Sunday, December 30, 2007

Selling 'For Sale By Owner' in a declining market

There is an abundance of information published by the National Association of Realtors (of which I am a member) that I disagree with. All too often the Association does nothing more than apply lipstick to the proverbial pig by stating that the housing market/mortgage crisis is not as bad as the media makes it out to be. Sure, the spin put forth by the association may ring true in the 5 best performing markets nationwide, but overall that is not an accurate portrayal of what is really going on in the world. It's like saying 'even a broken clock is right twice a day'.....no matter how you sugar coat that saying--it is still a broken clock.

That said, there are still bits and pieces of solid advice that the NAR does put out (once in a blue moon). The advice to homeowners on why it doesn't make sense to sell your home 'by owner' is actually good advice in a declining market, and I will explain why in MY words.

First, lets take a look at some for sale by owner websites and who is actually searching those sites for homes to purchase. Some of those websites are http://www.forsalebyowner.com/, http://www.fsbo.com/Blendtec Vs Vitamix and http://www.byowner.com/. I'm sure you've probably seen the clever television ads by some of these sites where the homeowners describe how much money they saved while thanking the site for a job well done. I do not know the cost associated with using their services, but I assume it's less than the 6% it costs to sell your home through a residential brokerage.

So, you decide for whatever reason, you would like to sell your home 'by owner' and utilize the services of one of these websites. Immediately, you increase your exposure through top search engine positioning via one of the aforementioned websites. You do this presumably to save money. Well guess what type of 'market' shops for homes to purchase on for sale by owner websites? If you guessed BARGAIN SEEKERS you hit the nail right on the head!

When I speak to a homeowner who has tried or is still in the process of trying to sell their home through one of these outlets my first question to them is 'have you had any offers?' and their answer to the question is usually 'yes'. I follow that up with 'well what did those offers look like?', to which they ALWAYS say (not sometimes, ALWAYS) too low. WELL NO KIDDING! The people making offers on your home know you are trying to save 6% by not selling through a traditional brokerage!! Any idiot with a pulse is going to knock that right off their asking price BEFORE they make an offer. Just like you are trying to save money--they are trying to save money also. Whether you think you are offering fair market value or not makes no difference when you consider WHO these websites were REALLY created for in the first place. In a declining market, an experienced bargain seeker will CONVINCE you to accept his/her terms now before the news gets worse. If they are as good at negotiating as I know some of them to be, you are about to give up your place for a song!

I mean really.....why would a buyer/investor not use a Realtor to find the perfect home/investment for them when the service is free? (home sellers are the ones who pay Realtors their commissions). Because they want to try and get a DEAL!! They know they will out negotiate you (and yes, they will) and get you to agree to THEIR price and THEIR terms. No way, you say!! They'll never get us down from this price!! We can see you coming miles away, you say!! Uh......okay. Then your home sits on the market like all the other McMansions on the street and you end up listing it with a Realtor anyway. What a royal waste of money/time for you I say. For sale by owner websites were created for INVESTORS/DEAL SEEKERS......NOT YOU!!!!

Every so often, someone will sell their home by owner for a decent price (to that seller). And, at dinner one night out, you will overhear this conversation from another table as the other couple sips champagne and eats chocolate covered strawberries while laughing and smiling and otherwise acting as though they hit the lottery. You will remember this isolated case. It will stick in your head FOR MONTHS. You will subsequently forget about how 1000's of other not-so-fortunate 'by owner' sellers could not sell on their own and either gave up or listed with a brokerage. And your listing will languish. It will become unfairly stigmatized because you could not pull the wool from your eyes and face reality. What was reality again? The reality is that for sale by owner websites were NOT CREATED FOR YOU. They were created for bargain seekers and people who know how to get deals.

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