FSBO Jane

It’s a common question facing many homeowners in today’s market: When your home isn’t selling, what should you do? You can get the word out, improve your curb appeal, update your advertising… but at the end of the day, a bad market is a bad market.

Your basic options are simple: (1) Keep waiting, possibly lowering the price (2) Take your home off the market & rent it instead or (3) Give up.

Option #1. Keep Waiting

Even in the face of plunging home values and an abundance of listed for-sale homes, many homeowners today remain blithely unaware of the realities. Of course, it’s always possible that the right buyer will come along. But leaving a property listed at a too-high price (too high = not similar to competition) means almost certain failure.

One of the smartest ways to grab buyers’ interest is to lower your home price. Let’s face it: buyers are just as worried about losing money by buying your home as you are in selling it. They are aware of the market’s leanings, so they’re not easily swayed into a big purchase. Knocking your price way down may be the best (if not only) way to get their attention.

Leaving your price as it is, waiting for the right buyer, may mean waiting for a very, very long time. Especially as many of today’s experts don’t expect home values to return to normal before 2010.

Option #2: Rent Instead

The obvious negative with this scenario is that you still own a property that may continue to decrease in value. Additionally, you’ll have renters to manage, and any problems/damages will be yours to deal with.

But there are also big positives: Renters can often compensate for your monthly mortgage payments, if applicable. They also can cover all utilities, meaning bills you will be freed from, at least while they live there. In a rough housing market, people will still need places to live, and, if people aren’t buying, they’re certainly renting. This is a good option if you’re looking to ride out the market and recap some of your losses. When things pan out, you can try selling again.

Option #3: Give Up

If you don’t have to move, you can keep living in your home while you wait to determine your next move. You could wait a year or two and try to sell again, or you could just decide to forgo moving altogether. Sometimes, realizing buyers don’t love your home as much as you do can make you want to keep it.

Whatever you decide, it’s important to weigh all the factors together carefully. Being informed about the market is the best way to equip yourself to make a wise decision.

You hear a lot of people these days talking about real estate’s being a “buyers’ market.” And, if you’ve paid any attention at all to real estate, you can probably guess that this means something about the market working in favor of buyers.

Simply put, it all goes back to the economy.

In a prosperous economy, people are doing well, businesses are thriving, we’re all spending more on eating out and vacations and so on. This type of economy usually means people are buying houses, and if enough people want houses, the demand can get higher than the supply. This is a sellers’ market. In other words, sellers have much more negotiating power and tend to be getting their fair asking prices or higher.

Then there are times when the economy is struggling. Layoffs, budget cuts, higher costs of living push expenses up and make consumers trim spending. In this type of economy, people tend to save rather than spend, and they aren’t as likely to buy homes. If enough people decide not to buy, the supply of homes for sale can exceed the number of buyers. This is a buyers’ market. Because there are fewer buyers, they have a lot more negotiating power and tend to buy for less than a home’s fair asking price.

Then, for one reason or another, the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession.

During such a time, fewer people are buying homes. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment - perhaps because of a layoff in the family.

In the business cycle of real estate, there are buyers’ markets and sellers’ markets…and some markets in between.  It is all based on supply and/or demand.”

Since 1988, Kevin Wood, founder of byowner.com, has been helping homeowners sell their own properties without paying commissions. Today, the site offers many different ways to advertise your home; however, most of them are quite confusing.

PLACING AN AD ON BYOWNER.COM

There is a fee to post an ad on byowner.com, and with this ad, homeowners can post up to 25 photos (although it seems as if no one actually posts 25 photos… maybe about 10 or so total), and their descriptions of the houses can be 1,000 characters in length. That’s not very long to describe an entire house, especially if it’s a big one. Byowner.com also boasts “NO COMMISIONS EVER.” However, there is a little asterisk with the following sentence attached: “assuming you choose just byowner.com and not the MLS option.” The way this is worded, it sounds as if Byowner.com would offer an MLS option. In reality, they actually spend paragraph after paragraph on another part of the site bashing listing on the local MLS, while promoting Byownermls.com, which is another site where your advertisement is place (free of charge). This is so confusing, is it not? And how would potential buyers know about the buyownermls.com website?

