More DIYers Predicted

A recent survey reported in Parade magazine caught my eye. The survey, Parade Crisis Impact Poll, by Michael Berland and Douglas Schoen, (July 19 - 23, 2009) revealed that while American families have certainly felt the downturn in our economy, there has also been an upside effect.

In the survey, 68% of the respondents reported "creating a meaningful life" and "giving back" as being important to them. What really stood out to me was that 63% of respondents have become more "do-it-yourself".

How will this translate in the real estate market? Will more sellers strike out on their own, by-passing the hefty agent commissions that come with outsourcing a real estate transaction? Quite possibly we are witnessing the beginning of another surge in for-sale-by-owner activity, this time caused not by the greed of the seller's market but by necessity. Whatever the reason, selling by owner is a smart way to hold onto your equity and increase your purchasing power.

FSBO sellers today enjoy a plethora of tools to market their property. Gone are the old stand-by classified ads, replaced by Internet listing websites and social networking platforms. The latest to jump into the online listing market is Tweetlister, where agents (and private homesellers) can upload listings to Twitter. We have been adding our sellers listings to Facebook and Twitter as well as several blogs over the past couple of years and encourage sellers to also post within their own networks.

So, will 2010 be the YEAR OF THE FSBO? We can't wait to find out....at least Massachusetts home sellers will know where to turn for the best exposure and ongoing marketing help.

Appraisal or Market Analysis - It Can Mean The Difference Between Selling and NOT Selling

In 2002, Massachusetts 4 Sale By Owner first introduced Western Mass consumers to the idea of for-sale-by-owner (FSBO) real estate and have since helped hundreds of buyers and sellers each year learn how to navigate the world of real estate without agent representation.

Although most serious home sellers come to us first for advice, occasionally we get frantic calls from well intentioned sellers who felt confident to test the water without us. We understand the DIY mentality and it's absolutely OK. Unfortunately, by the time they call us, their efforts are faltering and are about to throw in the towel. In order to know if we can help them, I need to know where the marketing efforts have failed, so I begin asking questions.

One of the first questions I ask, even before I've seen a picture of the home is "How did you determine your asking price?" The answer I am often given is . . ."I had an appraisal." I press harder, "What kind of an appraisal did you have?", I ask. The seller answers, "I had not one, but two real estate agent appraisals."

Aha, we now know the problem . . .

A real estate agent does not provide an appraisal. An agent offers a Comparable Market Analysis (CMA), which is a sales tool. It can be helpful, but not definitive in your quest to set a competitive asking price. The analysis can be flawed by the agent's experience (or lack of), thedesire to obtain a listing, the worry over other agent competition, and other factors.

A Uniform Standard Appraisal, as performed by a licensed residential real estate appraiser, contains all the information that an agent supplies, and more. Bear in mind that an agent ONLY includes MLS data, so every report is flawed. An appraiser looks at ALL data (MLS, for sale by owner, foreclosures, etc). The appraiser also measures the property accurately. An agent uses data supplied by public information which is often inaccurate and outdated. An appraiser utilizes a standard "credit/debit" formula to more accurately compare properties side by side. An agent's "opinion of value" is never used by a mortgage lender to determine whether a buyer can obtain a loan for your property. They rely on the independent appraiser's report only. Finally, an appraiser ONLY uses properties that have actually SOLD as true comparables. An agent often sprinkles several properties that are currently on the market (often with their own agency) to inflate the seller's opinion of their property's worth. Until the property sells, the asking price is only wishful thinking on the seller's part.

Ask yourself this. . . .

If real estate agents are so good at what they do and understand how to price your house for the current market better than you, why are there so many overpriced homes for sale with agent signs in their front yard? Perhaps, the answer is that the agent is more concerned about gaining a listing at YOUR expense.

Our recommendations . . . .

