FSBO Sales Just Don’t Cut It – Sellers Lose Time, Money and End Up Exhausted

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It’s a natural reaction of most homeowners looking to sell to reject the idea that any real estate agent would support a For Sale By Owner transaction.  And for the most part, they would be right -- but not for the same reasons.  The truth is that real estate agents usually end up selling most of the homes that were not successfully sold on their own, once the home is back on the market again.  But when a top executive of a website company called ForSaleByOwner.com supports hiring a real estate agent to sell his home, THAT should get people listening, right?

So why is it that the CEO of this top national company that is based on facilitating FSBOs hired an agent to sell his property?
 
Because hiring an agent is the smartest thing you can do.

In fact, he was able to sell his condo in New York City for $150,000 OVER the asking price!  Trust me, that was not the doing of an (usually) inexperienced homeowner.  That was largely as a result of his agent’s knowledge, expertise, and track record plus of course, hard work.  This wasn’t before he tried to sell his property on his own, but he figured out quick enough that if he was going to get anywhere then he better hire a professional.  So he did.

Now, as a homeowner looking to sell your property, what do you need to know before deciding to hire an expert or go it alone? 
Here are five solid reasons you want to call a Realtor to get your house sold:

FSBO Buyers Are Expecting a Deal Before They Even Set Foot In Your House

We all know that sellers putting up yard signs and using other avenues to self-market their home, are doing so in order to save some money.  Why then, is anyone surprised that buyers who end up looking at FSBOs are also looking to save some money.  In a real estate transaction when agents are used on both sides, usually the commission is split evenly between each.  This means that the potential of savings is on the side where an agent is NOT being used.  Ironically, statistics show that during most FSBO transactions as much as 10% is left on the table.

Only 2% of the Population Attempt To Buy and Sell Real Estate On Their Own

In other words, ninety-eight percent of the real estate buying and selling population heads for a Realtor to assist them in their property endeavors.  There is a good reason for this figure too – which is that the process of selling on your own is often unsuccessful, resulting in a lot of time wasted, not to mention a good amount of high hopes dashed when the sale falls through.

Forty Out of Every One Hundred FSBO Sales Do Not Even Come Close to Closing

The main reason that For Sale By Owner transactions do not pan out is because the parties were inexperienced.  Whether this means they were unable to effectively negotiate, credit qualifications were not done prior to making an offer or issues came up during the home inspection stage – there are myriad reasons that these deals fall through.  Interestingly, about 20% of these fallouts end up in the hands of real estate agents, who usually sell them successfully.

Top Agents Yield As Much as 98.5% of the Asking Price for Most Properties Sold

Even more so than the market average of 94%-96%, top agents’ performance means more money ends up in your pocket – and in less time.  When you factor in the fact that other agents can cause you to lose up to 2.5% to 4.5% through a lower final negotiated selling price, imagine how much you stand to lose during negotiations as a FSBO seller. 

Sellers Walk Away With More Cash When Using an Agent – 3 to 5% More

Statistics demonstrate that those homeowners who opt to use a real estate agent often end up with three to five percent more than if they had sold the property without a Realtor.  On a $200,000 home, this amount can add up to anywhere from $6,000 to $10,000 more cash in your pocket!
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The bottom line is that real estate agents want to help you sell your home and they will do what they can to help you save as much money as possible.  Far more important to them than a few extra commission dollars is the long-term relationship and hard-earned referrals that they seek from you when you are a happy customer with a house sold at a great price.

The Spring Real Estate Market Has Arrived!

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We just turned the corner into March and things are already picking up at warp speed in our marketplace. Sellers are jumping off their fence and deciding to sell, while buyers continue to seek out the nicest looking properties, located in great places at good prices.

But that doesn’t mean that it will be easy. There are some things that as both sellers and buyers you will need to do to get the upper hand on your competition.

Sellers Have the Upper Hand

Consider this: we recently picked up two listings that had expired after not being sold despite being on the market for considerable time. One of the homes had been available for sale for 155 days. When we took on the challenge to sell it, we simply applied our techniques and the seller followed our suggestions, creating the perfect home for showings. This resulted in the house being sold in 14 days. We requested the homeowner to remove any clutter, create a neutral environment with décor that would likely appeal to most anyone and then we used a professional stager followed by having professional photographs done.