SELLER WOES

Sellers show their own properties and pay for yard signs. Byowner.com also has a plethora of products for sellers to purchase. Some of these include a listing on eBay (costing $199 through byowner.com, when you could do it yourself on eBay for much less), 30-day phone support for $69 (so you have to PAY to speak to a human being regarding YOUR ad that you already paid to place?) and a listing on FSBO.com that costs $79.95 (this site has 5 packages ranging from $69.95 - $499.95, so which package are you getting through byowner.com?). Why pay for an extra ad on eBay, phone support and an extra ad on FSBO.com if you are already paying for a listing on byowner.com that comes with a FREE listing on byownermls.com??

FEATURED PROPERTIES

Once on the main page, there are a few highlighted properties. However, when you click on some of them, some of them are “no longer listed” and some of the property descriptions say “description to follow.” If these properties are so special, why are the ads not completed? And why haven’t new properties been highlighted once the featured properties are sold? How often do they update these? It looks very unprofessional.

BLOG AS FREE ADVERTISING??

Byowner.com has a blog. In this blog, they list properties and their descriptions. Do they do this for every property? How does your property get to be one of the lucky ones on the blog? Is this another FREE advertisement?

BUYER WOES

Byowner.com advertises their hard copy magazine (which is only available in Chicago, Memphis, Miami and New York, even though they advertise properties all over the nation) subscription of six monthly issues for $15. This is listed under the dropdown menu for BUYERS. The testimonials page has people boasting about how fast they sold their homes… so what kind of buyer would want to look for a house for 6 months?

Also, the advertisements don’t direct you to the seller. As a buyer, you call ByOwner; they refer you to a coach; the coach maybe takes you to the buyer. That destroys the whole point of selling BY OWNER!

TESTIMONIALS

Speaking of testimonials, that page is just weird. Some of the first comments say:

Edide Reso and Donald Clement - Property #20092446 . We sold the house. Thanks byowner! . Please remove from website.

Phyllis James - Property #62798 3503 W Carla Vista Dr Chandler, AZ 85226 sold for full price in July of 2005. It was easy and great, thanks for your forms and expertise. Please remove from website.

Did byowner.com forget to take their listings off of the web? And why is Phyllis James’s exact address on the page? If this property sold to someone else, would they really want their new address posted on the Internet for everyone to see?

NO PREQUALIFICATION

Byowner offers no method of prequalifying potential buyers, so you have to wade through any and all calls on your own.

I just came across this article at ABCNews, written by Elisabeth Leamy over a year ago. Her advice is still spot-on.

From Elisabeth:

“…how many times in your life do you get a chance to save not hundreds, but thousands, of dollars? I wouldn’t go so far as to say buying or selling a house without a Realtor is easy. It’s just that it’s not that hard — especially not 6 percent-commission-on-the-sales-price hard.”

“The Realtors’ association crows that nine out of 10 homeowners end up hiring a Realtor after trying to do a FSBO. My answer is, ’so what?’ Why not try to sell on your own to save the money? If you succeed, you’re a genius. If you don’t, you’re right back where you started.”

Isoldmyhouse.com is one of the newer FSBO companies. Begun in 1998, it’s just shy of 10 years old. Its novelty works for and against it: I realize it has room to grow and it offers a money-back policy (plus), but it’s not viable yet as a strong option for home sellers because of its limited scope, poor-quality photos, lack of descriptions and marketing tactics (all big negatives).

LIMITED SCOPE

Because it’s still newer, isoldmyhouse.com’s scope is still pretty limited. Mainly, it works with homeowners and buyers in New England. In the entire state of Illinois, where I live, isoldmyhouse.com has only four properties total listed. In Georgia, there’s five—none in Atlanta, where I used to live. In the Tampa area, only four properties total—that’s in the entire Pinellas County.

They claim to cater to New England, but even there, the amount of listings seems disappointing. I’ve said this before: if buyers aren’t going to find a lot of choices at a site, they aren’t going to come back. No buyers, no sales. Period.

Entire Philadelphia area: 2
Boston: 18
Concord: 6
Providence: 19

POOR-QUALITY PHOTOGRAPHS

Isoldmyhouse.com is one of the companies I haven’t used personally, though a friend of mine planned to. Since my friend didn’t end up going with ISMH, I never got to see how her photos would be set up. Skimming the site though I noticed that the pictures are often missing. When they are posted, they’re blurry and there’s usually only three at most.

OFTEN NO DESCRIPTIONS

I looked through homes in Rhode Island, where my friend lives. None of the ones I viewed had any text written. There were a few bullet points that said how many bedrooms and the living space square footage. But that was it. This is not the best (or even a good) way to draw buyers to a property.

