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 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 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 is done negotiating with the buyer and paying the agent’s 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.

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 save the agent commission.

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 can save the commission by going with a FSBO model. 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.

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 (including 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 confirm 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. Apart from placing the listing in the MLS, the sellers themselves are doing all the marketing, as well as other responsibilities such as negotiating and preparing for closing. NAR has decided unilaterally that since an agent is ‘involved’ (in placing the home on the MLS), the sale is an ‘agent-assisted sale,’ not a FSBO sale. 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 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 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.

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.

Ok, that’s it! The August 13th (2009) article our CEO, Jerry O’Rourk, brought in from The New Canaan News finally got me motivated to sit down and vent my frustration about this contributor to falling home prices:  The article quotes a local agent (from a nationally recognized brokerage) suggesting that, to get buyers’ attention, sellers should price 15% lower than every ‘for sale’ and ‘recently sold’ comparable. And the reason this got my goat so badly is that this was the second time I had heard this tune in one week!

At lunch a few days before, a REALTOR® friend  (again, an agent with a national brand) stated that their president had just directed all their agents to do a new Comparative Market Analysis (CMA) on all their listings and then go to their sellers and suggest that every seller drop their price by 10%! So, clearly agents are being advised by their higher-ups at the brokerages to advise sellers—across the board—to lower their price.

Just whose interests are being served by this arbitrary approach? Agents’ income depends on the sale. The brokerages’ income depends on their agents’ income. And to the extent that they can each have an impact on overall volume of sales, they can both make up in volume what they may lose on any individual sale when the price is dropped. So it’s in the agent’s best interest to make sure more sales happen, and not in their best interests for an individual seller to hold their ground on a higher price if a lower one will get to a sale quicker.

On a home that sells for $200,000 in a typical co-brokered sale, the two agents each stand to make $6,000. If the seller is persuaded to drop the price 10% to $180,000, then each agent’s commission drops to $5,400. So the agent makes $600 less, while the seller takes a $20,000 hit. Clearly sellers have much more to lose on a price drop than the agents.

But the bigger question is: Are brokerages working for or against the interests of a healthy economy and vibrant real estate market in suggesting across-the-board price cuts?