Does Selling FSBO Make Good Sense?

Most property owners wanting to sell their home hire a realtor® for one of two reasons. Either they want their home sold within a specific time frame or they need help locating a buyer. Seldom do sellers think about the marketing aspect, competitive pricing, adding additional curb appeal, contract negotiation, administrative paperwork or even finding that next place to live. Let’s address the time it takes to sell a house.

All real estate is unique. All buyers are unique. That is why there is no specific time of how long a house sits on the market before selling. Some houses sell as soon as the sign goes in the front yard. Conversely it seems that there are houses the seller cannot even give away.

All houses priced competitively and in good locations sell. To illustrate this example I’ll use some houses that sold last fall in a very popular Columbus subdivision. All had three bedrooms and two baths. Three of them sold within $2500 of each other.

One house spent just over three months on the market. Another took almost two months from list to close. A buyer purchased the third almost as soon as it came on the market.

Yet in that same subdivision, another house spent nearly a year on the market. Why? That seller wanted over $90 per square foot. The other sellers recognized that houses in this particular subdivision sold for $70-$80 per square foot.

Listing a house does not guarantee the sale by a specific date. Listing significantly increases the probability of finding the buyer within the time frame. Why?

In today’s market, four of every five buyers look to Internet real estate web sites for information about housing before they ever contact a realtor®. Buyers hire an agent for one of three reasons – suggest alternative properties, previewing or contract negotiation.

It is contract negotiations where many FSBO sellers falter. Many FSBO sellers believe their house has the best value in the entire market. Unfortunately they have not preview properties to get an unemotional analysis of competing houses in the market place. The emotional attachment to their house blurs a FSBO seller’s vision of the market. The FSBO seller has only one concern – his bottom line and profit margin.

Buyers want value. That is why they willingly sign a buyer agency contract. They want the expert advice and counsel of a professional for the widest possible options offering the best value.

Sellers with a short way to go and long time to get there have little reason to use a realtor. Those are the exception. Still, sellers must realize that the real estate market in 2010 is very different than a few years ago. Back then the demand and supply are very different than today.

Wise buyers look for sellers willing to sell at the fair market value and make concessions. If one seller does not meet those demands, others likely will, especially in this high inventory market.

Here is one final factor for FSBO sellers to consider. Any marketing reaches a specific target audience. Assume that the FSBO seller markets his property to 25 friends, neighbors or acquaintances. Assume each of those tell 3 other potential buyers. That marketing reaches 100 people.

With over 100 realtors® in Columbus, a single MLS listing reaches a minimum of 1000 potential buyers – if every agent knows only ten people. The fact is that most agents know 50 or 100 potential buyers. Who has the marketing advantage – a FSBO seller or a seller that hires a realtor®

There is an old adage – “you can’t have your cake and eat it too.” That is the real estate market. You can ask a buyer to pay above the fair market value, but don’t expect him to that.” The buyer wants only value – not insuring the seller makes a profit.

Sellers need to answer a simple question. How do buyers find available housing? Doesn’t it make sense to market your house so buyers can easily find them? That is why serious sellers should contact their realtor® (that’s me).
Cell Phone – 662.549.3421
E-Mail – andyk@dorishardy.com
Video Conferencing Available upon request

Should You Even Try To Sell Your House Yourself?

I ask the same question to many people every day – why are you selling your house yourself? Their answer is simple – save the commission. I’m all for doing things economically, but let’s see if selling a home yourself is a wise decision.

Less than 15 percent of “for sale by owner” sellers actually find a buyer and close the deal without the help of a realtor®. In over half of those sales, the seller knew the buyer beforehand – making the sale in the “closed” market. Said another way, every FSBO sellers has an 85 percent chance at failure. Are those odds in the FSBO seller’s favor? Let’s try to draw a correlation.

How many basketball teams will win a game if they make just 15 percent of their shots? What happens to a baseball player that has a .150 batting average? Tell me what happens to a quarterback that completes just 15 percent of his passes? What happens if a coach wins just 15 percent of his games?

So why do sellers believe they can buck the odds? If you are a FSBO seller, I want to hear from you. Why do you think you can beat the odds? Before answering – read on.

