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NOTE: from Jody; this
article is for YOUR educational use and is published
here for you in it's entirety.
For Sale By Owner: Marketing Fee
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Welcome!
For
sellers:
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2003) looking here for property, homes, real estate
investments, condos, townhouses and Delaware Beach Area local information.
If you are a seller they may be looking
for a property like yours.
To sell your home
fast and for the highest price!
For
buyers: that means that
there is more information
Click here for dozens of informative articles and
essays!
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Click here to search the entire
Sussex County, DE MLS
Click here for some information on the similarities and
differences regarding our different beach areas.
For Sale by Owner:
A Guide for Buyers
By
PENNY
DOHERTY
Buyer beware -- very wary.
That's the advice that real-estate agents give
clients who plan to purchase a home in a
for-sale-by-owner transaction. They claim that homes
that are for-sale-by-owner -- typically abbreviated to
FSBO and pronounced "fizbo" -- often cost 10% to 20%
above market price, may conceal problems that owners
don't know of or hope to disguise, and can take longer
to close than broker-marketed homes.
But FSBO experts say such claims are unfounded.
FSBO sellers, they say, decide to sell their own
property because they want to keep the commission they'd
otherwise pay a realtor and feel they know its
attributes better than a busy real-estate agent. An
agent doesn't necessarily know about the details of the
neighborhood or lifestyle a buyer is seeking -- school
districts, babysitting, park access, the neighbors and
other factors.
It's not surprising that
real-estate agents and FSBO experts don't see eye to eye
on the issue. Both have a vested interest in it.
Fear that a FSBO transaction may not go as smoothly
as one handled by a seller's agent doesn't mean you
should avoid a home you'd like to own because it's being
sold directly by the owners. You might find one while
surfing the Internet or driving through a neighborhood
you'd like to live in. Or you might find one through a
buyer's agent (note from Jody: Kate and I are available
as Buyer's Agents to help you.) -- a representative for
the buyer who casts a wide net to find appropriate homes
for sale -- regardless of whether a real-estate agent or
owner is selling it. Buyer's agents often research homes
using FSBO magazines or Web sites and other channels
beyond the MLS, where real-estate agents (but not
owners) can list homes they represent.
Buyer's Agent Article
Professionals They're Not
Buyer's agents say that not all FSBO homes are
overpriced or sold by owners who plan to conceal
problems. Most FSBO sellers, however, share a few
psychological traits that demand extra tire-kicking from
a buyer or buyer's agent.
FSBO owners have a reputation among agents for being
tight with a buck: They're generally trying to sell a
home themselves to avoid paying commission fees to a
real-estate broker. (Note from Jody: when you use a
buyer's agent, you will need to pay that agent a fee, in
addition to the price of the home. That can be a
flat fee or a percentage.) Further, they may have
an emotional and personal attachment to their property.
They can take it personally when buyers or their agents
want to negotiate.
Logistically speaking, they may also do paperwork at
the last minute or lack housing data -- like exact
square footage or full zoning details -- that a
real-estate agent would get from a local jurisdiction
before listing a home.
Under state law, sellers must provide disclosure
forms that detail the condition of the home. Adorna
Carroll, a buyer's agent at Realty 3 Carroll & Agostini
in Berlin, Conn., urges buyers to secure these
forms from sellers, so that negotiations will proceed
more smoothly. (You can get a copy of this very
long form from Kate and Jody)
"Every state has different
disclosure requirements," Ms. Carroll says. Buyers
of FSBOs should learn what those requirements are and
demand the most extensive disclosure.
"Buyer's agents have a lot more work to do when the
home is a FSBO," says Ms. Carroll. "Every FSBO
transaction is unique."
The Commission Issue
Despite their reputation, FSBO sellers may become
more flexible the longer a house sits on the market in
order to close a sale. Janet Branton saw that happen
when she considered buying a FSBO condominium in
Chicago. She hired a buyer's agent to help with her
condo hunt, and after identifying a building she'd like
to live in, her agent located two units there that were
on the market -- one a FSBO, the other represented by a
real-estate agent. The units weren't substantially
different in terms of their size and layout, and their
prices were similar.
However, as Ms. Branton began preparing to make an
offer she grew worried about whether the FSBO sellers
would pay the commission she'd owe her buyer's agent.
FSBO sellers are stereotyped as stubborn when it comes
to paying commissions for buyers and negotiating prices
downward. But she knew she could negotiate the
commission with the real-estate agent representing the
other unit. Ms. Branton, however, was pleasantly
surprised to learn the FSBO seller was open to paying
her agent's fee.
