For sale by owner Web listings appeal to thrifty home sellers but haven’t quite clicked yet with buyers

The concept is tantalizing: Instead of paying a 6% commission to a Realtor, sell your house yourself on the Web and save tens of thousands of dollars in agents’ fees.

Dozens of Web sites, such as ForSaleByOwner.com, HomeSalez.com, GoneHome.com and Owners.com, offer home sellers a platform for marketing their homes to millions of potential customers on the Internet.

Perhaps, but today’s FSBO sites aren’t exactly hotbeds of real estate activity, at least not in Southern California. Their lack of popularity is surprising given the Southland’s booming housing market, where homes in some areas are selling in a day and multiple offers are driving up prices. Seldom-visited FSBO sites could offer a distinct advantage to frustrated home buyers, who could make offers without entering into bidding wars.

But many Southern California home sellers who have tried for-sale-by-owner, or FSBO, sites complain that their ads have gone unnoticed by buyers. Some eventually sign with a real estate agent, while others place FSBO ads in more traditional media, including newspaper classifieds and real estate magazines. The problem, proponents of sell-it-yourself Web sites say, is that many buyers don’t yet know the sites exist, though aggressive marketing, including TV infomercials, may someday make for-sale-by-owner real estate sites as popular as such online discount brokerages as Ameritrade and E*Trade.

But don’t try to tell that to Valentino Perkov. When he wanted to sell his two-bedroom house in San Pedro, Perkov bought a three-month ad from Owners.com for about $100. After three weeks online, he hasn’t received a single call regarding his $345,000 property. “I have some hits on the Web site,” Perkov said, “but no calls yet.”

James Athan had a similar experience when trying to sell his two-bedroom bungalow in El Sereno. He paid roughly $30 to list his $200,000 home on HomeSalez.- com. “We never got any responses from that Web ad,” Athan said.

A typical FSBO site allows the seller to post a classified-style listing with one to seven photos of the houses, along with e-mail and phone contact information.

The cost ranges from nothing (for a basic ad with photos on GoneHome.com) to $199 (for an ad on ForSaleByOwner.com with yard and “directional” signs for your property).

Christie Stoddard hasn’t done much better. She recently listed her $490,000, four-bedroom Brea home on ForSaleByOwner.com. But after a month, her ad doesn’t appear to be working. “We’ve gotten more calls from just having a for sale sign out front,” she said.

Most sites offer additional services for sellers and buyers, including mortgage calculators, information on schools and recent sales data to help sellers price their homes accurately. And for those unsure about going FSBO, many sites provide links to Realtor sites and phone numbers for partnering real estate agents.

“Some sites do a good job at taking people’s money, but they do a poor job at spending that money where it needs to be spent–at driving potential customers to a home,” said ForSaleByOwner.com Chief Operating Officer Colby Sambrotto. “They don’t spend enough money on marketing and advertising so not enough people see the ad, and the seller doesn’t get any offers.”

Based in New York City, ForSaleByOwner.com lists about 10,000 to 12,000 homes for sale on its site at any given time, Sambrotto said. But a quick search for homes within a 50-mile radius of central Los Angeles produced only 36 hits. (A similar search on GoneHome resulted in six homes, whereas Owners.com yielded about 60 hits. Some of the Owners.com listings, however, were for vacant lots and foreclosure properties.)

So if sellers are posting ads on FSBO sites, why aren’t buyers clicking? According to officials of some sites, the major problem is marketing–or the lack of it.

ForSaleByOwner.com recently shot a 30-minute infomercial explaining the benefits of home selling on the Web. The infomercial will air on cable systems in the Los Angeles area in about a month, and also will run in 36 markets across the country.

“It has become so crowded, with [thousands] of real estate Web sites out there,” said HomeSalez.com founder and President Shawn O’Quinn. “It’s impossible to compete unless you spend money.”

Only 16% of homes nationwide are sold without an agent, and that figure drops to 10% in the West, says the National Assn. of Realtors.

Some FSBO sites take a strictly Web-centric (and less costly) approach to marketing. Toronto-based HomeSalez.com, for instance, spends $5,000 to $6,000 per month to place its name on Internet search sites. If you type “sell your own home” in a search engine such as AltaVista or Yahoo, a link to HomeSalez.com will appear in the first page of results.

FSBO operators believe homeowners simply give up too soon on the sell-it-yourself concept, regardless of whether they use the Web. Perhaps, but it’s understandable that home sellers get nervous when potential buyers don’t bid.

Michael Williamson listed his $167,500, three-bedroom Inglewood townhouse on GoneHome- .com, but quickly changed his mind and hired a real estate agent. He retained his free GoneHome ad but isn’t optimistic about FSBO sites. “As far as I know,” he said, “the Web ad has not produced anything.”