The most frequent answer I hear is that FSBO sellers can by-pass the realtor® fees and pass that savings on to the buyer. In theory that sounds great. In reality – why do only 15 percent of the sellers ever find a buyer? The theory has a false premise with confusion at its root.

FSBO sellers incorrectly equate cash savings with value. Let’s explain value in simple terms.

Let’s say you want to purchase a car. Car one sells for $15,000 and has no frills. A second car has the same specifications except for mag wheels and a stereo. The second car sells for $20,000. Which has the greater value? The first one because the stereo and mag wheels combined cost less than $5000.

But we have a third car under consideration. Car three is fully loaded with every luxury feature. This car sells for $22,000. Which car has the best value? Car three. That is because the luxury features exceed $10,000.

Buyers perceive the value realtors® bring to the table. Buyers want an intermediary and are willing to pay for it. Buyers recognize the enormity and complexity of a real estate transaction. They cannot afford to make a mistake.

Buyers relocating to a city want information about the community, schools, churches, neighborhoods and quality of life issue. Realtors® have those answers at their fingertips.

Tomorrow, we’ll discuss some other issues that For Sale By Owner Sellers need to consider. In the meantime, let me ask a question.

Mr. and Ms. Buyer – Do you want to take full advantage of the tax credits due to expire at the end of April? If so, you need to contact your realtor® (that’s me) so we can start the ball rolling. Remember it takes about 30-60 days from start to finish. Less than 90 remain until April 30th.

Mr. and Ms. Seller – Are you serious about selling your house? I really mean that. Serious sellers want more than a 15 percent chance at success. When we meet, I am going to be very straightforward and honest with you. I’ll give an opinion based on what I think a buyer will pay in this market. Let’s talk. Contact your realtor® (that’s me) for a consultation about putting your house on the market so it sells.
Cell Phone – 662.549.3421
E-Mail – andyk@dorishardy.com
Video Conferencing Available upon request

Super Bowl Weekend and Catfish In The Alley

It’s Super Bowl Weekend. Most people in Columbus are eagerly anticipating the Saints and the Colts. But there are lots of other activities this weekend that have nothing to do with the big game. Let’s take a brief look at the diversity of Columbus and the type of caring people that call Columbus home.

What are you doing for lunch Friday? The Columbus Police Department is hosting a Hamburger/Hot Dog Plate Fundraiser starting at 11:00 a.m. on the eastside parking lot of the Columbus Police Department, 1501 Main Street. Orders for 10 or more plates should be called or faxed in @244-3589 (if at all possible). All proceeds benefit Michael and Lisa Lang’s family. The Lang family lost their home and everything they owned to a fire on January 8, 2010.

“Catfish in the Alley” is Friday and Saturday. For many years local people affectionately called Fourth Street South between College Street and Main Street “Catfish Alley.” This block is where many predominantly owned minority businesses once operated. This year, the block honors its heritage with a community-wide celebration to kick off Black History month.

The Columbus Cultural Heritage Foundation is serving Mississippi Farm-Raised catfish starting at 5:30 p.m. Friday. Simeon Weatherby and Muzik in Action provides the entertainment.

Saturday morning the action moves one block west to the Tennessee Williams Welcome Center at 300 Main Street. A tour departs at 9:00 a.m. The tour includes, Catfish Alley, Columbus Riverwalk, Sim Scott Park, Queen City Hotel Site, Burns Bottom, The Haven, Temple Heights 1837 Kitchen House, Missionary Union Baptist Church, Sandfield Cemetery, Union Cemetery, Union Academy and the Seventh Avenue Historic Business District. Transportation is free, but reservations are encouraged. A second tour departs at 1:00 p.m. from the same location.

Mississippi University for Women's Creating High Achievement in Mathematics and Problem Solving (CHAMPS) project is hosting a Super Saturday Workshop for Teachers needing continuing education credits. Claudia Carter and Debbie Fancher lead the workshop focusing on fun math activities for the classroom.

The Pilot Club of Columbus has their annual rummage sale Saturday starting at 7:00 a.m. at the First Presbyterian Church on Bluecutt Road in Columbus. All proceeds benefit local projects.