"They were more than willing to compensate my agent,"
Ms. Branton says. "The property had been on the market
for three months."
What You Need to Know
Buyers can take several steps to minimize potential
problems when evaluating a FSBO home. Perhaps the most
important is to make sure you have a mortgage
pre-approval before you put in an offer. FSBO sellers
may be trying to sell the home fast and entertaining
multiple bids, and you may have to act quickly, says
Terry Watson, a buyer's agent in Chicago-based GM King
Realty.
Another critical measure is to arrange for a bank or
other neutral entity to manage the escrow or "earnest
money" applied to the down payment on the home,
something a licensed real-estate agent would normally
do, he says. Don't let the seller hold the money in
escrow.
Additional precautions that buyers should take (or
make sure that their agents take) before buying a FSBO
home include:
1. Secure a seller's permission to buy what's
known as a "C.L.U.E. report" -- a five-year
insurance claims history of a particular property.
C.L.U.E. stands for Comprehensive Loss Underwriting
Exchange. A C.L.U.E. report is similar to a credit
report, but with insurance-claims data. The reports
require seller permission, but cost only $13 and are
available online from a company called
Choice Trust.
"The big thing to look for is a water-related
claim... and the possibility of mold," Mr. Watson says.
"Sellers don't always tell buyers about this."
Mr. Watson says that C.L.U.E. reports will reveal any
claims that sellers haven't mentioned. But, equally
important, they will help buyers who have become owners.
Many buyers purchase a one-year initial insurance policy
when closing on a home. Most insurers will, at renewal,
look at a C.L.U.E. report to evaluate recalibrating
rates and coverage. If a C.L.U.E. report wasn't used
initially, he says, owners may get a rude awakening upon
learning their own - or their home's - insurance history
is damaging.
"They can cancel on you if you don't get a good
C.L.U.E. report," he says.
2. Get a competitive market analysis (CMA) for
the neighborhood where the home is located. (Note from
Jody: We can do this CMA for you for a small fee if you
need us to; or we can refer you to some local appraisers
who can do a full property appraisal for you.)
Real-estate agents -- even if not involved in the
transaction - may be willing to provide them.
This is a document that outlines selling prices on homes
of varying sizes in different neighborhoods. Separately,
Choice Trust will, for $9.95, sell property-value data
gathered from tax assessors' offices - at either the
street address or ZIP code level.
Fred Turner, vice president and co-owner of Homes for
Sale By Owner Inc., a Chicago-based producer of FSBO
magazines and seminars, says that he encourages owners
to do this research on the assumption that their
prospective buyers may be doing it. For instance, he
recommends that FSBO sellers get three separate
real-estate agents to provide CMA quotes -- if they can
locate willing agents -- or go to the city's deeds
office to look at "green sheet" data used to determine
property taxes. In major markets, some limited
home-price data are available online at no charge at
www.homeradar.com and
www.domania.com.
If you can, try to research recent FSBO sales in your
neighborhood. A CMA will only represent MLS data - that
is, data on homes sold by agents, which exclude homes
sold by owners -- so "it's not the whole picture," Mr.
Turner says. He adds that he once bought a home from a
seller who was represented by an agent at 25% off the
original price.
Learning that a FSBO is overpriced before a bid is
made can save a lot of time and effort, as buyers and
sellers often learn in the middle of the purchase
process or from a bank declining to make a loan because
it's for more than a home is worth.
3. Hire a "vicious" home inspector to
check electrical wiring, moisture levels, carbon
monoxide, asbestos, lead, electromagnetic fields and
radon.
Many sellers aren't lying to buyers when they don't
disclose problems in their home, Mr. Watson says. "They
just don't know or tell them [the extent of a problem],"
he says.
"It's a seller's market right now. I'd say about 25%
of the transactions we do are for sale by owner," Ms.
Carroll says, noting her market is particularly active
with respect to FSBO transactions. "Initially, [a FSBO
listing] doesn't raise any flags for the buyer," she
says. "Afterward it does."
-- Ms. Doherty
is a free-lance writer in Seattle.
NOTE: Kate and Jody will
help you with your FSBO project. You can be placed on
our web site and in the MLS for a small fee. We have,
by far, the highest traffic web site in the region and
we'll even help you to get good pictures and make them
suitable for the web (make them come up fast). You can
also hire us as sales and marketing consultants to help
you with pricing, ad writing and getting your home ready
for the market! We'll help YOU do the work we would
ordinarily do for you and you save money.
For Sale By Owner: Marketing Fee
Schedule
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