Williamson said he believes that many potential buyers don’t surf the Web. “You’re looking at a smaller segment [of the population], people with Internet access.”

Does the future lie with FSBO for Real Estate in Australia?

Depending upon who you talk to the future for the Real Estate in Australia could be vibrant or bleak depending upon where you stand. The inescapable fact is that the real estate market is changing and whether you wish to be part of that change probably is an indicator of whether you are going to survive the change or not.

With the real estate market that control had hitherto lain with the Realtors / Agents call them whatever and their counterparts within the legal profession. For an agreed rate, a rate that has to be said that a great many people have thought excessive for some time, these twin professions acted as a fulcrum and point of control between buyers and sellers. “No pay no gain” if you pardon the alteration to the widely accepted maxim and in this case if you were not prepared to pay their quite large fees then you couldn’t sell your property. You were quite naturally shafted and there was nothing you could actually do about it.

As with most industries the Internet has changed how we do business and surprisingly the real estate industry has been quite slow to adopt those changes. Sure they adopted the concept of the web site at an early stage and yes they understood interactivity and all that that entails but what they were surprisingly slow to grasp was that the Internet would actually wrestle control from those who had hitherto enjoyed the power of control.

However enter stage left in late nineties the Internet and all of this changed. The Internet is affectively structured round the correct understanding and implication of three main concepts or laws. Moore’s law, Metcalfe’s Law and Ronald Coases Theory of the Firm. Understand these theories and you understand how business is transacted and how we exist profitably in the age of the Internet.

No longer were people prepared to pay 6% of a transaction and why should they pay anything at all when they could effectively now develop channels with which to successfully market their own properties.

The main result of the above theories and concepts is the transfer of power from the pre existing controls to the buyer and the greater empowerment of the consumer. Coupled with this transfer of control and power came a tumbling of pre existing fee structures and fixed costs. Nowhere was this more evident in the real estate industry where quite frankly people were waiting just for this moment to happen and adopt this change with a relish they did.

Cue the rise of the FSBO or For Sale By Owner. Now enterprising individuals can actually market their own properties to a growing number of like minded buyers who are becoming more and more interested in doing business this way. The concept of the FSBO has matured rapidly and is now becoming more and more widely accepted. It is now not uncommon to see more and more houses and properties being marketed in this way and more and more successful transactions are the result. Long live the FSBO!.

FSBO in Pinellas County St. Petersburg

There are a lot of buyers that think they get a much better deal when they buy directly from a FSBO.

What I see in today’s Real Estate market here in St Pete and the beach communities like Treasure Island or Madeira Beach is that buyer’s are much better of to hire a Realtor.

This might or might not be true. BUT BE CAREFUL

There are so many properties out there that you will never find on your own, Most Condo complexes do not allow signage and most FSBO do not know how to advertise their property everywhere.

Buying property in can be expansive and you need to know all the choices you have and it can also be complicate, so you want a realtor on your site that is familiar with the buying and selling process.

If you are serious about buying property here in Pinellas County, hire a Realtor or real estate agent that has an ABR designation (accredited buyer’s representative)

For Sale by Owner - Startegies and Significance in Real Estate

For Sale By Owner [FSBO] acts as a market place for those who want to sell their properties or homes and those who are looking forward to purchase property without involving any kind of middleman or real estate agent. Here, buyers and sellers share a common platform where they can interact directly to avoid any kind of miscommunication and misinformation.

The concept of for sale by owner has been proved quite successful in the real estate market; however, it has few shortcomings. In a typical real estate market, the best thing is that one can get easy finance as most mortgage companies rely on the local real estate agents to bring them the bulk of their business. With growing competition, the FSBO (for sale by owner) market took note of it and now days they are offering one of the best mortgage deals. Often, this feature of FSBO (for sale by owner) is misunderstood by the buyers who eventually begin to think that the sellers are offering finance at their end, which is not the case most of the time.

The most common reason that normally entices a seller to opt for FSBO (for sale by owners) is to save on the real estate commission, which indeed can run pretty high. The basic misconception is that the buyer also saves money by opting for a FSBO deal. In consideration of this fact, each year many of the home owners decide to choose the FSBO route to sell their properties. According to the National Association of Realtors.

Web 2.0 style FSBO

I went to two open houses yesterday. My sister and her partner are looking for a place. The homes we looked at were on the same street in Oakland. One was listed by an agent with Pacific Union, a prominent Bay Area brokerage company; the other was a FSBO.

The first home, the one listed with a broker, is marketed adequately. It seems to be priced right. The listing appears on pacunion.com, Realtor.com, and Trulia. There are eight photos. Not enough, but better than some.

The second home, the FSBO, is more interesting. It too seems to be priced properly. The owner paid this company, (yikes, what a crappy site!) one of those flat-fee posting “brokers”, to get the home into the MLS and thus onto everyone’s IDX display, including that of Pacific Union. No big deal — that’s been done for ten years. And, as we know, it produces results less than 20% of the time.