If you want to have an agent give you a market analysis, that's fine. Just make sure that the agent leaves ALL the paperwork with you for you to examine closely without being under pressure. Never sign a listing agreement on the spot without weighing this information carefully and looking at your other options. Be realistic about your competition and don't overprice in a buyer's market.

Winning The Commission Game

In today's tough real estate market, it pays to be smart and informed about the sales process. One of the most expensive parts of the real estate transaction involves the potential payment of a real estate commission to either the seller's or buyer's agents involved in a traditional sale.

Throughout the years we have working with private home sellers when selling "by owner", it has always amazed me to learn how both sellers and buyers feel that commissions are an inevitable and unavoidable part of the sales transaction and that they are set in stone.

The average U. S real estate commission in 2008 ranged from 5-7%, depending on where you live. Some agents will quickly say that their commission is 5% (but only if the buyer comes through their agency. One might presume that their motivation would be to not go out of their way to encourage brokers from other agencies to become involved.

Discount brokers claim they can offer the same services as "full commission" agents at a fraction of the cost, but at what price to the home seller. Be very careful and read the fine print before signing any contract, even one with only a 3-4% listing fee.

Private home sellers pay Zero listing commission and can offer a buyer's agent whatever they want, of course.

FSBO Publishers Network Launches Real Estate Blogs

FSBO Publishers Network is the nation's largest organization of independent for-sale-by-owner services, of which we are a member. As a regional publisher of both a print magazine ("A Buyer's Guide To 4 Sale By Owner & Builder"), multiple websites (MA4salebyowner.com, HomesByOwner.com, MAbuilder.com) and several blogs, we are dedicated to providing the best services possible for consumers here in Western Massachusetts. Being part of a national organization gives us a unique perspective on local real estate markets in other areas, and provides us with an opportunity to explore new innovations and opportunities that will help our customers.

Recently, FSBO Publishers Network launched two new real estate blogs with the purpose of providing consumers and member publishers an opportunity to share information, discuss topics and become a platform where we can continue to promote innovations within the real estate industry that will help consumers save money and regain control over the sales process.

We invite you to take a look at both blogs, share your thoughts and be sure to subscribe to each in your favorite RSS Reader.

FSBO Publishers Official Blog

Real Estate By Owner - A Consumer Forum

PODS To The Rescue - Moving Made Easy

Massachusetts 4 Sale By Owner is all about saving consumers money! We know that preparing a home for the market can be stressful. Moving is even more stressful. That's why we've teamed up with PODS, the portable moving and storage system that has revolutionized the moving process.

What's so different about PODS? Well, for starters, they are great for sellers. Not only can you take your time clearing out extra stuff, having a POD in your yard is a clear signal to buyers that you're moving soon. Create a real buzz by having a "moving sale" with a POD in the front yard - pass out our Custom Flyers to everyone that stops by.

PODS are great for buyers too. Once you've found your dream home, the next step is packing and moving - across town or across the country.

Get up to 10% discount when you order through us!

Find out More

Mistake #1 When Selling By Owner - Aking A Real Estate Agent To Price Your Home

Two key elements in selling successfully "by owner" are 1) Setting the correct PRICE and 2) Finding enough EXPOSURE to bring a wide pool of qualified buyers to your door.

As a Massachusetts for-sale-by-owner service with years of experience helping first-time home sellers learn how to sell successfully on their own, we often ask new advertisers this question. "How did you determine your asking price?" The answer will guide us in helping the home seller start out on the best path to success. Typically, here is how the conversation goes:

FSBO EXPERT: How have you determined the price for your property?
SELLER: I had an agent come over and give me an appraisal. She gave me a "high" and a "low" and I went in between.
FSBO EXPERT: Did the agent leave you with the CMA (Comparable Market Analysis)?
SELLER: No, she showed it to me and gave me the numbers, but she took the report with her.
FSBO EXPERT: That's too bad, because you cannot analyze the data without knowing what she used for comps, whether they were valid (still not reflective of the entire market) and how recent they were.
SELLER: What do I do now?
FSBO EXPERT: Our recommendation is to hire an independent real estate appraiser and pay for a Uniform Report of Market Value.