Columbus Country Club Cabaret Night is Saturday starting at 6:00 p.m. Enjoy an evening of music, dancing, and food featuring New York chanteuse, Elizabeth Bartley. Accompanied by Columbus jazz musician Rick Montalto, Elizabeth will entertain the audience with beautiful songs and surprise vignettes from musical theatre. A New Orleans-style buffet including Catfish Creole and French Quarter Bread Pudding will be served. The Tennessee Williams Tribute Committee sponsors this event.

The Columbus Public Library did not lose track of Super Bowl Weekend. Their teen lounge has a Pre-Super Bowl Madden Tournament on the Xbox starting at 10:00 a.m. and running until the middle of the afternoon. The library located at 314 7th Street North.

Many local churches are having special fellowship gatherings Sunday evening and watching the game in a wholesome family environment.

But for those not interested in the big game, the Golden Triangle Show Stoppers Horse Club is sponsoring a membership drive Sunday starting at 3:00 p.m. at Temple BP Station on Highway 69 South. This drive is to get as many members involved as possible to continue to spread the love for horses and horse show events for this upcoming year in Columbus and surrounding areas. All senior citizens and children under the age of 18 can become members free. The Golden Triangle Show Stoppers have many events to come in the up coming year and would like as many members as possible to get involved.

Oh, and before we sign off for today, let’s wish a lot of success to the folks at the Caney Fork. That is a new restaurant opening on Monday. They are located at the 18th Avenue exit of the US-82 by-pass. This is the same location that housed the Santa Fe Cattle Company. I’m hearing that there will be four large flat-panel televisions in the dining area.

I’ll be in Olive Branch this weekend attending a Lions Club convention. But I will be available by cell phone if you have a real estate need.
Cell (or text) Phone – 662.549.3421
E-Mail – andyk@dorishardy.com
Video conferencing is available

January 2010 Sales Figures for Lowndes County, MS

It’s the time of the month when we take a look back at the previous month’s activity. Hopefully this information gives sellers and buyers a realistic and factual overview of the real estate market in the city of Columbus and Lowndes County, Mississippi for January 2010. Here are the facts.

During January only, all of the realtors® in Lowndes County closed a total of 24 transactions. In January 2009 only 15 transactions closed. But the 24 closings are only half the transactions that closed in January 2007. It is roughly the same number of transactions (20) that closed a month ago.

Of the 24, the median house sold for $115,000 or about $83.50 per square foot. The median price represents the midway point between the highest priced house and the lowest priced house. This house sold in less than two months.

The average house sold for $122,000 or less than $64 per square foot. The average house sold for less than 90 percent of the list price. It took more than three months to find the buyer and close the deal.

In previous months we also remove the houses at the upper end of the market – those selling for more than $300,000. We also remove house at the extreme lower end of the market – those selling for less than $50,000. Including those skews the numbers. So let’s hone in on the vast majority of the market – houses selling between $50,000 and $300,000.

In January, only three houses sold for more than $200,000 and none even got close to the $300,000 threshold. Can’t eliminate anything there. Four houses sold for less than $50,000. Those are the only four we’ll remove.

After removing those at the bottom of the market, the median house sold for $133,000 or about $73 per square foot. The average house sold for slightly more than $141,500 or 90 percent of the list price. This house also spent more than three months on the market.

Even though the sellers did not get as much as they initially wanted, 34 other sellers could not find a buyer and had the contract expire. Half that number (17) had a house listed between $100,000 and $200,000. Just two had a list price between $200,000 and $300,000. Five sellers wanted more than $300,000. The remaining ten were below $100,000.

Meanwhile listing agents found 78 sellers that put their Lowndes County home on the market. About half (38) have a house listed between $100,000 and $200,000. Another 20 are asking for less than $100,000. In the $200,000 to $300,000 price point are 11 listings. Nine sellers want more than $300,000.

What do all those numbers mean? We still have a strong buyers market. The 24 active buyers had over 400 properties to consider. That is a 17-month supply of inventory. In the law of supply and demand, when the supply (sellers) exceeds the demand (buyers), prices fall. We saw that in January as only three of the 24 closings sold for the full list price. But in each of those three properties that sold at full list price, the seller made significant financial concessions to finalize the transaction. In reality then, nothing sold for the full list price.

The figures quoted above are factual but not meant as a substitute for a comparative market analysis on a specific house. Only your realtor® can fully determine what a ready, willing and able buyer might pay for that house. What these figures do reflect is an accurate representation of what buyers have at their disposal. Property owners contemplating selling need to understand the 2006 and 2007 markets are long in past gone.