But … this homeowner also set up a Blog for his home. With 47 photos. He also took the time to list it for sale on Zillow, adding a bunch of photos there.

There are lots of things he did not do with the blog that he should have. He chose the wrong platform. And the photography is not exactly inspiring. But he still did a better job marketing his property online, where it really counts, than the pro down the street did.

It made me think about the impact Web 2.0 will have on the FSBO market. Despite more than a decade of Realtor bashing and consumer empowerment, the percentage of homes sold without an agent has remained flat. But will that continue now that consumers have access to the same free or nearly free Web 2.0 applications Realtors are just starting to adopt? Now that it’s cheap and easy to get listings into the MLS, and most public listings websites no longer view placing FSBO next to their broker listings taboo? Now that forking over big bucks for print advertising is no longer necessary?

I don’t think so.

The entry of generations X and Y into the real estate market has been talked about a great deal — usually in relation to practitioners’ level of preparedness to “deal” with them. But many of these consumers, whose FSBO parents fumbled with useless “FSBO kits” and homemade yard signs, will look at the bounty of Web 2.0 applications — from blogs to video editing and sharing tools — and think long and hard before they pay 6% to have their property marketed just adequately.

Web 2.0 will empower Realtors with the desire and skills to master its practice. It will do the same for the FSBO-inclined consumer. With each coming year, an increasing number professionals who ignore this reality will be left in the lurch.

I think we’re going to see a significant increase in FSBO’s in the coming years. What do you think?

Does Selling For Sale by Owner Make Cents?

It is not at all uncommon today for many homeowners to attempt to sell their home on their own, especially with the many home selling tools available via the Internet. One of the primary reasons listed by most homeowners for selling their home without using a real estate is the money they plan to save on the commission.
Unfortunately, many homeowners discover the hard way that while they had planned to save money on the sale of their home they actually end up losing money. In fact, studies indicate that homeowners who do it themselves through for sale by owner, or FSBO, listings end up selling their homes for approximately 15% less than homeowners who use a real estate agent.

Homes sold by their owners without the benefit of an agent frequently sell for less because the owners simply sell the home for far less than it is actually worth. In many cases, this is because FSBOs commonly attract buyers who are looking to save money. These buyers typically think that because you’re saving on the commission you can afford to lower the asking price.

Still yet, in other cases, the homeowner may not know what price to ask for the home when they decide to put it on the market. Sometimes this lack of education of the real estate market can result in overpricing the home so that it sits on the market so long the seller ends up selling it for a song. In other cases, the homeowner may sell the home for less money than it is worth by jumping at the first offer.
Another common problem contributing to the low sales price of many FSBOs is the lack of exposure. There is no doubt about the fact that maximum exposure helps homes to sell faster and at higher prices. When the property is exposed to multiple buyers, it is far more likely to garner more and higher offers. Due to the limited marketing opportunities of many homeowners who choose to sale their homes on their own, this kind of exposure simply isn’t possible.

It should also be noted that above and beyond the potential loss of profit involved in FSBO sales, many homeowners are not prepared for all of the legalities they will have to deal with. In a home sale where an agent is involved, it is the agent who works with buyers regarding financing as well as handles arrangements such as appraisals, surveys, title insurance, contracts, etc. In a FSBO sale, there is no experienced agent to guide you along the way. Experienced real estate agents know how to ensure buyers are qualified to purchase a home before they instigate a contract with them.

When you’re handling everything on your own you could easily find yourself working with a buyer who simply isn’t financially qualified to purchase your home. As a result the deal may fall through before it ever closes and you will have wasted a significant amount of time and expense in the process. It is also important to know that when selling your home on your own you are exposing yourself to numerous legal liabilities. Just the seller’s disclosure alone is fraught with several risks. Unless you’re extremely familiar with the legal end of selling a home, you could find yourself in above your head.

It is also important to consider the time you will need to dedicate to the sell of your home if you handle it on your own. Many homeowners find out after the fact they simply were not prepared for the amount of time they would need to spend on the home selling process. Not only will you need to spend time marketing your home but you will also need to spend time following up on leads, answering phone calls, scheduling home showings and dealing with significant amounts of paperwork. All of this can cut into your leisure time and affect your privacy. Make sure you’re prepared for this when making the decision to sell on your own.

If you do decide to sell your home on your own without an agent, make sure you do your homework up front to ensure you don’t fall into these potential risks. If you’re not sure how much to ask for your home, find out. Many real estate agencies offer a complimentary market analysis. This gives you the opportunity to have the real estate agent look at your home and provide you with an educated decision on how much your home may bring on the current market. It will then be your decision whether you want to list the property or try selling it on your own.