There are two reasons why paying for a professional appraisal is recommended:

1) A licensed appraiser is independent and has no vested interest in swaying the results of the appraisal. Often the courts rely on appraisers to provide an evaluation of an estate due to death or divorce. The appraiser is licensed by the state according to the types of appraisals they are qualified to perform and must adhere to a strict formula when performing the appraisal. An appraiser only looks at sold properties and is not concerned with "wishful thinking". The data used combines not only MLS data, but also any homes sold "by owner" in your area that are similar.

2) Using an appraisal to establish your asking price will provide you with peace of mind. You will be able to negotiate with market-savvy buyer agents, armed with mountains of "on the market" data to justify their buyer's lower offer. You will also sleep soundly knowing that the accepted offer that will meet lender's requirements for your buyer.

Remember, a real estate agent's main objective is "getting the listing" at a sales meeting. While some agents work hard to provide comparable data based upon their years of experience in the business and the time spent locating quality data, the vast majority of agents understand this is their "ticket" to a new listing. The stakes are very high and it is best to avoid any secret agendas by using an agent's opinion of value. Here is how an agent's CMA (Comparable Market Analysis" is flawed.

1) Agents only use MLS listed property data. In some areas of the country, as much as 25-33% of homes are sold "by owner". If this data is not included, the results are skewed.

2) Agents advance their agency listings first. Often agents provide home sellers with 10 - 15 listing sheets to compare property prices. They lean heavily on providing listing sheets from their own agency, calling attention to their prowess at obtaining other listings, designed to help you look at " asking price" not "sold price" and rely upon their own agency's listings rather than data from their competitors. The name of the game is to keep 100% of the commission and not share it with outside agencies.

It's the GIGO theory - garbage in, garbage out. Your results are only as good as the data you've used.

If you have had a CMA, don't worry, but use it in conjunction with other data. Make sure the agent leaves it with you! Separate the "on the market" sheets from the "sold" data to pinpoint where the market is at. If the agent did not leave you with the report, call them back and ask for the entire report to be sent to you.

Now, obtain an appraisal and USE that appraisal to determine your asking price. In a seller's market you can pad the appraised value by as much as 5% or more. In a buyer's market, be careful. Your local market may show weakness in some areas that will depress your asking price to below Assessed Value. Do not pay as much attention to the assessed values a town may assign as the tax base is set to obtain a fair tax, and cannot keep up with sub-markets, etc.

Where do you go to obtain an appraisal?

Find a qualified residential appraiser by contacting your local for sale by owner service or local lenders. Expect to pay around $300 - $400 (Western Mass rates). Ask for any discounts available. If you have recently had your home appraised for a refinance, try calling the appraiser that the lender used and ask to pay for a "comparable update", assuming you have had no recent improvements since the appraiser did a walk-through. Note: This does not work for lenders who may use a "drive by" appraisal technique or utilize online AVM technology.

Oh, The Things Real Estate Agents Say

One of our sellers got a call from an agent telling her that she had buyers who were very interested in her home. The agent showed up at her open house the next weekend (without buyers) and began to implement "FSBO Prospecting 101". In the old days, agents would be quick to tell FSBO sellers that they were down right stupid to think they could sell their home without the agent's knowledge, assistance and the coveted MLS. The new strategy is to become a partner, an ally of sorts. Provide free information and encouragement to "unrepresented sellers" (the new term for FSBOs), send them periodic gentle reminders and sympathetic phone calls to see how things are going. If you play your cards right, you may land a listing within 30- 60 days. Here's how it went with our seller:

Step 1: Be A Resource - The agent handed the seller a stack of agency information, while complimenting the owner on what a beautiful home she had. She was surprised that she wasn't already under contract, in fact. (worry nugget #1)

Step 2: Promote Feeling of Inadequacy - The agent then asked her, "Why haven't you attached the Massachusetts Lead Paint forms to your flyer?" This was designed to rattle the seller by making her feel that she was doing something illegal, I suppose. In reality, the lead paint forms are supplied to the buyer as part of the Purchase and Sale agreement, not handed out at open houses!!!

