For Sale By Owner – The Smart Choice for Independent Sellers

For Sale By Owner is one of the fastest-growing segments of the real estate industry. Also abbreviated as FSBO, this refers to the practice of selling property without the intervention of a broker. Some FSBO sellers do use limited services of a real estate broker for getting their homes listed with a Multiple Listing Service. With the right research and marketing efforts, you can sell your home FSBO and avoid costly broker fees. These real estate broker fees can range between 5% and 10% of the final home price. FSBO selling allows the home owner greater control over the sales and marketing process and brings in buyers who might not be attracted by ordinary real estate listings. Because FSBO sellers are often willing to make arrangements with a buyer, such as a rent to own situation, buyers can negotiate directly with the owner. For Sale By Owner selling accounted for 12-13% of the properties sold in 2005 and 2006.

Marketing your FSBO property is an important part of the selling process. Buyers can’t come to see your house if they don’t know it’s there. The simplest and least expensive method is the yard sign. In areas with hot real estate markets, a yard sign can be enough to bring buyers to your door. Even in slower markets, signs can bring in interested parties in your immediate area.

Next up from the yard sign is the classified ad. This is still inexpensive, and allows you to reach a large number of people easily. Local papers are read by many prospective customers every week. A short ad that runs multiple times will reach more people than a long ad run only a few times. You can announce open houses and other such events with a classified ad, also.

Brochures and bulletin board ads are other good ways to get your house noticed. With the help of a camera and computer, you can produce announcements about your FSBO sale. Many public buildings and workplaces will allow posting of these ads. You can also make brochures available in a container attached to your yard sign. Be sure to keep a few at home so that visitors can remember important information about the house that they have come to see. Home shoppers see many houses in a day, so having a brochure could be the thing that makes your FSBO property stick in their minds and eventually sell.

Another great way to market your For Sale By Owner property is through Internet FSBO sites. These sites allow you to put up details and photos of your house, including dates for open houses and other events. A site like FSBOmarketing.com or one found through a search engine can help you reach a wide range of browsers. Many people in the real estate market now start their house hunt online with a FSBO site. For a small fee, these web sites can improve your exposure dramatically. If you’re comfortable with the sales and negotiating processes, there is no reason at all that you should pay a Realtor to do things that you could very well accomplish on your own. Hot real estate markets can make real estate agents almost irrelevant.

Home Sellers! Are You Guilty of the 7 Sins of Home Selling?

Greed: This one is a biggie. It was easy in a seller’s market to get in touch with your greedy side. Feeling like Midas, anything you asked for from a buyer turned to gold in your hands. Drunk with that kind of power, buyers were often left feeling helpless to comply if they wanted your home. In a balanced market, or even in a buyer’s market, many sellers have not kicked the greed habit. Ironically, greed is costing those sellers money. Ask any real estate agent and they will tell you stories of deals that were blown because of a $300.00 item that could not be agreed upon. No longer with the advantage, many sellers are refusing to make any concessions if it means less money in their pockets, but now the buyer’s are free to move along to the next house on their list. A seller may balk at fixing a $500.00 item in the house, or providing an inexpensive home warranty, but when the buyer moves along to an accommodating seller, the greedy seller is left to wait for another buyer – all the while making mortgage payments on the house they can’t sell. Bad move.

Unrealistic Expectations: Anyone who has sold a home in a seller’s market is going to have a hard time grasping a buyer’s market. If you want to sell your house, you have to forget everything you remember about selling your house in the past. Odds are that your home will not sell in a week, nor will you receive multiple offers. Unrealistic expectations are the foundation of blame and resentment, and they keep you from selling your home. The first few weeks of having your home on the market is filled with hope, anxiety, and irrational exuberance. It’s completely normal to believe that your home is somehow more special than the others on the market, and yours will be the exception to the tough market. Once it becomes clear that the bidding war has not materialized, and your home still sits along with the others, a home seller with unrealistic expectations is crushed. Stay positive about your home, but don’t blind yourself to what selling it will entail. A home seller with a realistic view of what it takes to sell a house in a balanced or buyer’s market, can easily adapt to changing market conditions, use constructive feedback to improve their home, and in return sell their home faster.

Pride: If you really want to sell your home, make the promise right now that you will never utter the following phrase: “I’m going to send that buyer a message.” If you enjoy sending messages, then perhaps you could raise carrier pigeons. If you want to sell your home, drop that phrase from your vocabulary. The message that sellers send, when they respond to buyers that way is “I don’t want to sell my house to you. You have insulted me.” In the end, all you are left with is your pride, and that house that just will not sell. As an active Ebayer, I have never witnessed a transaction in which the seller of an item got indignant at the lowest bidder. It’s all business. Divorce your emotions from the home selling process, and you have an advantage over the angry sellers in your area, because the buyers that they turn way with their “messages”, are going to buy a home – just not theirs! The message to send to a buyer should be in the form of a counter-offer. Nothing more. Nothing less.

Impatience: You want this home sold. Now! The impatient seller can’t understand why their home hasn’t sold in the first week. By the third week on the market, the impatient home seller is fuming, and wondering how to get out of the listing agreement. Are you an impatient home seller? If you’ve chosen your real estate agent carefully, and believed when you signed the listing agreement that they are up to the job, then sit back and let the market work. The impatient seller calls their agent more than once a day for updates, even if there has been no activity on the house. The question, “why isn’t it selling?” is regularly pleaded over the phone. Are you, the impatient seller, doing everything you need to do to get your home sold? Have you done the things your agent suggested to get your home in selling condition? Did you really listen to the comparable pricing data your agent provided you? Or did you have a set price in your mind and refused to move from it when listing the home? The impatient seller can create an enormous amount of stress for everyone involved in selling the home, and it’s totally avoidable. In the end, the timing of the sale of your home will be a combination of price, condition, and luck. No amount of impatience is going to change that.

