Busting FSBO Myths – Agents Sell Homes Faster Than FSBO Sellers – NOT TRUE

The 2009 Profile of Buyers and Sellers has been published by the National Association of REALTORS® (“NAR”). Their own data busts another myth in the real estate market:  FSBO homes take longer to sell than do homes sold by REALTORS.

Here are the facts:

Among home sold by real estate agents, it took, on average, six weeks to sell in 2006 and ten weeks to sell in 2009.

Among FSBO home sales (where the homeowner did not know their buyer before the sale), it took an average of four weeks in 2006 and only six weeks in 2009!   (That’s 40% less time on market for fsbo vs. agent-assisted sales in 2009!  And for most sellers, that’s a difference of at least one mortgage payment). And nearly 75% of all FSBO home sales were completed within 3 months!

It sort of galls you when you learn what you’ve been told as truth is merely a myth, doesn’t it?  Check out more FSBO Mythbusters here!

Affordable Re-Do for Outdated Bathrooms

We have a common problem here in the Northeast: outdated ceramic tile that lines most of the bathroom walls, a holdover design element from the fifties and sixties.

Most people think that the only way to convert an outdated bathroom is to bring it down to bare walls or studs. Not only is this expensive and time consuming, but it’s also very messy. For the homeowner working on a limited budget, a complete remodel is not an option. What to do in this situation?  I think I’ve come up with a cost-effective and stylish solution that any handyperson with intermediate skills could complete.

My three-step system uses ¼” bead board usually made from MDF secured to the wall with adhesive.  Adhesives have been used in construction applications for decades and have come a long way over the years.  Since MDF normally does not do well in humid areas, you must take care to protect it, so I  make sure it is well-protected with two coats of a good latex or oil-based paint and caulk. If you protect it well, moisture should never be an issue.

First, choose your lumber.  Find a baseboard you like. A simple 1×4 primed pine works well in most cases. Next, choose the bead board you might want to use at Home Depot’s or other home center, where you’re likely to find several styles to choose from. Lastly, you’ll design a cap that will give your job that custom look.

Step one: Base board.   There is usually a baseboard and cap designed to be used with bead board. They are good products and easy to use, but they look a little generic. Personally designing your baseboard only takes a little thought and will give you a custom look. In most cases I attempt to mimic the style in the house. If other areas of the house use a 1×4 I will use that. If it has details such as quarter round and/or some type of cap I will also attempt to copy that so there is a consistent design flow from other areas to the bathroom.

Step two: Bead board. In most bathrooms, the tile is 36” to 42” up the wall.  Purchase the bead board materials in eight-foot lengths to save money, and cut it down to the right height. I’ve found it best to cut it so the top of the board is the same height as the tile. Then as your cap sits on top of the tile, the board will also support it. Don’t worry too much if it’s a bit short because when building the cap you will be adding additional support and covering bad cuts. Then using a generous ¼” bead of the adhesive on the back of the board apply it to the wall starting in a corner. The product uses a tongue and groove system so the next piece should slide right in. I have used products where the pieces are very resistant to fitting into the groove of the previous piece. In these cases I’ve used my table saw to cut the backside half of the groove off thereby making it an overlapping system. Sometimes these joints might not sit as well but by the time you’re done with caulk and paint you’ll never notice them. This technique also works well in tough spots such as behind toilets. Lastly you might have to make custom cuts to go around things like vanities.

Once you’ve installed all the bead board you’re ready to create your cap. This consists of a support piece as well as the cap itself. You can use many different items from a lumber house for a cap, so do some looking around. I like to use a piece of ½” thick bull nose stock that measures 1 ½” deep and is flat on the backside. For the supporting piece I usually use a trim piece called window stop (so-called because it’s used in windows to hold the sashes in place) which has a nice detail to it. It comes in different widths. Start by cutting the support piece to size. Apply a bead of adhesive to the back. Now place a level on the top of the tile as a guide and install the support piece placing it against the bottom of the level. Next cut the cap to size. Apply a bead of the adhesive to the top of the tile and support. Gently, with just a little pressure, place the cap on top.

