Archive for the ‘Selling Techniques’ Category

For Sale By Owner (FSBO) Myths (And a Couple of Facts)

Friday, June 17th, 2016

Updated in 2016…

With more than 90% of prospective buyers beginning their home search online and multiple web outlets for listing publication, it seems that more sellers would be bucking the broker’s commission and listing their property for sale by owner (FSBO). Cutting a commission by 3-6% could save thousands of dollars, but it would also put some real estate brokers out of business. At RealDirect, we recognize that the traditional method of selling real estate needs to adjust and embrace a new way of doing things in order to stay relevant. However, to many brokers who are wedded to a standard commission, the easiest way to keep money coming in is to use fear. Fear that selling with anyone but a traditional broker is hard. Fear that buyers’ brokers won’t show homes that are not listed with the big brokers. Fear that sellers won’t know how to price their property. While the list goes on and on, most of these fear tactics are inaccurate at best, and outright lies at worst. If you’re thinking about selling your home without a traditional broker (or a FSBO), we’d like to debunk some of the for sale by owner myths (and share a couple of facts).

Myths

Myth: If you don’t list with us, we won’t bring our buyers.

Fact: Buyers’ agents want to earn a commission. If their client says they want to see a property, agents will typically try to work out a deal. However, getting brokers and owner to agree to a deal can be tricky, with many of the large brokerages refusing to show homes where they do not have agreements in place. But by working with an FSBO like service such as RealDirect’s Owner Managed service, we take care of the agreement, so it will be easy for brokers to show your home. Plus we are members of the Real Estate Board of NY – which is the de facto MLS in NYC. Being a member of REBNY requires that you co-broke with all other REBNY brokers.

Myth: You’ll get more money if you sell with a traditional broker.

Fact: That’s just plain fuzzy math. First, this does not take into consideration that the net proceeds could be higher with alternative sales models because the closing costs are lower (i.e. commissions) even if the sales price is lower. But even if you do not take that into consideration, if the property is marketed to every possible buyer, as done with RealDirect, the sale will be highly competitive, and you will get the highest possible price.

Myth: It’s too much work for you to handle on your own.

Fact: Maybe. It depends on how much time you’re able to devote to showing and answering questions about your home. That’s why RealDirect offers different listing options which allow you to handle your own showings and open houses or have a licensed agent do them for you. Our platform has baked in marketing that covers all the mediums a traditional broker would use (and several they don’t). We’re available to negotiate for you, or you can handle it yourself. Because every situation and every seller is different, we don’t prescribe to a one-size-fits-all real estate model and we don’t believe in one-size-fits-all pricing. You shouldn’t have to, either.

That said, there are some scary things brokers will tell you that are actually accurate.

Fact: People won’t find you unless you’re in the MLS.
Your local MLS is what most buyers’ brokers use to find properties for their clients, and also where sites such as Streeteasy, Trulia, Zillow and others get some of their listing info. While it’s certainly possible to find a direct buyer by doing your own advertising, if you want to appeal to the widest buyer base possible, it is critical that your listing appear in the MLS. And being in the MLS (or REBNY database in NYC) will also help you with the next one…

Fact: You have to offer a buyer’s broker commission.
While you can forego paying 2.5-3% to a seller’s broker by listing your home “for sale by owner (FSBO)”, if you want brokers to bring buyers to your home, you have to be willing to pay their commission. You can opt to only show your home to direct buyers with a strict “no brokers” policy, but in doing so, you eliminate every single buyer who wishes to work with a broker instead of representing themselves – and that is the majority of buyers. And eliminating buyers from the buyer pool can result in a lower purchase price, and work against your sale.

So the key to successfully selling your home as a FSBO is to do your research, understand how the process works, realistically evaluate your level of time and willingness to do work, and make a decision you’re comfortable with. Scare tactics are just that. Don’t believe the “for sale by owner” myths.

A Home Seller’s Guide: From Offer To Contract To Close

Friday, February 26th, 2010

Congratulations, you got an offer on your home! Now comes the tricky part: navigating the waters between your buyer’s offer and the successful closing of the sale. In between, there will be contract negotiations and numerous other steps. With patience and an eye for detail, you’ll reach the end with a minimum of pain and stress.

Turn An Offer Into A Contract And Close The Deal

Full disclosure. You are required by law to provide information on the structural, environmental and legal status of your home as it might influence a buyer. This information is typically provided on disclosure forms as defined by your state. You’ll need to have your disclosure forms in order before accepting an offer for your home.

Offer review. Once you’ve received an offer on your home, be sure to review it carefully. Pay particular attention to the offer price, any contingencies that will rescind the offer and details of timing like proposed closing date and when the offer expires. The buyer’s offer is your first chance to develop your negotiating strategy and decide on counteroffers if the offer doesn’t match your expectations.

