IN SPITE OF MODERN TECHNOLOGY AND SAVVY HOME OWNERS
FOR SALE BY OWNER HAS NOT BEEN A SUCCESSFUL TECHNIQUE TO SELL A HOME
'For Sale By Owner' founder sells his home... using a real estate broker
By David Gardner for MailOnline
UPDATED: 04:26 EDT, 5 August 2011
Colby Sambrotto, who founded a website for DIY-real estate, just sold his Chelsea apartment for $2.15million. The founder of a website helping people to sell their own homes has found a buyer for his own apartment – with the help of a traditional real estate broker.
ForSaleByOwner.com creator Colby Sambrotto even paid the standard 6% commission after selling his two-bedroom New York condo for $2.15 million.
According to the Wall Street Journal, Mr Sambrotto spent six months trying to sell the apartment in trendy Chelsea through online listings and classified adverts. But the DIY home selling guru eventually decided to turn the sale over to a professional.
Not only did broker Jesse Buckler set the price $150,000 higher than the original asking price, he went on to lure the elusive buyer Mr Sambrotto’s self-help methods had failed to attract.
The Journal said the 2,000-square-foot apartment at The Lion’s Head building near Sixth Avenue is now under contract. The apartment in question: Colby Sambrotto, founder of 'For Sale by Owner' sold his Lion's Head Building home via a real estate broker. Practice what you preach? Mr Sambrotto couldn't sell his house by himself - despite making a fortune by advocating for the method.
Mr Buckler claimed the owner wasn’t asking enough for the apartment and was not consequently attracting the right buyers. Broker Jesse Buckler encouraged Mr Sambrotto to increase the asking price of the apartment as a sales strategy. ‘At first he wouldn't let me increase the price,’ said Mr. Buckler. ‘I told him I know what I am doing—the market is picking up.’
Mr Sambrotto bought the apartment for $2 million in 2007, a year after he sold his ForSaleByOwner.com website at the height of the real estate boom. He told the Journal that he still believed in owner sales and discounted commissions, but added: ‘The apartment market in Manhattan was tightly controlled by agents.' 'So many buyers don't even bother to do a search online.’
Undeterred, he is now planning to launch a new sale by owner website, called USRealty.com.
Even the CEO of Zillow thinks you should ask a
real-estate agent what your home is worth
(after selling his home 40% below zestimate)
A decade ago, when the real-estate bubble was reaching its peak and homeowners were giddy about the rise in home values, plugging in addresses at the new website Zillow became a national pastime. “People ‘Zillowed’ their Christmas list. They would go and look up the home value of their boss and ex-girlfriend and ex-wife and their neighbors,” said Spencer Rascoff, Zillow’s CEO. The site was originally built around these automated valuations (or “Zestimates”)—in 2006, not a single for-sale listing was posted on the site. It now has millions of listings and agent reviews, among other features.
