Aug 27, 2008
Housing Bulletin—One Chicago Seller’s Limited-Time Offer
To save money on commissions to real-estate agents, Rachel and Mark Bickenbach have been trying to sell their Clybourn Avenue loft themselves this summer. They put it on craigslist.com and advertised it in the Chicago Tribune and the Reader—but all they heard was crickets.
So last week, Rachel took an enterprising step: She e-mailed a come-on to more than 3,000 Chicago real-estate agents, urging them to bring their buyers to the loft and offering a lucrative 3 percent commission to the agent whose client signs a contract to buy the space by September 5th.
If it’s not sold by then, she noted, the loft will be listed with a real-estate agent, at which point a buyer’s agent can only hope to collect a commission of 2.5 percent. The difference is $3,075, assuming the loft sells at its full asking price of $615,000. (The Bickenbachs’ own potential savings is much bigger: If they sell through a real-estate agent, they will give up 6 percent in commissions, or $36,900 for their full price; if a buyer’s agent takes the deal they are offering until September 5th, they will pay out only $15,375, a savings of $21,525.)
“I think money and commission is, rightfully, so strong a motivating factor for real-estate agents,” says Rachel. “I thought we could use that to entice the people who can sell our property to come see it. You have to put yourself in the place of a real-estate agent: What will make them choose your place over somewhere else?”
The couple—she’s a clinical social worker, he’s a management consultant—wanted to “take a chance on making this work,” Rachel says. But because they didn’t want to sit through a protracted period of trying to unload the place themselves, they made the offer good for just two weeks. And thus far the strategy appears to have worked: After almost no calls about the property in the four weeks it appeared on Craig’s List and in the newspapers, there has been a flurry of activity since Rachel’s flyer hit real-estate agents’ e-mail boxes last Wednesday. “I’ve had a tremendous amount of calls and four showings,” she said on Monday. “It may not seem like many, but in this market, I was fine with that.”
Like a lot of people who want to sell their homes these days—in her flyer, Rachel wrote that “our plan to start thinking about having a big family is making us say goodbye” to the loft—the Bickenbachs can’t understand why their very nice home is getting so little action. Situated inside a charming old red-brick building, it has two bedrooms (with the possibility of converting back to the original three-bedroom floor plan), two baths, and 14-foot-high timber ceilings. The kitchen, by de Giulio, is sleek and crisp, complementing the exposed brick walls; enlarged windows bathe the living room in light from the south and east; the fireplace is an eco-friendly ethanol burner; and there is a sleeping loft above the main floor (aside from the bedrooms).
“No cookie-cutter here,” Rachel wrote in her e-mail to agents. “My husband and I looked at 50 places in this city before we saw this amazing space [and] knew we had to have this place.” They bought it in May 2005, without the assistance of an agent even though as buyers they wouldn’t have been on the hook for any commission. (The seller pays commissions to both the buying and the selling agent.) “We thought without an agent there was more room for negotiation on price,” Rachel recalls. They have the same flexibility in mind this time around.
So far, no sale has resulted, but there is still a week left on this pitch. Rachel says that among the many calls she has fielded were offers from some real-estate agents to represent the Bickenbachs once the September 5th deadline passes. And then there was the agent who left a message saying, “If you really want to get me to come over, offer me 4 or 5 percent.” Says Rachel, “Maybe what we’re offering isn’t a big enough incentive.”
Posted at 08:13 AM in Housing Bulletin | Permalink
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Reader Comments:
"the Bickenbachs can’t understand why their very nice home is getting so little action."
Maybe it's because they're trying to sell a two-bedroom loft for $600,000.
Obviously you are not familiar with the area in which this loft is situated. I have seen pictures of the inside and it is awesome. I am spreading the word amongst my friends and family, it is one heck of a place.
Whats the actual address of this unit? I would like to see it...
I agree with BEMA03's point completely. It may be an amazing place, but it's a 2 bedroom. A few years ago, with easy lending and very little money down, that's a nice bachelor(ette) pad for a young man (woman) doing fairly well - perhaps even a young couple, like the current owners.
Now it's 2008 and you've got to cough up $120k+ to put down and pay 7.50% on what you borrow. Not so many young people can pull that off. Those who have $120k are generally older and either have, or are looking have, kids -- a 2 bedroom is out of the question.
It's a SLIM demographic that is a potential buyer of a $500k+ 2 bedroom these days... even slimmer at $600k. These type places are all over town and it will get ugly for them - they could easiuly lose 40-50% from peaks...
They paid $539K for it in '05, according to public records. Why that important fact wasn't in Rodkin's write-up (which really feels like little more than an ad) is beyond me. Oh, "anonymous," the address is 1872 N Clybourn. Take a look at this online listing sheet here: http://www.redfin.com/IL/CHICAGO/1872-N-CLYBOURN-60614/unit-307/home/13351434
They paid 539K without a Realtor on either side and it looks like they have done a lot of work to it. I checked and it was the only one for sale in the building.
Market prices are back to 2004-2005 levels. Maybe if they weren't asking for almost 15 percent above that they might get some action. And agree with the point that there are very few buyers of 2bdr $600+k. There are a lot of those units on the market competing for few buyers.
I know what some of you are saying about the price being too high. But you can't say anything until you see it. My wife and I recently viewed the place and it is very spacious, crisp and bold. It is defintely a must see. We also live in the area and just wanted to see what this place was like. I wish this place would have been up when we bought ours, we would have purchased this home for sure.
Interestingly, these sellers are going at it alone in an incredibly slow market and are pricing it as if we are still in 2005. As for the comment about commission being a motivator for realtors - good ones aren't swayed by elevated commissions - they bring their buyers to properties that they feel a) fit their clients criteria and b) are priced well. The latter surely doesn't fit here for anybody.
As a real estate agent I must say that I do not choose listings to show my clients based on a higher than average commission- I show them what fits their requirements best and this is most easily interpreted by a well written listing in the MLS with good photos. Pricing is key as well. So it is a good thing for the owners that they are now listed with an agent in the MLS with a reduced price! Best of luck to them!