Top 5 Reasons Homeowners Should Avoid Going FSBO  

There are Top 10 Lists aplenty that detail just why any homeowner should think twice before planting one of those For Sale by Owner signs in their front yard. One of them is that when you sell your home all by yourself, the sheer amount of time you’ll have to devote to mastering processes that are already fully handled by full-time real estate professionals is a true waste of time. It’s one wheel that doesn’t need reinventing.

If you are among those considering how you will sell your own property this spring, since your time is important, let’s start saving it now by cutting those top 10 lists down to the Top 5 Reasons to Avoid FSBOs:

1.   You’re involved. It may sound like a good idea to be your own salesperson since you are the most intimately acquainted with the product—your house—but logic rules against it if for no better reason that buyers will be automatically skeptical of your impartiality. Why? Because you aren’t! You also don’t get the benefit of a professionally trained pair of eyes helping prepare your property to appeal to today’s buyers, nor the benefit of honest feedback that buyers won’t share with a FSBO seller.

2.   Legal peril. Throughout this year’s political debate, a frequent refrain from candidates (both local and national) has been the need to cut down on over regulation. Without getting into those weeds, it is certainly the case that federal and state laws require a number of very specific disclosures. If you aren’t a real estate attorney, that lack of familiarity could make a FSBO sale an open door to after-sale litigation. When that happens, there goes any commission dollars saved (and maybe a lot more!).

3.   Expense. That’s right, one of the Top 5 Reasons to Avoid FSBOs is that a FSBO can actually amount to an extravagance. It’s logical, too—because most buyers take one look at your asking price, mentally subtract the commission, and proceed from there (wouldn’t you?). The most recent studies bear out the bottom line: only 8% of successful sales were made via FSBO, and on average, they sold for 15% less than the agent-assisted sales.

4.   Marketing Oomph. We professionals market homes all year long, 24/7. As a result, we know which marketing approaches are currently bringing in results, and which are wasting time and money. We also have open channels with the media companies we deal with regularly—an advantage that FSBO sellers can’t hope to match.

5.   Expert Opinion. The open secret is that those who know the most about how to get the best results from a house sale tend to rely on expert help. A good example came in 2014, when Al Bennati, the CEO of the “BuyOwner” dot-com (“the strongest For Sale by Owner marketplace”) decided to sell his own St. Petersburg home. He listed it with a Realtor^®.

            There! Time saved already—who needed a Top 10 list when you have these? I bet you agree: these “Top 5 Reasons to Avoid FSBOs” are more than sufficient reason to avoid the FSBO route…and to give me a call instead!

Notes On The Ins And Outs of Short Sale Listings

Any dedicated bargain hunter who scours the local real estate listings is not surprised to find among the most deeply discounted entries one of two notations: foreclosure or short sale.

Everyone knows what the “foreclosure” designation means—it’s been repossessed by the bank. It’s an REO (real estate owned). By discounting the asking price, the lending entity invites buyers to take the property off its books. It is here that the economists’ favorite acronym, “TANSTAAFL” (There Ain’t No Such Thing As A Free Lunch), comes into play. Foreclosed properties have frequently been neglected by their previous owners, who are not happy campers. So the cost of rehabilitation must be factored in before any offer is made. Still, foreclosures can represent real opportunities for buyers with patience and determination.

Slightly different are foreclosures’ first cousins: short sale listings. There are any number of unforeseen circumstances that can cause an owner to fall into financial distress, but when their home has to be repossessed, the impact on the borrower’s credit is immediate and drastic. It can make finding a new place to live difficult, and can even make future employers hesitate to hire someone whose record includes that kind of hefty unpaid debt.

Local properties which fall in the “short sale” category are those in which the borrower has been unable to keep up with the mortgage payments, but who is arranging for the lender to agree to accept a payoff that’s less than the full amount owed. When a short sale is finalized, the result is still some damage to the original borrower’s credit, but less than had a foreclosure proceeded. The buyer will benefit from what should be a substantially lower price than a comparable  property would bring—and a home that is usually in better condition. An eager lender can also sometimes offer favorable financing terms, too.

But remembering what the economists say about TANSTAAFL, there are also these points to keep in mind:

·       Short sales involve extra bureaucratic red tape. The fine print includes items such as the lender having to approve details of the sale—and that can result in nerve-racking delays.

·       Although the owner is usually trying to keep a short sale property in good shape to facilitate the deal, banks won’t allow a short sale until the borrower has seriously fallen behind in payments. That can mean an inability to keep up with the expense of proper maintenance. As in a foreclosure, canny short sale buyers make certain they know the cost of rehabilitation.

·       The possibility of sticky legal issues needs to be recognized. For instance, if the seller has filed for bankruptcy, it could squelch the whole deal. Negotiating a short sale can be considered a “collection activity”—and those aren’t allowed in most bankruptcy courts.

If one of our local foreclosure or short sale-denoted listings has grabbed your attention, I can help because I have bought and sold many foreclosures and short sales. It will require attending to some technical issues attached to the specific property—but I’ll be pleased to help you navigate the process from beginning to end!