Contingencies. Contingencies protect the buyer, allowing her to walk away or renegotiate if the conditions of the contingency aren’t met. Typical contingencies include requirements for appraisal and inspection, the securing of financing and the completion of repairs that result from a home inspection. Closing and other costs may also be subject to contingency agreements. Any or all of these requirements may be negotiable. A savvy seller may be willing to concede to a contingency as an alternative to lowering the sale price of the home. (more…)

What To Do When Your Home Won’t Sell

Friday, February 26th, 2010

Nothing is more frustrating than wondering what to do when your home won’t sell. When the home you love languishes on the market you may begin to question your sanity, your agent’s talents—even the house itself! Luckily, you can do several things when your home won’t sell to increase your chances of a successful sale.

Make A Change When Your Home Won’t Sell

A home sale stuck in neutral is usually a sign that something isn’t working. There are several culprits to consider when your home won’t sell and fixing or altering any of them might be enough to move your home sale forward. Here are some adjustments you can make when your home won’t sell:

Everybody loves a bargain. It may take some emotional fortitude, but lowering the price of your home may help jump start interest when your home won’t sell. On the positive side, the money you lose by selling at a lower price may be recovered by lowering your monthly living expenses if you move into a less expensive home.

Change your situation. If you’re selling on your own, consider hiring a real estate agent—a fresh (and professional) set of eyes might catch something you’re missing. If you are currently working with a real estate agent, it might be time to evaluate your relationship. It’s not a marriage. If things aren’t working or you’re not happy, feel free to let your agent go and hire a new one. (more…)

Should you FSBO?

Friday, February 26th, 2010

Thinking about entering the FSBO (For Sale By Owner) waters? In a tough real estate market, some homeowners look to cut costs by selling a home without the help of a real estate agent. Going the FSBO route can save you thousands of dollars if you can say yes to the question: “Should you FSBO?”

Should You FSBO? Some Questions To Consider

Are you willing to get your hands dirty? The FSBO process requires the seller to assume the workload of a seller’s agent. This includes researching the right price, tracking down (and filling out) all of the proper forms and dealing with the constant phone calls and communications required to sell your home. Make no mistake: a FSBO effort will take a lot of time and effort on your part with no guarantee of success.

Will you settle for the right price—or less? The biggest hurdle to selling your home on your own is setting a realistic and competitive price. Your FSBO project will have the best success if you price your home close to comparable homes (called comps) in your area. You can find comps online at sites like Zillow.com or by scouring public sales records. As an alternative, you could pay for a professional appraisal. Once you’ve established a competitive price, be prepared to receive offers below that price as most buyers equate FSBO with a bargain or distressed property. (more…)

Tips For Selling A Co-Op

Friday, February 26th, 2010

Selling a co-op presents different challenges than selling a single-family home. A co-op is a unit of a larger building. That means the building, its inhabitants and the co-op board are all part of the sale in one way or another. As you enter the process of selling a co-op, steel yourself with the knowledge that patience, persistence and common sense will result in a successful sale.

Seven Tips For Selling A Co-Op

Check with the board. Before you begin the process of selling a co-op, be sure to check with your board of directors. The board will be able to provide you with all necessary forms and can guide you on the proper procedure for selling your co-op. Unlike detached dwellings, co-ops often require board approval of both the buyer and sale itself. Getting started early with this process will help smooth the way later in the transaction.

First impressions. When you’re selling a co-op, you need to understand that you are not only selling your unit, but the building itself. While a house may have “curb appeal”, your co-op has “building appeal”. Take a look at the common areas including lobby, hallways and elevators. Your co-op’s board of directors may be receptive to a reasonable request to make cosmetic changes or repairs that will help make a good first impression to prospective buyers. If it helps, you can point out that such changes will improve the unit prices for all shareholders, not just you as a seller. (more…)

Selling Your Home With Kids At Home

Friday, February 26th, 2010

The first rule of home staging is to de-personalize your home as much as possible, but how do you do that if you have kids? Selling your home with kids at home can add an extra challenge to getting your property to present at its best. Without involving Social Services, it will be difficult to get your kids to disappear while you’re selling your home. The next best thing is to maintain as much order as possible and let kids be kids.

Selling Your Home With Kids At Home—And Staying Sane

Clutter correction. Priority one as you begin selling your home with kids at home should be to reduce clutter. Have your kids divide their belongings into three piles: “can live without”, “put in storage” and “can’t live without.” Sell or donate the things in the first pile—giving the proceeds of any sale to your kids can be an incentive. Box and store the items in the second pile—this is easy with seasonal things that won’t get used for half a year or more. Finally, help your child store, display and neatly arrange the things in the final pile.