The drying time for the adhesive product you use will determine when you can start painting and caulking. I usually allow it to cure over night.  And best of all… no nail holes to fill!
Finally, you may have to improvise in some cases. For instance, if your run doesn’t end at a piece of trim, such as at a tub, I will use another piece of 1×4 between the base board and top of the tile so that the cap can go over it for a finished look. Also, where you don’t end at an existing piece of trim, I usually will cut the end of the cap at a 45 degree angle to the wall, then cut another 45 degree piece to fill in again.

All in all, these three steps offer you a low-cost method and a relatively low investment of time and skill to make an outdated bath much more appealing to buyers.

What Does Your Listing Plan Have in Common with the Thighmaster?

I’ve been corresponding over the last week with a customer who purchased her ProSell MLS plan three weeks ago. She was wanting to know if her listing had been picked up on the other sites where we feed our listings. A couple of days later I had confirmed that the listings had been fed and were beginning to appear (how quickly they appear on the other sites is controlled by those sites), not only on the sites we feed to, but on several others in her local area, thanks to the additional online exposure provided by her MLS agent. As a matter of fact, when I searched for her property address, I came up with over two pages of search results! So, all in all, our seller was satisfied that she was getting the widespread online exposure we promise.

But in the meantime, there was interesting learning to be gained from this seller’s expectation that her online listing do the lion’s share of marketing her home.

In the three weeks since creating her listing, she indicated she had gotten some traffic. In today’s real estate market, and  her beautiful West Coast neighborhood is no exception, any traffic in three short weeks is quite remarkable! Yet when she wrote, she commented that “time is of the essence for sellers” which seemed to indicate that she had an expectation of a lot more traffic and even possibly getting an offer in that three-week time frame.

We have always been keenly aware that time is of the essence in the home selling process. And we address the issue of timing exhaustively in Book Two of our complete home-selling system, Marketing Made Easy!

And that brings me to the Thighmaster…or Bowflex…or the latest diet plan. We all see, and many of us buy a lot of products that make a lot of promises, and ours is no exception, in that we promise you that if you use our  system, you’ll save a lot of money on the sale of your home (or we’ll give you your money back).  But just as the thighmaster sits in many a basement, garage, attic or closet, and therefore doesn’t achieve the results it promises, so our complete system, if unused, won’t achieve the results we want for our sellers.

You’ll get the best results from using all the components of our home-selling system. Get all you can from your four selling system books.  From home prep to pricing, from marketing and sales to a hassle-free closing, we’ve written them to cover every issue that might arise in the home-selling process.   (If we’ve missed something, please feel free to let us know what it is!)    Contact our staging or storage partners to help clean up and declutter.  Use our classified ad partner to get a great price on a classified ad. Plan a traffic-stopping Open House with our Open House sign kit.

I reminded our seller to gather the statistics discussed in  Marketing Made Easy! For example, in her market, the average days on market is 133, and there are currently over 600 properties in foreclosure and over 150 other properties listed for sale. I suggested a thorough review of her Home Valuation Report for recent sales data in her neighborhood. She decided, first, to drop her price, and secondly, to lower her expectation that, in such a competitive market, the sale of her home will result from an online listing alone  (or even many online listings)!

We know that we’re not going to get the slimmer thighs, rock-hard abs, or lose the weight, without doing the ‘work’ of using the products that promise those results. Similarly, we provide you with a great complete set of tools for saving a lot of money on real estate commissions, but in order for those tools to get you the results you want, you’ll need to open the tool box and put the whole set to work for you!