Your realtor® (that’s me) will be happy to discuss and explain these figures in a face-to-face setting, where that realtor® competes for a listing. Pick up the phone and call.
Cell (or text) Phone – 662.549.3421
E-Mail – andyk@dorishardy.com
Video conferencing is available

Getting The Facts From The Source

Earlier in the week I mentioned the necessity for educated homebuyers. Today, let’s review some of the resources available for first time and repeat homebuyers. Hopefully the information contained below begins the education process. Many buyers want a personal explanation based on individual circumstances. We’ll discuss that too.

The Federal Housing Administration has a comprehensive list of authoritative web sites about buying and owning a home. Organizations like the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, the Department of Housing and Urban Development or the Federal Trade Commission provide some of the resources. Other authorities include the Mortgage Bankers Association, the National Home Builders Association, and the Department of Veterans Affairs. Do those sound like authoritative sources?

The same FHA’s Buyer Resources is also a great place to start the information hunt for present homeowners struggling to make a mortgage payment. Again, reputable sources like the Federal Reserve Board, Federal Trade Commission and the Mortgage Bankers Association have resources available about avoiding foreclosure, mortgage restructuring, short sales and identifying foreclosure rescue scams.

There are many advantages to homeownership. There is a free publication offered by the Mississippi Association of Realtors® entitled Real Estate 411 – The Mississippi Consumer Guide to Homeownership. This is a comprehensive book with topics like choosing a realtor®, the realtor® code of ethics, mistakes to avoid when buying, buying versus renting, knowing your credit score, and explaining mortgage shopping.

The same publication even explains to sellers the rules to follow, low cost ways to spruce up the house, pricing, staging, and moving tips.

Getting smart enough to make a decision is one thing. Acting is another. Time is running out to take advantage of the $8000 first time homebuyers tax credit or the $6500 repeat homebuyers tax credit. April 30th is on the horizon. That’s why it’s important to act. Here is what to do.

First, bookmark or print this blog! Why? It has links to important educational website from authoritative sources about the home buying process.

Next, visit all of those links. Become familiar with the process. Get the confidence to ask intelligent questions.

Third, set some goals. We’re already one month into 2010. Is buying a home a wise long-range financial decision? Will it happen this year?

If the answer to question three is “yes” and “yes” then step four is to contact your realtor® (that’s me). Let’s map out the strategy to get that $8000 or $6500 tax credit check into your hand.
Cell (or text) phone – 662.549.3421
E-Mail Address – andyk@dorishardy.com
Video Conferencing is Available

The First Steps Toward Homeownership

The biggest stumbling block for most first time homebuyers is not getting mortgage pre-approval. The biggest stumbling block is getting the potential homebuyer to visit with a mortgage lender and ask questions. Let’s look at this important step. I want a homebuyer literate about the process.

Let’s be honest. Mortgages are complicated. That is why I always suggest that first time homebuyers start the mortgage pre-approval process by personally visiting with the mortgage department at the place where they bank. Think about the value of walking into someone’s office, shaking a person’s hand and looking them in the eye. Add to that the value of dealing with the same financial institution that holds their money on a daily basis.

Compare working with a local lender to dialing a toll-free number and interacting with someone you never meet and have no idea about their training, experience or understanding of your situation. What is the guarantee you will talk to that person in the future?

Local lenders have experience in explaining the ins and outs of home loans to buyers. They want to lend money. But more than that, they want to be sure the borrower does not make a mistake. For that matter, the lender cannot make a mistake either. Both the borrower and the lender take a risk.

Let the lender help determine just how much house the homebuyer can afford. The lender can also identify the best type of mortgage to fit the individual circumstances. They offer competitive rates and terms.

There is only one thing worse than falling in love with a house only to discover you can’t afford it. What could be worse? Bypassing a house you can afforded, but don’t realize it.

That’s why it is important to know how much house you can afford. Most people need help knowing their financial limits. That is why it is important to work with a lender before deciding on a specific house. You’ll know whether you qualify for a mortgage to buy the house you want. If you don’t qualify, the lender explains the steps to take so you can buy that house in the near future.

