sold is a co-op.

• Shop around for a real-estate lawyer

In some states, buyers and sellers routinely hire lawyers to put oral agreements in writing and make sure the closing goes smoothly. Closing fees range from about $1,000 to $1,600.

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