BUYERS ARE DIRECTED TO THEM, NOT YOU

In the advertisements, guess whose number is listed? ISMH’s. Potential buyers aren’t sent to you, the seller, directly; they’re sent to this company. In this way, ISMH works much like a realtor does. They can take a buyer’s info and point that person to any of their listings—they have no vested interest in making sure you’re home sells.

Homesbyowner.com began in 1995 and also claims to be the oldest, most established FSBO company around. Again, while I agree with the concept of their FSBO industry, I have to point out several problems with their company strategy:

Poor Ad / Photo Quality
Looking at homesbyowner.com, I get the impression that this site is best suited for people who want to be able to post an ad written in their own words. I’ve noticed that a lot of the ads are lacking in some areas and could do a better job of showcasing the house. While I agree no one knows your property better than you do, the whole reason to use a FSBO company is to get some assistance marketing your property. If I’m still writing my own text, taking my own photos and designing things, what is the company providing? Just a listing with their site. And if that’s all they’re giving, I should just list in the local paper or Craigslist and be done with it.

With homesbyowner, you also take your own photos and upload them to the website. This is fine if you’re just after getting something—anything—posted. But if you want quality, again, I wonder: why are you paying them so you can do all the work?

Small Selection of Homes
This is a common problem with FSBO companies. Like owners.com, homesbyowner.com has very few listings available. And if they offer few listings, they’ll be attracting few buyers. It’s simple math. Certain towns in my area aren’t even listed; when I do a specific search for a certain area code, only a few properties come up.

I find it interesting that their front page advertises the need for more selling representatives. On the entrance page that should be directing buyers and sellers to market/view properties, this company reveals its primary objective: getting more people to get more of your money.

Overall: Use homesbyowner.com if you like to give your money away. I know that seems harsh, but it’s true. They’re happy to take it, and they still make you do everything. You’ll write your ad. You’ll take your photos. You’ll have to direct people to your listing because no one will be coming without your own advertising.

Let’s talk about the drawbacks of selling “For Sale by Owner.” Basically there are two things to seriously consider:

1) You have to do the work. You’re going to make your own marketing materials, take your own photographs, organize and post listings, etc.

2) You have to find the buyers. Will you put an ad in the paper? List at Craigslist or eBay or a FSBO company’s site? Whatever you do, you have to plan the best strategy for connecting your home with the right buyer.

Personally, I’m convinced that the pros outweigh these drawbacks. And I think that the best plan of attack for these issues is to use a FSBO company. I’m also convinced that one organization does the best job, but I’ll leave you to make that call for yourself.

A FSBO company can effectively answer all your questions, help you with every step of the process and make sure your advertising looks professional. At least, a good FSBO can do these things.

When deciding which FSBO company to choose, these are the things I want to find:

Attention to professionalism
The photographs, the text, the listing itself–everything about the company and the way it operates should exhibit professionalism. I want to know that my money is getting something, not just a listing, but professional service.

Ads that direct buyers to me
One of the biggest drawbacks of a using a real estate agent is that potential buyers could see your house, call the listed number, and never talk to you personally. The agent may decide to show them another house that is also listed; the agent doesn’t care if they sell your house, just that they sell a house. For this reason, I demand that a FSBO ad point buyers to me, the seller. I should be the one getting the calls.

Available customer service
If there’s a problem with my listing, if I have a question about something or want a mortgage lender referral, I should be able to talk to someone. Again, this is the benefit of paying for a FSBO company’s service.

A website/listing that draws a large readership
The best part of advertising with a FSBO company is the larger amount of viewers you can reach. The bigger a site’s readership, the more likely that my property will be sold. I can usually determine the popularity of a sight by its amount of listings and its word-of-mouth credibility.

Assistance with prequalifying buyers
One of the most annoying things about selling on your own is dealing with non-serious buyers. Neighbors might want to tour your home, bored people might be looking for something to do… but in the end, they just waste your time. I want a FSBO company to solve this problem for me by helping me determine who’s really looking for a home.

This may seem like a lengthy list of requirements. Am I aiming too high, do you think? I say no. I’ve actually found this service before, believe it or not. It’s available.

FSBO stands for For Sale by Owner, and it’s a smart alternative to using a real estate agent for homeowners.

HOW IT WORKS
The term is used to identify properties that are for sale directly by their owners, without the assistance of a real estate agent. Typically, owners get the word out about their for-sale homes through websites, classified ads, referrals, and other means. They make their own brochures and take their own calls about showings. They deal directly with the buyer or possibly with a buyer’s agent. In the end, they pay no selling commission, pocketing that cash.