Starting with your present bank is not the end of the line. Visit with competing local banks and local mortgage companies. Different lenders offer different packages. That is why it is important to compare lenders. Find the one that best fits. Think about it this way.

Seldom does a buyer preview only one house and write a contract immediately. Buyers compare and contrast one house against another to find the best one. Doesn’t it make sense to do the same with lenders?

Anyone interested in buying a home can find detailed information about mortgages and other related topics at the Mortgage Bankers Association Home Loan Learning Center.

Starting on January 1st, the federal government requires lenders to provide a detailed Good Faith Estimate to buyers. This allows them to compare and contrast different mortgages for the same property.

Talk to your realtor® (that’s me). Get an explanation about the home buying process. Get a recommendation about good lender that offers great service, competitive rates and accurate information.
Cell (or text) phone – 662.549.3421
E-Mail Address – andyk@dorishardy.com
Video Conferencing is Available

Does Buying Make Sense For A First Time Home Buyer?

Last week we mentioned that anyone wanting the $6500 repeat homebuyers tax credit should first evaluate if buying a new home makes sense. Today we’ll answer the same question for the homebuyer wanting to claim the $8000 first time homebuyer tax credit. In most cases, the first time buyer is a true first time buyer. That means they have limited knowledge about the process. So let’s spend a few days educating a first time buyer about the home buying process.

Buying a home is a major step in life. Assuming a mortgage for that home is a big responsibility. Because the first time buyer has no experience, it makes the challenge seem overwhelming. Is this you or someone you know? If so, then read on.

First time homebuyer’s need 100 percent accurate information in language they can understand. That way the first time homebuyer can clearly see who is their friend and who is not.

That is why anyone buying real estate needs to read this blog every day. I point readers to authoritative information on the web. I want buyers educated. I want them to know about the process in advance. I want smart real estate buyers that know the right questions to ask. I want buyers that can differentiate fact from fiction, even if the truth hurts. Of course I want those buyers to buy something from me.

Buying a home is the largest purchase most people will ever make. Homeownership has great benefits. Homeownership also comes with certain responsibilities. Is home ownership right for you?

The answer depends on each individual financial situation, future plans, and individual goals for self and family. Buying a home means committing a lot of money and a lot of time. So let’s begin with examining your current financial situation.

- Do you have a steady, reliable source of income and a steady employment history for at least three years?
- Do you have a good credit history?
- Do you understand how to manage your credit?
- Is your total debt manageable? That is can you pay all your bills on time and still afford to take on the costs associated with homeownership?
- Can you save money for a down payment and closing costs or do you have access to other sources of funds, such as an employment bonus, tax refund, or a gift from a relative?
- Do you have adequate savings to weather an unexpected loss of income or an emergency?

Next consider the future. Homeowners must balance the costs of owning and maintaining a home (like repairs and maintenance) against other major expenses. Homeowners must still buy cars or major appliances. Homeowners take vacation. On occasions, homeowners must make short notice emergency trips. Homeowners find a way to save for their children’s college education.

There are many advantages to home ownership. In addition to receiving the $8,000 tax credit this year, there are annual tax advantages for homeowners. The Internal Revenue Service always rewards homeowners with deductions not available to renters.

Perhaps the biggest advantage is the long-term reward. I personally know about a person that purchased a new house in 1958 and lived in it until last year. They sold that house for more than ten times the amount they paid for it. Think about that. If they paid $10,000 in 1958, they sold it in 2009 later for over $100,000. Plus they had the enjoyment of living in it for 50 years. Talk about a nest egg! That is the American Dream!

The benefits of homeownership come with responsibilities too. Paying the mortgage, property upkeep and repair bills are just few. The person I mentioned above still faced challenges. Somehow they made it through the 70’s when prices rose much faster than income. The late 70’s and early 80’s had high unemployment as priced stabilized. Tough times don’t last. Tough people do.

We’ll continue this discussion tomorrow. In the meantime, carefully consider if homeownership is the right decision. The clock ticks toward the April 30th deadline. Waiting can become an $8,000 mistake.

Get good advice. Contact your realtor® (that’s me) for honest advice about the entire home buying process.
Cell (or text) phone – 662.549.3421
E-Mail Address – andyk@dorishardy.com
Video Conferencing is Available