Ignoring the market: Ignorance is not bliss. Ignorance is disaster for a home seller. Yes, we know that your neighbor sold their home for the same price you want for your home, but that was four months ago. The residential real estate market is more fluid than ever now. Educate yourself about current market conditions, not last year’s market, not even last month’s market. A home seller who ignores the market will interview a few real estate agents, read the data provided by the agent, then ignore the data and list with the agent that gives them the least argument about pricing their home unrealistically. Real estate agents do not price homes, sellers do. The agents will provide valuable information and input to help a seller choose a price. Some agents will refuse to take a listing if they feel the seller is unrealistic about pricing, but many others will take the listing with the caveat that the seller be open to reducing the price later. With so many other properties on the market, an overpriced home will sit there like a deli tray at a gathering of vegetarians. Then, the seller will be chasing the market by lowering the price after watching the prices around them fall. Eventually, the house may sell, but the price will be determined by the market, as it always is. If you are guilty of ignoring the market, you can save yourself a lot of time and headache by scheduling a meeting with your real estate agent to go over the current sales data for your home, and setting a realistic price, now.

Stubbornness: When selling your home it’s best to imagine yourself as a supple tree gently swaying with the wind, instead of a donkey with its heels dug solidly into the dirt resisting all attempts to be budged. Stubbornness can show up in many situations. When you are contacted to schedule a showing, do you leave the house? Though it’s a fact that your home has a better chance of selling if you are not there for the showing, do you refuse to be inconvenienced by having to leave? You may tell yourself that the buyers can work around your schedule. They won’t. The chance for a sale often vanishes because a buyer feels uncomfortable with the homeowner in the house, and cannot freely assess the house. Expect to be inconvenienced when you sell your home. It’s part of the process.

Being Uncooperative: Are you a partner with your real estate agent when it comes to getting your home sold? Do you resist all suggestions by your real estate agent to make changes to your home that will help it sell faster? I’ve had this conversation with home sellers many times. Is it fair that people judge your home based on the things that are not going to be in it when you move out? No, probably not. Do buyers judge your home based on those things? Absolutely. I’ve seen buyers lose their enthusiasm for a home based on a decorating theme that didn’t suit them. No matter how many times their real estate agent might remind them that they can decorate in their own style, it’s too late. The home is now referred to as the “duck home”, or the “doll home”, or the “pink home.” Every house gets a nickname when buyers are shopping. Don’t let your refusal to cooperate stop your home from being the “perfect home.”

The sale of your home requires the cooperation of countless people, many of whom you’ll never meet. The key word here is “cooperation.” We, as home sellers, expect those that are working to complete our sales transaction to be cooperative. What about you, the home seller? Are you willing to meet the buyer halfway in negations? Are you willing to work within someone else’s schedule to get something signed? Remember, you may be selling a property, but in the end, real estate is about humans. Be a good one.

Sellers Must Face Facts, About Their Home’s Value: 5 Considerations

After, over a decade, as a Real Estate Licensed Salesperson, in the State of New York, I’ve come to realize, many homeowners, end up, being, their own, worst enemies, because, their perception of the value of their house, is, often, considerably different, from what, a potential, qualified buyer, may believe, and thus, be willing to offer! Because of this, I emphasize, to my clients, my core policy, I will always tell you what you need to know, not just what, you want to hear! A wise homeowner, will interview real estate agents, and hire one, who makes a difference, for the better, in terms of achieving the objectives, of obtaining the highest possible, available price, in the shortest period of time, with the least amount, of hassle! With that in mind, this article will attempt to briefly, consider, examine, review, and discuss, 5 considerations, and reasons, sellers are best – served, when they face the facts.

1. Realistic – Price it right, from the start: Don’t be fooled, falsely complimented, or let you ego, be stroked, by someone, who suggests, an overly, optimistic, suggested, listing price. Since, generally, the best offers, arrive, in the first three weeks, after a home is listed, on the market, when/ if, you use a listing price, which is excessive, you will lose a great opportunity! Be realistic, and, price it right, from the start!

2. Using a professionally designed, thorough, accurate, Competitive Market Analysis (CMA): Base the listing price, on a professionally designed, thorough, accurate, Competitive Market Analysis (CMA)! This is the best, and only, accurate way, of determining a quality, listing price! Price the property, correctly, from the start!

3. Know the competition: Remember, your house, has competition, from others, being offered, for sale, in your area! Take a close, realistic look, and know your actual competition, by seeing the other houses, and identifying, how your house, is stronger or weaker. Price accordingly, and, be realistic!

4. Marketing and sales strategy: When interviewing agents, it is wisest to fully discuss, suggested marketing and sales strategies, and, why, they suggest, a particular one, for your best advantage! Every house has certain strengths, and weaknesses, and you need, to use areas of strength, effectively, while effectively addressing, areas of weakness!

5. Negotiate from strength: If you want to get the best results, you should, negotiate from strengths, to your best advantage! This begins with pricing, properly (at the right price – point), and marketing, effectively!

When a homeowner prices his home correctly, understands the process, realizes limitations, etc, and, listens, to the advice of a qualified, real estate agent, he faces, the facts, and uses them, effectively! Will you be a smart home – seller?

Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them

The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.