Another important safety precaution is to make sure you hire a competent attorney experienced in real estate matters to help guide you along the way. While the cost will certainly detract from your profit, it could keep you from much higher legal liability costs.

Keep in mind that it is no coincidence that homes which receive the best exposure on the market sell quicker for higher prices. If you do elect to sell your home on your own make sure you utilize a multi-pronged marketing approach. Sure, a For Sale sign in the yard is great, but you will need to go above and beyond this technique. Take out ads in the newspaper and look into websites that provide coverage for FSBOs. Host an open house party. Give your home the exposure it deserves. If for some reason, you feel you cannot openly market the property, remember this may mean you have less money when you do sell it.

Finally, do not forget to weight the cost you may be saving by avoiding the commission with the profit you may be giving up. While real estate commission rates do vary from one region to the next, on average most consumers pay an average commission rate of about 6.5%. Considering the fact that selling your home on your own could cost you 15% at closing, even if you do sell your home on your own and save the commission you could still be losing at least 8% on the sale of your home. On the other hand, if you use an agent, even with the commission you could stand to bring in far more money on the final sale than if you handle it on your own.

Home Sellers: Entice Buyers with 321 Buydown

With the real estate market beginning to slow down across the country, some sellers, real estate agents, and lenders are starting to rediscover some old methods of financing that were used to help move properties back in the 1980s, when interest rates soared well into the double digit range. One of the most effective techniques that’s being revisited involves “buying down” a home’s mortgage rate.  

In essence, the buydown concept involves having a seller contribute money toward lowering a buyer’s mortgage rate rather than reducing the overall sales price of a home. In the 1980s, the most popular type of buydown was called a 3-2-1, and here’s how it works, using a typical 30-year mortgage as an example:  

Once a sale has been consummated, and payments have begun coming, the seller begins to help the buyer make those payments. During the first year of the mortgage note, the seller will pay three percentage points of the interest rate. The second year, they will contribute two percent, and the third, one percent. Only after that initial three-year time period has elapsed will the buyer begin to pay the full rate on the loan. 

Here’s why a 3-2-1 buydown can be good for everyone involved in the transaction, including the buyer, seller, and real estate agent. Let’s say that a seller has had a home on the market for a considerable length of time without any serious interest from buyers. That seller could choose to reduce the price by a substantial amount, but they could also agree to a 3-2-1 buydown, which essentially offers buyers a chance to have their first three years of mortgage payments at least partially subsidized. 

Such a buydown program would allow a buyer who may be young, but with excellent prospects for increasing their income in the relatively near future, a chance to get into a home with substantially reduced payments, especially during the first year. For example, a $200,000 mortgage payment at 6.5 percent over thirty years would be about $1,200, principal and interest. With a 3-2-1 buydown, the seller’s contribution for the first year would lower the buyer’s payments to about $898, which is a substantial savings. The second year, the buyer’s payment would run about $1,114, and the third year would run about $1,013 a month. Only at the beginning of the fourth year would the buyer be responsible for the entire monthly payment.  

Besides saving money each month on the mortgage payment, one huge benefit to the buyer (and the seller) is that the buyer needs less income to qualify to purchase the home. Many lenders use the lower payment in qualifying the buyer. This also helps buyers with debt-to-income ratios.  

On the seller’s side, the first year’s subsidy would cost about $4,400. That amount would decrease to about $3,010 in year two, and $1,550 in year three. That $8,960 would cost a seller less than reducing a home by $10,000 in order to attract a buyer.   

At the time of sale, the real estate agent benefits, too, because the sales price is higher than it would have been had the seller simply dropped the price. As a seller, negotiate this extra commission with your listing agent. Just because you signed a contract for a specific percentage doesn’t always mean that you can’t renegotiate at the time of sale. Besides, your promised commission was for a full price offer.

It’s not a new home selling tool, but the 3-2-1 buydown can help you get that SOLD sign.

Should You Buy, Sell or Just Wait?

It’s nearly impossible to look for a home today without hearing about foreclosures. But how do you translate this headline news into your dream house?With over 2 million listings on Trulia, they compared listing prices with foreclosure prices for bank-owned foreclosure properties (aka REOs) across the country to show you how to buy or sell your home smarter. Median List prices (green) are provided by Trulia.com. Median REO (Real Estate Owned by Banks) home prices (orange) provided by RealtyTrac.

Selling in the Midwest or Pacific?

If you’re trying to sell before you buy here, you might want to wait if you can. Unfortunately, a tough job market and the subprime crisis have meant a lot of foreclosures at prices well below the list price in markets like San Diego, CA and Detroit, MI.

Buying in the South or Mid-Atlantic?
Try using foreclosure prices to bargain for a better deal on a listed property. When price tags on foreclosures and listings are neck-and-neck, you have more options at lower prices and a better negotiating position.