Getting (and staying) organized. Once you’ve removed the clutter from the kids areas of the home, make sure to kept these areas organized with functional storage. Toy boxes and other storage containers should be placed neatly where appropriate and your kids should be directed to keep their items stored when not in use. Setting limits on the number of things “out of the box” is one way to limit clutter. Having your kids “check” items in and out of storage can be turned into a game that will keep your home neat during the selling effort. (more…)

Biggest Mistakes Made When Selling Your Home

Friday, February 26th, 2010

When selling your home, the biggest mistakes can cost you time, money and peace of mind. Although it’s easy to fixate on the financial side of selling your home, the biggest mistakes often come when sellers fail to consider the details of the home itself. Remember: when selling your home, treat the home like a product. Marketing and displaying your product in its best light is the only path to a successful sale.

When Selling Your Home, Avoid The Biggest Mistakes

You want HOW much? Overpricing is the number one mistake most novice home sellers make. Regardless of the current market, you always need to do your homework before pricing your home for sale. Take emotion out of the equation and use comparable sales in your area as your pricing yardstick.

Condition. Another of the biggest mistakes made when selling your home is to ignore the condition of your house. Waiting until a real estate agent or (worse!) a prospective buyer points out your home’s repair shortcomings is too late and will cost you a sale. Take the time to go over your house in detail or consider hiring a home inspector to take a look at your home before you put it on the market.

Marketing. Given that your home is the most expensive product you’ll probably ever sell, it only makes sense to market it to the best of your ability. Take high quality photos of your home and create an attractive listing. Once you have that listing, be sure to publish in as many markets (both online and in print) as possible with services like RealDirect.com. Also, consider brochures, flyers and other forms of marketing. Above all, don’t settle for a simple listing on a single web site! (more…)

Tips For Selling A Condo

Friday, February 26th, 2010

Selling a condo in a down market can be a challenge. You’ll need to get everything just right to beat the trend of falling prices and long sales cycles. Selling a condo means selling a lifestyle as well. Be sure your efforts are targeted at buyers who appreciate a low-maintenance, controlled environment.

Six Tips For Selling A Condo Quickly

The price is right. Make every effort to set a competitive price for your condo. Before you begin the process of selling a condo, check local print and Internet listing for similar units in your area. If you work with a real estate agent that has experience with condo marketing, she should be able to provide comparable sales to help guide you. Need to make a quick sale? Price your condo 5% below the average selling price for similar units or consider incentives like covering closing costs.

Tell us about it. Take plenty of pictures of your condo (inside and out) and create a detailed written description of your unit. Detail the desirable features of your condo, the development and the surrounding community.  These materials will form the basis for your marketing campaign and will be a big help in selling your condo.

The power of marketing. Once you have a description and pictures of your condo, be sure to post them in as many places as possible. Online real estate portals, “for sale” sites like craigslist.org and other Internet venues should all be targets for your listing. Newspapers, flyers and brochures should also be on your list of marketing activities. (more…)

Strategic Foreclosures: What Homeowners Need To Know

Tuesday, February 16th, 2010

A recent study by the credit reporting firm Experian found that 25% of pending foreclosures are “Strategic foreclosures.” While the negative equity situation caused by the recent housing crisis may have many homeowners considering this type of move, the risks are high.

Strategic Foreclosures: Risks And Rewards

A strategic foreclosure occurs when a homeowner decides to walk away from a mortgage while continuing to pay off other debt. Borrowers who choose this route are often motivated by high monthly mortgage payments on homes that are valued at considerably less than the value of the loan. An increasing number of homeowners make the back-of-the-napkin calculation that a monthly rent at one quarter of their current mortgage payment makes more sense than continuing to pay on a property that has lost 30% or more of it’s value. A strategic foreclosure comes at a price, however, and you should understand all of the implications before choosing this drastic solution.

Credit impact. Despite making a “strategic” decision to walk away from a bad investment, a strategic foreclosure will impact your credit score to the tune of 150 points or more—those with good credit will feel more pain than those with lower starting scores. The dent in your credit score will stay in place for a minimum of seven years and the listing of foreclosure that comes with this penalty doesn’t indicate the nature of your decision. A drastically lower credit rating will not only make it difficult or impossible to purchase another home, it may also lower credit limits and increase interest rates on existing credit cards. (more…)

Seller Financing: What Home Sellers Need To Know

Tuesday, February 16th, 2010

Seller financing can be an attractive option for homeowners in the right situation. Seller financing can open your home to a wider pool of buyers and defer some tax obligations. By entering into seller financing, you can create passive income that may exceed the return rates of traditional investments.

A Seller Financing Primer

A simple concept. Seller financing takes place when the seller assumes the responsibility for financing the sale of her home. In essence, the seller assumes the role that a bank or mortgage lending institution would play. By assuming the risks traditionally held by a bank, the seller can make his home available to buyers that might not qualify for a standard loan. The seller-financed promissory note has all of the same features of a normal home loan, including a down payment, interest payments, a monthly payment schedule and protection of the property from default.

Investing in the future. Seller financing can be an attractive option for those who would like to create a passive income stream or who want to avoid the large tax bite of a capital gains sale. Whereas the stock market averages returns of 4% to 6%, a seller-financed loan may yield returns of 8% or more, depending on the agreement between buyer and seller. (more…)