For Sale By Owner?

In the United States, less than 10% of all For Sale by Owners (FSBOs), are successful in selling their home by themselves. That's because most people just give up because they don't realize from the beginning the difficulty and complexity of the job ahead. But that's not the only reason. Here are several mistakes FSBOs make when selling their home.

1. Failure to price a property at what market conditions will bear.

The number one reason that most FSBOs don't sell their homes is that they price them too high. Many start counting the money they're saving on commissions and how much their sale will net. If your house is priced higher than other comparable houses in your market, you won't get anybody to look.

2. Underestimating the time, energy, know how, ability and effort needed to sell a house.

One of the keys to selling your home effectively and profitably is complete accessibility. Many homes sit on the market much longer than necessary because the owner isn't available to show the property. Realize that a huge amount of time each day is necessary in order to sell your home.

3. Not being prepared to deal with an onslaught of buyers who perceive FSBOs as targets for *low balling*.

Another challenge of selling a home is screening unqualified prospects and dealing with low-ballers. It often goes unnoticed that much time, effort and expertise is required to spot these people quickly. Settling for a low-ball bid is usually worse than paying any type of professional fee or commission.

4. Lack of knowledge about financing options for the buyer.

Are you prepared to answer questions about financing? One of the keys to selling is having all the necessary information the prospective buyer needs and to offer the buyer options. Think about the last time you purchased something of value. Did you make a decision before you had all the info you needed? By offering financing options, you give the homebuyer the ability to work on their terms. You'll open up the possibility of selling your home quicker and more profitably. It's critical that you locate and establish relationships with a network of financing experts that will help you accomplish your goal profitably.

5. Not fully understanding the legal ramifications and all the necessary steps required in selling a home.

Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your state's disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, you may want to consider consulting with a legal or real estate professional. Nearly 90% of all real estate law suits are from For Sale By Owner transactions!

6. Lack of experience in handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented.

Are you well versed in legalese? Are you prepared to handle disputes with buyers? It is always wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.

7. Not contacting the necessary professionals... title, inspector (home and pest), attorney, and escrow company. Great care needs to be taken with every one of these!

Selling a home requires an intimate understanding of the real estate market. In Tyler, Texas, real estate is extremely strong; and selecting a highly qualified professional realtor is absolutely the best way to go.

BUBBLE?

Is there really a real estate bubble? Do the national averages and/or the stock market have very much to do with the health of your real estate market?

The stock market is based on the national, even the world economy. The real estate market is based on local, and, in many cases, micro-local economies. What's happening in Los Angeles does not directly affect what's happening in Tyler or Tempe. True, certain factors such as interest rates affect all the markets, there really is no barometer to measure the entire housing industry in the U.S. Average prices, average new homes sold and average homes built nationally has little relevance to your locality. And, within a particular city that is doing well, there may be certain neighborhoods doing poorly for a variety of reasons, such as over-building of new homes.

So while statistics, calculations and economic factors are relevant, so is common sense and due diligence. Take a look around and see what's really happening. Talk to real estate agents, investors and lenders in your area for a better picture of what is going on. Don't look at broad nationwide, statewide (or even city-wide) statistics. Be concerned with the average prices in the particular neighborhoods in which you're interested, the average time on the market, and the changes in sales prices from last year to this year. You'll be better prepared to buy your home or make your investment.

California Problems

The CAR reports that "The percentage of households in California able to afford a median-priced home stood at 16 percent in July, a 3 percentage-point decrease compared with the same period a year ago when the Index was at 19 percent. The July Housing Affordability Index (HAI) was unchanged from June, when it also stood at 16 percent."

And, it is interesting to note the income required to buy in California:
"The minimum household income needed to purchase a median-priced home at $540,900 in California in July was $125,670, based on an average effective mortgage interest rate of 5.73 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $109,170 in July 2004, when the median price of a home was $461,760 and the prevailing interest rate was 5.93 percent."

This is compared to stats for the U.S. in general:
"The minimum household income needed to purchase a median-priced home at $218,000 in the U.S. in July 2005 was $50,650."

Real Estate Investment?

Like millions of others you are probably wondering where you can attain the greatest and safest return on your money. Finding the right investment vehicle can be very difficult to say the least. The stock market can give you stable long term appreciation potential if you diversity and hold for a number of years. Sadly, however, one downturn in the market and years of gains can be wiped out overnight. Unfortunately, most Americans will stop looking for other ways to higher yields. They will leave their money in the stock market and must continually hope that when they are able to retire the market will stay strong and not suffer a downturn. In addition, when they are enjoying their retirement many will have the added burden of having to constantly watch the market to make sure their nest egg stays intact.

Why not invest in homes, and let renters pay your mortgage? Normal property appreciation is accompanied by a decreasing mortgage! What better investment could there be?

Shopping For a Realtor

Shopping for a real estate agent:

Your first step should be to shop for a Realtor, not to shop for property. Shop for a Realtor the way you would shop for a good attorney, accountant, doctor, financial advisor, or other professional.

Now that we have the Internet, you have more information at your fingertips than buyers did in the past. The web is a great place to start. There are lots of directories that list agents. And then there are the search engines, too. Peruse the sites. If an agent has lots of information on his site and seems genuinely concerned about informing homebuyers, and if he gives you good, solid information about himself, then that's probably a good choice.

The client should be the focus of any real estate transaction, not the agent. At the same time, agents have to market themselves -- or else you won't notice them. And realtors don't mind a bit if you email them, or call them, and ask questions. Find a good fit for what you're trying to accomplish, and then give that agent your loyalty. He'll work himself to death trying to please you!