2010 Home Sellers New Math: Make It Add Up for You!

As reported by Reuters, a Zillow analysis of December listing prices compared to the final sales price shows buyers across the country paid, on average, nearly 3% less than the seller’s asking price. That means sellers received about $5,600 less than the last listing price for the home. (This lower price doesn’t even take into account price reductions that agents may have suggested during the listing period.)

Making the seller’s situation even worse is the need to then pay real estate agents up to an additional 6% in commission. Using the median home sales price on Zillow of $209,900, the seller working with an agent would lose up to an additional $12,594 in real estate commissions. So by the time the seller’s done negotiating with the buyer and paying the agents’ commission, the typical seller would LOSE OVER $18,000 on the sale of their home. That new math isn’t going to make sellers very happy.

So, what’s a seller to do? Make the real estate math work for you! First, eliminate the real estate agent commission! Choose a Private Sale Partners listing plan.

Next, set a realistic price for your home. With the Home Valuation Report from Electronic Appraisers, included in your listing plan, you’ll get the most reliable tool available to set your price: recent sales figures for properties in your neighborhood. Electronic Appraisers is ranked first in accuracy, value and ease of use in an article by MSN Money Central, comparing Electronic Appraiser with other providers offering similar products.  EA has helped thousands of home buyers and sellers to save the agent commission.

Oh, by the way, here’s something else to consider from the Reuters article: Zillow noted, “More buyer negotiating power tends to put downward pressure on overall home prices and may push more mortgages ‘underwater.’ This negative equity has been one of the biggest banes of homeowners, making many unqualified for home loan refinancing and preventing some from selling.”

If your home has lost a considerable portion of its value in this economy, and you think you can’t afford to sell because you’ll lose what little equity you have left to an agent, think again! You really can save the commission. And if you check out our FSBO Mythbusters, you’ll find you’ll be likely to get a better price selling it yourself than with an agent!

Buyers are going to be very motivated to purchase a home before the April 30th incentive expires. So, if you’ve been thinking about selling your home, now’s the time to make the new math work for you.

If you’re looking for more information, see the Reuter’s report.

10 Tips for a Kitchen that Sells

When it comes to preparing your home for sale, you have to think objectively.  While not everyone has the same decorating tastes, we all have one thing in common.  We like things clean! This is especially true in the kitchen. If you’re selling, you must surpass dirt-free and go straight for sparkly clean!

Buyers should and will take a peek inside appliances and cupboards! Here are 10 down-and-dirty tips to sanitize your kitchen to sell:

Clean your oven. You’d be surprised what sticks around in there!  Don’t forget to clean the window and all the tricky knobs.

Clean Oven

Same goes for your microwave.  You’d be surprised how much reheating last night’s dinner splatters the inside!

Refrigerator and Freezer: Defrost your freezer and wipe down your refrigerator shelves – it says a lot about how you live.  Even if you’re planning on taking it with you when you move, you may find it to be a valuable negotiating tool as some buyers will request it in their offer.

freezer

Sink and countertops:

Scrub your sink, and keep it spotless.  Don’t keep old sponges out. Hint: buy a bunch of microfiber rags, and put a new one out each day – great for cleaning counter tops and they’re washable.  Yes, it’s clean AND green!)

Deep clean your countertops – If you have granite, make sure it has been sealed recently.  (Hint: Method has a nice spray granite cleaner that will help your granite really shine for showings).

Wipe down all counter-top appliances, such as toaster, coffee pot, bread box, or whatever you must have out.  (Hint: never put more on your kitchen counters than fits comfortably on your kitchen table).

counter stuff

Talking Trash. Take out the garbage before any showing, even if it’s not full.  While you’re at it, sweep out the garbage area and hide a stick-on air freshener in the area.  If your trash area is not concealed, get a nice step-on can.

Kitchen Cabinets. Wipe down your cabinets with wood cleaner.  Make sure the cabinet handles are clean.  If they’re nasty or dated, replace them.

