For Sale By Owner Real Estate Blog.
When Craig Blackmon sold his Seattle home two and a half years ago, he did what most sellers do — he contacted an agent.
As an attorney, he appreciated how complex the transaction could be. Still, there was that commission to pay — about $25,000, split between his and the buyer’s agents on the $482,000 home.
Next home he sells, he plans to go it alone.
Don’t believe everything you see in the media. You probably hear that all the time, but surprisingly, most people still do- especially when there are numbers- statistics to back up the claims. But there are many ways to look at data. People mine it, disect it, twist it up, slice it into pieces and then put it back together again to make whatever point they are trying to make. But different people can make the same data look entirely different by the way the present it and by choosing the pieces of that information that will best suit their needs. So what does this mean? Well, if nothing else, it at least should tell us to be careful not to simply take stats for the way they are presented.
Q: DEAR BOB: I’m wondering about mortgage refinance junk fees. I know consumers have the right to avoid these fees, but my experience has been these lender fees usually come at the end of the refinance process, after the mortgage is approved. How should borrowers distinguish between real fees and unnecessary junk fees? Will we ever find a mortgage without junk fees? — Nan S.
Residential real estate sales in Alberta so far this year have ballooned to nearly $18 billion in total dollar volume, a jump of almost 36 per cent compared to a year ago, according to the latest data by the Canadian Real Estate Association.
If you’re looking for impassioned differences of opinion in the field of real estate, look no further than selling a home by yourself, which is typically referred to as FSBO (for sale by owner). I’ve written before about the advantages of going FSBO and about the advantages of using a real estate agent. And I’ve received numerous emails from readers sharing additional thoughts. Permit me to share a few of them with you:
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The trend for selling houses on the internet appears to be on the increase as Private Seller or ‘For Sale By Owner’ (FSBO) websites fight for sponsorship advertising space on Google Search. A UK based search conducted on the British Bank Holiday 27th August 2007 for search terms ‘Sell My Property’ reveal over 90 FSBO websites fighting for exposure on Google sponsored advertising space.
Do-it-yourself is a familiar concept to frugal consumers. If you’re handy, doing home repairs yourself can save a bundle, for example.
But do-it-yourself doesn’t always pay. One prime example is selling a home by yourself.
Selling a house without using a real estate agent is tempting because, if successful, you could save thousands of dollars in sales commissions. Saving that money might be even more appealing if you had to slash the asking price because of a sluggish real estate market, which is where most home sellers find themselves today. It could also be enticing if you had an exotic mortgage that added borrowing to your principal, and you owe more than your home is worth. You also may simply want complete control over the selling process.
But the disadvantages of for sale by owner (known as FSBO) efforts are potentially just as large as the savings. That’s especially true in a buyer’s housing market, where drumming up interested sellers is much more difficult than a few years ago.
Cutting out the real estate agent could end up being a decision that’s penny-wise but dollar-foolish.
The basic formula is this: Will a successful FSBO save you enough in real estate commissions to make up for the market knowledge, potentially higher selling price, marketing efforts, deal negotiations and paperwork preparation that a real estate agent offers?
Today, one in eight homes is sold by owner. And almost half of successful FSBO sellers knew the buyer before the sale and didn’t try to sell the home on the open market, according to data from the National Association of Realtors. Fewer than half of FSBO sellers said they would sell another house by themselves.
Clark Howard, an author and syndicated radio-show host, is a self-proclaimed cheapskate who loves a bargain. But on the subject of real estate commissions, he recommends that most people pony up for an agent.
“In most cases, people who do FSBOs basically just waste time until they hire an agent,” said Howard, who’s newest book is “Clark Smart Real Estate.”
The topic of FSBO transactions is wide-ranging and controversial, but here are a few considerations:
Commission savings: Some FSBO home sellers might be under the impression they can save the entire 5 percent or 6 percent commission for selling a house. That’s not necessarily true. Unless your buyer doesn’t have an agent, you’ll have to pay 2.5 percent to 3 percent to the buyer’s agent. So commission savings on a $250,000 home sale would be $6,250 to $7,500.
That’s a lot of money. But then you must deduct do-it-yourself marketing expenses. That might include advertising and hundreds of dollars to be on the Multiple Listing Service, the primary database for home listings. You might also spend money hiring a lawyer to draw up a sales contract and incur myriad smaller costs.
You also must put a price tag on the time required to sell a house yourself. If an FSBO transaction is slower than one with an agent, you might end up making an extra mortgage payment or two. For example, if you already bought a new home, a quicker sale on the old home means you carry two mortgages for less time. That all goes into the calculations when running the numbers on whether paying a commission is worthwhile.
Selling price: This is a hotly debated topic. Will an agent secure you a higher selling price? The National Association of Realtors claims homes sold by its realty agents bring 16 percent higher prices on average. On the other hand, a study released earlier this summer by economists from Northwestern University and the University of Wisconsin showed FSBO sellers in Madison, Wis., made out better than if they had hired an agent and paid a commission. But Madison has a more-robust-than-usual local FSBO Web site, and the researchers’ calculations placed no value on services provided by an agent.
In the end, the tussle over a higher selling price might be the wrong focus. Your concern should be attracting the most buyers. If enough buyers know about your home, multiple bids would ultimately set the appropriate price, regardless of your method of selling. So the question becomes: Can you, as a FSBO, market the house as well as a real estate agent?
Impartiality: To be successful, FSBO sellers must be as objective about the house and its shortcomings as an agent would be. “You better have ice water in your veins, or don’t try to sell your own place,” Howard said. “If you have an open house, you better swallow your pride because one buyer after another will come in there and insult the daylights out of you. People will even criticize your furniture.”
DEAR BOB: We are buying an out-of-state house. The closing is scheduled for about two weeks from now. It is a “for sale by owner,” and the sellers aren’t too knowledgeable about the sales process. We just received a document from the title company listing the recorded liens against the sellers. The list includes a lien from the state’s Bureau of Child Support for more than $12,000 and deferred property taxes for about $2,000. None of these liens were previously disclosed to us. If the sellers are unable to pay these liens at or before the closing, what are our options? We don’t want to be homeless when we arrive in our new city if something goes wrong with the closing. –Rebecca L.
DEAR REBECCA: If the sellers will be receiving sufficient cash from the sale to pay off the child support and property tax liens, then they will be able to deliver marketable title to you.
You want the home you buy to include certain features, but you’re not likely to find all of them in one house for the price you’ll be willing to pay. You can compromise on location, home features such as size, condition, price, or all of these. Just make sure that the tradeoffs you make are carefully considered and that they don’t compromise your quality of life.
Even worse, a few days later you follow up and the homeowner says, “It was incredible. I stepped out in the yard, sign in hand, and two buyers drove up. I sold my home right there. Never even got the sign planted.”
If you have been in real estate for any length of time at all, something similar has happened to you. It has happened to your colleagues and competitors as well. Sometimes it feels as if you are at war against an unseen enemy—the mysterious “For Sale By Owner.”