Step 3: Grab The Listing - HOLD ON! Fortunately, our seller saw through this little charade and informed the agent that she had the marketing end under control with our help and had retained a very competent real estate attorney to represent her legal interests. The visit was cut short as the ruffled agent gathered her materials and left.

What is the best way to sell confidently "by owner"? Contact your regional for sale by owner company early. Prepare your home carefully, get it appraised by a professional appraiser and set your price according the the market conditions, and expose it to a wide buyer pool.

Pet Considerations When Selling A Home

Selling a home can be stressful and you're not the only one feeling the anxiety. Your pets can be affected too. Animals are very sensitive to subtle changes in our behavior and habits. If you don't believe me, just watch the family dog when you put on your sneakers by the back door. Walk, anyone? While the beta-fish probably won't care who is in your home, don't count on Fido having the same reaction. What will Fido's reaction be? Will he happily rush to greet visitors, knocking your potential buyer to the floor with enthusiasm, or could he show signs of more aggressive behavior? Will you know if you're not there?

When you list your property with a real estate agent, you won't be around when your property is shown. There may be a lock box on your door, allowing agents and their buyers to gain access to your property at all times of the day. Fido, who normally sleeps on the couch (we all know that's where he goes as soon as you leave) may need to be confined to another room every day, just in case. Worse yet, what happens if an agent comes unannounced and Fido goes berserk?

One of my dearest friends is "mom" to not one, but four German Shepherds. While they act very obediently when she is around, you couldn't pay me to venture into her home or back yard alone if she was not with me. What would a potential buyer do under that circumstance?

Dogs aren't the only ones who can act out during stressful times. Cats are notorious for making a run for a dark spot in which to hide when feeling threatened. Imagine Fluffy, alone under the bed after the real estate agent accidentally closes her in the room for the entire day, away from food, water and, well....you get the idea.

When you choose to sell by owner, you are not only making the selling process easier on yourself, but on your family members too, whether you have young children or pets. Knowing when potential buyers are coming to your home gives you time to plan for alternative pet care, or to move a pet into a more confined area for their own safety and that of your visitors. Maybe Fido will even get a well-deserved walk in the park with your teenager, blissfully unaware of the intrusion that took place during his normal afternoon nap time on the couch.

Dualing Agents

Little understood, yet frequently common in Massachusetts is the use of "dual agency". Years ago, agents represented sellers in the real estate transaction. Buyers kind of thought that the agent that showed them a property was "their agent" -- at least the all too friendly voice that cheerfully called them periodically seemed like their agent. In reality, the agent was working for the seller and showed properties as a "courtesy". Anything the buyer said could be carried back to the seller. Enter the buyer's agent -- a new breed of real estate agent that popped up in response to a growing concern over the fact that buyers were not really represented at all in the real estate transaction. Now we had two distinct third parties involved in the process - the buyer's agent and the seller's agent. However, in many transactions the seller's agent was also the one to show property to a buyer which posed a problem. The solution was to have both the buyer and the seller sign a piece of paper saying that they understood that the agent couldn't satisfy both parties so instead would really do nothing. Questions that a buyer might ask the agent would go unanswered. Neither could the seller have questions answered for fear of a conflict of interest arising. What really is confounding is why either party (the buyer or seller) would be willing to pay a commission to someone that did nothing to help them. Before you say that a buyer doesn't pay a commission, you're wrong. A commission is part of the cost of buying a home as the listing fee is figured into the seller's asking price. We have often heard consumers have an "aha" moment when dual agency is explained to them. Now they know why the agent appeared uncooperative. She was merely performing her role on the way to collecting her commission.