Pantry. A messy, unorganized pantry screams “not enough storage space” to a potential buyer!  Take a moment to organize and purge.  Are you really going to use that jar of gravy from 3 years ago?

pantry

Do Windows. Wash your windows inside and out. If you have heavy window treatments, remove them or at least get the dust out of them.  Don’t forget to wash the screens as well!  If the trim around your kitchen window is too dirty to clean, add a fresh coat of paint.  It does wonders!

Lighten Up. Brighten your light fixtures with a simple cleaning. You may not notice that dead bug caught in the fixture, but I guarantee that a potential buyer will!  Make sure you have the proper wattage bulbs in place.

If your light is too dated, replace it with an inexpensive fixture.  You’d be surprised at the difference it makes!

Rugs and floors. If you have any area rugs, clean or remove them.  Hint: be sure not to use too many, only one or two.  If you have a nasty (or outdated) rug under a kitchen table, pitch it.  Be sure to add felt stickers to the bottom of your chairs so they move easily and won’t scratch the floor.

rugs

Towels. And finally, take a close look at your kitchen towels.  Your best bet is to invest in some inexpensive “show” towels to keep out for showings.  Hide your “real” work-horse towels in the dryer during showings.

Now, doesn’t your kitchen smell better and shine more?   Quick, take a picture for your listing before “someone” messes it up!

Spring Home Sales Look Promising, But Time Is Short!

The spring traditionally brings a flurry of activity to the housing market. But spring may ‘come earlier than usual’ this year as the deadline for the home buyer tax credit rapidly approaches.

The home buyer tax credit now in effect provides tax relief of up to $8,000 for first time buyers and up to $6,500 for repeat purchasers of primary residences. However the window of opportunity for these benefits is approaching its expiration; buyers must have signed purchase contracts by April 30th, and have closed on their purchase by June 30th (credits were originally set to expire 12/1/09). So whereas the spring season typically kicks off in March and runs hot through May, this year may advance and accelerate the process by as much as two months. According to both the National Association of Realtors® (NAR) and Trulia, a national real estate search engine, the latter half of January and February will be very strong, March even more robust, and April should “really take off.” Many trade-up buyers who in the past would have timed their purchase based on school-year considerations may advance their buying plans.

What does this all mean? If you’re contemplating selling your home, there is the potential for higher than usual traffic between now and the end of April. You may want to consider beginning repairs and home improvements now. Buyers have but thirteen weeks (as of 1/22/10) to sign a contract to buy. For the move-up buyer who has to coordinate closing dates (on both a sale and purchase), the pressure is going to feel even more acute to meet the deadline. And complicating matters, according to NAR, the time it takes to process a home loan is now about eight weeks, two weeks more than it used to take. So, relative to the home buying tax credit, “time’s a wastin’”….

Help from HUD Means Fewer Settlement Surprises

The final step in buying a home, known as the ‘closing’ or the settlement process has, all too often, made what should be a cheerful occasion a time of confusion and, many times, anger over unexpected costs. Much to the dismay of buyers and sellers, mortgage lenders have been known to increase their costs at the closing. For the seller, this can be especially catastrophic as the buyer may consequently decide to opt out of the deal at the last minute.

Well, much of that ‘bait and switch’ game is over, thanks to the efforts of HUD (Department of Housing and Urban Development). Effective January 1, 2010, a standardized Good Faith Estimate (GFE) is to be used by all lenders and must be provided within 72 hours after prospective borrowers apply for a loan. Establishing a uniform GFE will allow consumers to easily compare quotes from various lenders. Borrowers will now be able to assess the impact of a lower interest rate and higher upfront fees and vice versa.

Lenders are required by law to give mortgage applicants a copy of the final settlement costs (known as the HUD-1), at least one day before the closing. However, in the past, borrowers often found substantial cost increases in the HUD-1 compared to the GFE. The new HUD rules will make it much more difficult for lenders to change costs. The HUD-1 format will also be changed to include a line-by-line comparison to the new GFE making it easy to identify any changes in costs.

