Money Magazine Advising FSBO's Now, And It Is Not Even Good Advice!!
Posted Oct 16, 2007 @ 9:14 pm, Viewed by 905 Visitors, Read 913 Times..jpg)
Money Magazine has an article in there November 2007 Titled “You Own It. You Sell It Be your own real estate broker when you sell your house and you could save thousands. Here’s what it takes.” by Josh Hyatt
They go on to talk about a family in Maryland who managed to sell their home back in 2004 FSBO, OK but 2004 was the height of the strongest sellers market in modern history. At that point anything would sell. Now it is 2007 and the same family thought they would try the FSBO path of selling a home again. They figured, replace the chandelier, and fluff up the towels and a buyer would magically appear at their front door. According to Money Magazine it has been over 2 months and they have not gotten one offer.
Money Magazine goes on to give some highly questionable advice. Makes me wonder why I am getting this magazine, after all if they will give suspect real estate advice, how good could the rest of their advice be?
Here is Money Magazine’s advice and the reality.
Money says: go to one of the fee for service companies, for the advice you get you will not spend more than $1,600. Reality is yes you likely will spend $1,600 or less, but this is money you spend up front and it is not refundable. There is no performance guaranty!! If your house does not sell you are still out the $1,600.
Money says: List It Right, Because 80% of home buyers start their search online you have to get your home in the multiple-listing service, a central database where all the real estate brokers in a given region share home listing data. The MLS feeds other sites for home hunters. You can find a licensed real estate agent to list your home for a flat fee for $250 - $400. Yes all of this is true, though the issue is that it takes a lot more to get a home sold for market value or slightly above than just getting it listed in the MLS. The other negatives are that many Realtors will not show your home if it is listed this way. I know I am not supposed to say this, but I have heard many a Realtor say that they don’t bother showing these types of listings because it is too much trouble, and the refuse to do the listing agents work as well as their own work when handling a sale involving a listing like this.
Money says: Spiff Up The Place, Cluttered, poorly laid-out rooms can make your houses rooms look smaller than it really is. True If you are clueless about how to make your house look more appealing, hire a stager; it will cost you about $300 True.
Don’t Skimp On A Lawyer: An experienced real estate attorney can tell you the flaws in your home that you are legally required to share with a buyer (That slab leak, for example) and what you can let them discover for themselves. True but so can a Realtor for free. The real estate attorney can help you negotiate the final deal and draw up closing documents. Money says to expect to pay $500 for all of this. The Reality is yes a real estate attorney can do all of these things but expect to pay more like $2000 or possibly more. I don’t know where they got their numbers from but I am thinking someplace in Mexico.
Make’Em Show You The Money: Ask buyers to include with their offer a letter from a Mortgage lender confirming that they can afford the mortgage required. And don’t take your house off the market until you get a good-faith deposit of at least $1,000. OK this is mostly good advice, though in New Jersey it would be unwise to take your home off the market until you get a good faith deposit of $5,000. When you are talking 300K to 800K averages for home prices $1,000 is nothing for a homebuyer to walk away from.
Don’t Get Greedy: Many first time FSBO’s come up with an unrealistic listing price based “on whatever amount of money they need” to afford the next house. This is very common with home sellers in general. Most Realtors have to talk their listing clients down to reality. This always seems like kind of funny advice since the statistics consistently show that FSBO’s consistently under sell their home buy 10% or more. Basically in order to save that 5% commission or what ever the prevailing commission rate is in a given area, they sell for 10% or more less. Does that make any sense at all? The homeowner does all the work and gets less in the end!!
Plan For A Major Time-Suck: You probably expect you’ll have to block out Sunday afternoons to show your home. But it is worse than that—much worse. You also have to be ready to sow it at any time, even during work hours. (Hope you have an understanding boss.) And you will need time to conduct negotiations and make repairs that buyers demand should you get an offer. They are right on with this one. In today’s market a FSBO homeowner can expect to be on the market for 6 to 12 months to have any chance of selling. The other option would be to reduce the price to the point that the people who are looking at your home cannot help but make an offer. But that defeats the purpose now doesn’t it??
The reality is that there is just no substitute for a good Realtor. In the money article they keep saying this person sold their home for this amount and save this, but what would the homes have sold for if marketed by a good Professional Realtor?? We will never know because Money Magazine does not care to do that part of the research. I will tell you that when doing research here in New Jersey we really hate to have a FSBO house in the mix of comps when one of our under contract listings is being appraised.
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James Boyer, is a resident of Morris Township in Morris County New Jersey and Specializes in listing and selling homes in Morristown, Morris Township, Madison, Florham Park, Chatham, Summit, Short Hills, Millburn, Maplewood, & South Orange New Jersey and Morris Essex & Union County Real Estate. Read More
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