Knowing the estimated value of a home was power—or at the very least, juicy gossip. That’s why it was so surprising that Rascoff sold a Seattle investment property earlier this year for $1.1 million—far less than its Zestimate of $1.7 million. This particular house, he said, was located on a major arterial street, a fact that wasn’t baked into the Zestimate. The company has worked that data into its algorithm since then, he said. According to the Real Deal, a Los Angeles real-estate news website, he also recently paid more than the Zestimate for a Los Angeles mansion. But Rascoff said it doesn’t really matter. “It wasn’t top of mind. When we were trying to figure out the price for the house that we bought, we relied on the expertise of the real-estate agent to help us decide what to pay. The Zestimate, at that point, was less important,” he said. The founders of the site always viewed the Zestimate as a starting point, a figure that would give a general sense of a home’s worth, Rascoff said. Zillow was never meant to replace real-estate agents (as travel sites such as Hotwire, which he co-founded, essentially did for travel agents), but to give consumers access to home-value information that real-estate agents were once gatekeepers of, he added. It’s also worth noting that real-estate agents now pay for advertising on the site, so the professionals have become an integral part of Zillow’s business model. “We call it a Zestimate and not a zeppraisal and not a zeprice. It’s meant to be a starting point,” Rascoff said. “To determine a more accurate opinion of a home’s value you should hire a real-estate agent, or more to the point, you should sell the house and then you will know how much it’s worth.” After the bubble burst and home prices plummeted, Zillowing all the homes on your Christmas list, let alone your own home, likely was a depressing exercise. Those who got carried away counting the Monopoly money building up in their home suddenly realized that values didn’t always go up. And perhaps people realized the importance of a real-estate professional when the market wasn’t on an upward trajectory. In today’s seller’s market, agents also are relevant, Rascoff said. In fact, his best piece of real-estate advice is to find a good agent, he said. “Whether it is finding off-market inventory or helping figure out the home’s value and what bidding strategy to take, real-estate agents play a really important role,” he said. “There are 5% fewer homes available for sale today than there were a year ago, and we’re supply constrained and there’s plenty of demand because of low mortgage rates, and therefore home values are rising.” Over recent months, there has been somewhat of a softening in the housing market because builders have been building more homes, he said. Still, many markets are low on for-sale inventory, making it important for buyers and sellers to have a helping hand, he said...
10 REASONS FSBO FAILS
Homeowners trying to sell their homes on their own — For Sale By Owner (FSBOs) — are driven by several reasons. Although most of them want to save money that they would have otherwise spent on real estate commissions, a few others take the FSBO route because they feel they don’t need a professional to sell their home.
Whatever the reason for attempting to sell solo might be, data from a National Association of Realtors survey shows that less than 10 percent of all home sales are FSBOs.
There are a lot of reasons why For-Sale-By-Owners fail and do not sell. Some of the top among these are:
1. Too many people to negotiate with - Those deciding to take the FSBO route often have to negotiate with many people. Some of them are likely to be: The buyer, seeking the best possible deal, The buyer’s agent, who represents the buyer’s best interest,
· Home inspectors, working for the buyer, which are likely to find some problem or the other with the house, The appraiser, if the home’s value needs to be assessed. Without the help of experienced real estate agents, dealing with so many different parties alone is often a tough task for homeowners.
2. Homeowners do not know how to prepare the home for sale. A majority of homeowners don’t know about the pre-listing tasks that FSBOs should do before they list their home for sale. These usually include: De-cluttering, staging, rearranging furniture, enhancing curb appeal, repair and paint where needed, Getting the home, floors and carpets cleaned by professionals, replacing light fixtures and outdated items etc. Because homes for sale by owners just have one chance to impress potential buyers, neglecting these home sale preparation tips often reduces the homeowners’ chances of selling the house.
3. Owners do not know how to screen potential buyers - FSBOs often have no idea about the difference between prequalification and preapproval, and they don’t know that buyers should ideally be preapproved or at least prequalified. Not knowing if a buyer has the ability to purchase the home acts as a big deterrent for homes for sale by owners.
4. Owners fail to solve buyer’s queries - Handling inquiries from buyers on their listings and coordinating showings for their homes are prerequisites for making a sale. However, many homeowners either aren’t able to handle such inquiries on their homes or don’t have the time for them. Even organizing showings might become an uphill task at times. Because these days potential buyers and their agents want quick responses to their inquiries, they don’t think twice before moving on to the next potential property if their inquiries and requests are unanswered.
5. Owners don’t understand the concept of ‘golden time’ - According to this concept, homeowners get the most money for their homes in the first week of putting the property on the market. The longer FSBO homes stay on the market, the less money people will be willing to offer for them. If a seller tries FSBO before hiring an agent, the seller loses the “golden time” window. This will eliminate buyers who have already viewed the home and might have made a reasonable offer — but have already moved on.
6. Owners fail to understand the contract procedures - The contract to buy a home involves much more than just the price offered by the buyer. Also, real estate contracts have lots of timelines and clauses and involve several common contract contingencies, such as inspections and mortgages. Many FSBOs don’t have a firm understanding of such contracts and might not know what they are agreeing to or how to negotiate particular parts of the contract.