Lenders are now prohibited from increasing costs they control, such as origination and processing fees. Costs from third-party services, such as appraisals and title insurance, can increase no more than 10% over the GFE, as long as the borrowers use providers selected by the lender. The limit does not apply if borrowers select their own third-party providers.

HUD has published a guide for home buyers, Shopping For Your Home Loan: HUD’s Settlement Cost Booklet. The booklet contains completed examples of both the GFE and the HUD-1 forms and is a great tool to help you prepare buyers and sellers for the closing. How about a high-five for HUD!

Shame on The National Association of REALTORS! Tell us the Truth!

The National Association of REALTORS® (“NAR”) has released its 2009 Profile of Buyers and Sellers, an annual study based on a survey of recent home buyers (and those buyers who also sold a home) during the 12 months ending June 2009.  Once again NAR has under-reported the size of the ‘for sale by owner’ segment of the real estate market, claiming that only 11% of home sales were FSBO, down from 13% the previous year.  This is only half of the real FSBO story.

The fact is that in 2009, the FSBO segment was 22% of home sales (equal to 2008) and NAR’s data confirms this finding. NAR fails to include the additional 11% of sellers in 2009 that “used an agent to list a home on the MLS and the agent performed few if any additional services” (“MLS Only”).

Sellers that use a flat fee MLS agent and “few, if any, additional services,” should be considered as FSBO’s. NAR has decided unilaterally that since an agent is ‘involved’ (in placing the home on the MLS and little, if anything, else) the sale is an ‘agent-assisted sale,’ not a FSBO sale. Nonetheless, by anyone’s definition other than NAR, these home sales are FSBOs, as the sellers themselves are doing all the rest of the marketing, negotiating and preparation for closing.  Adding NAR’s reported FSBO sales to these MLS Only sales, the total FSBO segment has been consistently more than 20% since 2006, when NAR began to break out the MLS only listing data.

Now, here’s the really amazing fact. A very conservative and widely reported estimate, by anyone’s accounting, is that 50% of FSBO home sellers eventually give up and switch to a traditional agent.  (Actually, since NAR likes to emphasize the FSBO failure rate, they report it as high as 75%).  These closed transactions are rightly reported by NAR, ultimately, as agent-assisted; yet the size of the FSBO segment, defined as ‘those who try to sell via FSBO” is consequently at least twice as large as NAR reports.  The FSBO segment is clearly an important factor in the real estate market…and one that will continue to grow in the next decade.  And Private Sale Partners exists to help reduce that FSBO failure rate by equipping sellers with all that’s necessary for a successful FSBO sale.

It’s clear that The National Association of REALTORS is trying to paint a picture of the FSBO segment as insignificant and eroding. They don’t want to alarm hundreds of thousands of full-service agents around the country who are locked into the 6% commission model, and they’d like to discourage thousands of would-be sellers from trying it on their own.

Why Early 2010 Could Be the Perfect Time to Buy or Sell a Home

The first quarter of 2010 may well be about as close to the perfect time to buy or sell a home as we may ever see.

  • First,  Congress recently voted to extend two home buyer tax credits: the $8,000 credit for first-time home buyers under contract by April 30, 2010, and a credit for repeat buyers who have lived in one residence for five consecutive years of the past eight.
  • Second, interest rates on thirty-year home mortgages have recently fallen to below 5%, a rate not seen for over fifty years.
  • Third,  banks continue to put newly foreclosed homes on the market, and there will be a good supply of foreclosed homes on the market for some time.

If you’re a buyer, use the Private Sale Partners website as your first source for homes that have been well-priced and well-prepared by our well-educated sellers! Use the search tool to define whether or not you’ll search for a foreclosed property. If you are looking at a foreclosured property listing, scan the listing details for the agent’s contact information. You’ll need to contact the agent by email to view the property, as foreclosed property listings don’t have access to the PSP Home Sales Hotline to take buyer calls.

Unfortunately, it is rare for a lending institution to notify Private Sale Partners when the property has been sold, so you may find that a foreclosed property you’re looking at has already sold, but keep at it!  A good buy is worth some extra digging.

If you don’t find anything in your desired neighborhood on our site, then you may want to enlist the services of a professional agent in your search, usually at no cost, since sellers normally pay the agent’s commission. We hope you’ll contact one of the thousands of agents in the PSP agent network to help you in the search. They work with the well-regarded national agencies of:

  • Better Homes and Gardens® Real Estate
  • Century21®
  • Coldwell Banker®
  • ERA®
  • Sotheby’s International Realty®

If it’s a foreclosed property you’re looking for, ask if there’s an agent in your local office who specializes in foreclosed homes. Our experienced mortgage bankers can also help you find the right broker and the right financing.

An FHA mortgage remains the best option for most home buyers.  An FHA buyer must live in the home purchased, which means that an investor will not be able to purchase the home you may want to buy to live in, so you may qualify for a great deal on a foreclosure while an investor would not. Not only do FHA mortgages offer great rates and small down payments, FHA also provides additional loans under the 203K program which provide money for the fixing up that foreclosed homes often require.

Since late fall, 2009, investors have been aggressively bidding for foreclosed homes, driving prices up slightly. In the short term, prices are likely to come down again as more homes are foreclosed and the supply of homes increases.

If you’re a seller, this is also a great time to have your home on the market as buyers will be out in force scouting for a good deal. It also means you’ve got to price aggressively to compete with foreclosures on the market. But, you’ll have an edge over most of your competition in that category, and will be able to command a higher price IF your home is well-prepared and it is obvious to a buyer that it will take less time and money to make it move-in ready.

If you are looking to buy or sell a home, the first quarter of 2010 may well be the best time ever to do so. Happy house selling or buying!

American Housing Survey Says…

Sorry about that title. In case it sounds odd to you, just imagine Richard Dawson reading it and you’ll get my intent. And if you don’t know who Richard Dawson is, or haven’t played Family Feud, well then, just move on. Anyhow, it’s really Jerry O’Rourk, our CEO, I wanted to write about. He’s always filling us in on the most fascinating bits and pieces of information. This time it’s the American Community Survey, just released by the U.S. Census Bureau.

Among the results of the survey is the statistic that nearly a third (30.4%) of U.S. households are headed by single women, either with or without children. At Private Sale Partners we wonder how that will impact our business and what particular concerns and issues surround the decision of selling a home “for sale by owner” compared to selling with an agent for the single female head of household. Because if anyone deserves to benefit from the savings inherent in the “for sale by owner” experience, it’s the single woman. (Oh, I’m sorry—is my bias showing?) Anyway, I hope our readers will let us know what might keep a single woman from trying “for sale by owner” or what we can do to make it more compelling. (By the way, in case you’re wondering, the survey shows that 20% (exactly!) of households are either “male only” or “male w/children.”)

Other results to ponder? In 20% of U.S. households, English is not the language spoken at home and 12.5% of the members of the 3,000,000 household surveyed were born in a foreign country. How does this compare to your community? Do you need to develop marketing materials in another language to appeal to a certain ethnicity local to your community? Place a classified ad in local publications or on bulletin boards frequented by that ethnic group? Remember, never discriminate when marketing or making appointments to show your home. Aside from simply being bad form, it’s illegal! (See the Fair Housing Act or the intro to our Home Selling System for proof.)

Finally, if you visualize your buyer coming as the result of a corporate relocation or other long-distance move, think again. According to the survey, your buyer is much more likely to come from around the corner, as 61% of the people who moved in the last year moved within the same county. Make sure your Buyer Information Packet (discussed in detail in Part Two, Marketing Made Easy! of our Home Selling System) tells your potential buyer why your street, neighborhood, or local schools compare favorably with others nearby.