7. FSBOs don’t know how to handle the home inspection findings - Home inspections almost always find some issues with houses even when they are relatively newer structures. In such cases, the buyer requests problems be fixed or corrected before moving forward with the transaction. However, many FSBOs believe that there is nothing wrong with their home, which is why they refuse to address the issues brought forward by home inspections. As a result, the offer falls through.
8. FSBOs incorrectly price their homes - FSBOs often price their homes incorrectly due to lack of experience. They set the price too high, which hinders their chances of closing the deal.
9. FSBO homes lack exposure - Homes for sale by owners are often listed on a few websites, but there are many that don’t allow FSBOs to list their property. Thus, FSBOs are unable to give their homes adequate exposure in the market.
However, when sellers hire a real estate agent, the professional can give a property comprehensive online exposure as well as exposure in the local real estate segment of the newspaper. The agent even has tools to extend the exposure further, which FSBOs don’t have.
10. FSBOs fail in the closing process - Even after an offer is accepted, many things still need to be done prior to the closing. For instance: Get the inspections completed within the allotted time. Check if the buyer has obtained written mortgage commitment
· Find out if title work is reviewed, Learn whether abstract is ordered. With so many things acting against FSBOs, it’s natural to find very few homes for sale by owners in the market.
Why For-Sale-by-Owner Sales Fail
By Michele Lerner | Nov 26, 2013
Homeowners obviously know their homes better than anyone, but that doesn't mean they're the best salespersons for their properties.
Some sellers are tempted to try a For Sale by Owner (FSBO) transaction because their local community is in the midst of a sellers' market and they think they can sell easily without help. Others try the FSBO route because they want to maximize their profits and avoid paying a commission to a Realtor.
However, statistics show that selling your home with the assistance of a professional real estate agent will garner you a higher profit, enough to cover the commission as well as put more money in your pocket. According to the National Association of Realtor's 2013 Profile of Home Buyers and Sellers, the average FSBO sales price was $174,900, while the average price for a home represented by an agent was $215,000, a difference of $40,100.
Why to Sell With a Realtor
Choosing to sell with a professional rather than on your own makes sense for a variety of reasons:
· A Realtor has access to market data about recent sales and other homes on the market that can be used to price your home appropriately. Studies show that homes priced right when they're first listed sell more quickly and for a higher price than those that linger on the market.
· A Realtor can show your home when you aren't available, can respond to inquiries from potential buyers and their agents, and can get valuable feedback from visitors - all things that save you time.
· A Realtor can look at your home objectively and suggest ways to improve its appearance - by staging and minor repairs - so it appeals to more buyers.
· Buyers typically prefer to look at a home without the seller present so they can feel more comfortable exploring the rooms and visualizing themselves in the property. At an FSBO sale, the seller must be present.
· A Realtor can screen visitors to your home, which provides a measure of safety that FSBO sellers don't have. In addition, by checking to see if the buyers are legitimate and can afford to purchase your home, a Realtor can help you avoid wasting time showing your home to unrealistic buyers.
· Realtors have professional marketing expertise, contacts with other Realtors who work with buyers, and the support of a brokerage that can market your home more widely than you can as an individual.
· A Realtor can help you negotiate a contract that not only garners you an appropriate price for your home, but that meets your needs for a settlement date and perhaps includes a period when you rent back your home from your buyer. In addition, a Realtor can make sure your contract is in compliance with all local regulations.
Most buyers today work with a buyers' agent to represent their interests. If you choose to sell your home on your own, you'll be negotiating with a professional and relying on your own skill to finalize a contract. Not only could you end up selling your home for less money, you could leave yourself open to potential legal problems unless you have the contract vetted by an experienced real estate attorney.
FSBO transactions can be successful, of course, but 90 percent of homeowners prefer to work with a professional rather than risk an unsatisfactory home selling experience.
Michele Lerner writes about real estate, personal finance, and business news.