In the second recent scenario, the home had been on the market for a total of 215 days before we took the listing on. Once again, we made some suggestions to the homeowner, had the home professionally staged and photographed. In one week there were multiple offers on the property and 32 days later the seller received full price for it!

Increased Buyer Competition Expected

Buyers will continue to be met with more and more competition, particularly as we see fewer homes on the market. Keep in mind historically low interest rates that we are seeing right now will not last forever. In fact, we are predicting rates will start to rise by the middle of this year.

Just as we have our unique list of things we do with our sellers to ensure optimum results, we also have some strategies in place to help our buyers get the home that they want.
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Contact us today to see how we can help you to make your real estate dreams come true this spring!  Call 410.638.9555 or email lee@leetessier.com

The FHA Announces Two Big Changes That Will Cost Borrowers Thousands More

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For the longest time homebuyers have relied on FHA loans to obtain mortgages using just 3.5% down. These government-backed loans have historically helped borrowers that otherwise might have had a hard time getting a loan to become homeowners. All FHA loans require the borrower to pay Private Mortgage Insurance, a premium paid each month by the buyer to insure the lender against default. FHA covers the insurance.

In light of financial troubles and exhausted reserves, the FHA recently announced that it would be changing its program. The two biggest changes have to do with the amount of premium due each month as well as the length of time these premiums are due.

Increased PMI Premiums To Take Effect April 1, 2013

Right now, all borrowers that put less than 20% down on their FHA loan are expected to pay 1.25% of the loan amount each month but effective April 1 of this year, the monthly premium amount goes up to 1.35%. On a $200,000 home that increase amounts to about $17 each month.

PMI To Be Charged for the Life of the Loan For Minimum Down Payment Borrowers

The second change will have a lot more impact on borrowers. As of right now, all FHA loan holders are required to pay PMI until they either have 22% equity on their home or for the first five years of the loan (with a minimum PMI payment period of 5 years). As of June 3^rd 2013, borrowers that put less than 10% down will be required to pay PMI for the life of the loan. Furthermore, if borrowers do pay 10% down, they would have to continue with PMI for at least a minimum of 11 years.

Buyers Must Be Under Contract By March 25, 2013 To Avoid Lifetime PMI

The mortgage industry expects a flood of new FHA applications, especially prior to April 1^st since for FHA loans that have a case # assigned by April 1^st, the lifetime PMI change will not apply. What this means to you as a buyer is that you should aim to be under contract by March 25^th so that you can get your FHA case # back by April 1^st. This does not mean that you need to close on your loan prior to April 1^st of this year.

Conventional Loans Will Likely Become More Popular

With these adjustments to the program, conventional loans will likely become more popular. Consider this comparison of a FHA loan with a conventional on a home priced at $200,000, once the changes have taken place:

Type of Loan	Down Payment	Monthly Mortgage Insurance
FHA	$7,000	$220
Conventional	$10,000	$113

Looking at the above example, there would be a savings of $1,300 each year by opting for a conventional loan.

Changes Being Made to Rebuild FHAs Financial Reserves

There are two reasons for these changes. First, the FHA is trying to recover its reserve and second, the organization expects to reduce the number of FHA loans it insures with the expectation that more borrowers will turn to conventional loans.
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If you would like to find out more about this, or better yet if you want to avoid having to pay month after month for the life of your FHA loan, contact us today and we will help you find your new home. Don’t wait – this one is huge.

Baltimore and Harford Counties Market Update January 2013

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The spring market in real estate is well under way and we are seeing lots of activity to show for it! As expected, things are picking up and we are very busy as a result. Buyers are out there, eager to lock in the still very low interest rates and with decreased inventory levels the better homes are going fast!

In terms of the number of homes available on the market for sale, we are reporting a 15% decline, with a good portion of the homes for sale being foreclosures. We are still dealing with the challenges of having about one fifth of our inventory being short sales.

As a buyer, keep in mind that this will be a test of your patience. Since despite getting some great deals on bank-owned and short sale homes, the process will inevitably take anywhere from two to four months at least, to get responses back from the banks.

The good news is that the distressed properties for sale are largely in good condition, with banks and owners doing much to prepare them with fresh paint, new flooring and other remodel or renovation done. Not only does this help our property values in the area in general but also it helps to steer the marketplace and drive activity.

If you’re considering buying a home – we strongly suggest that you act fact. With inventory levels dwindling fast and the market picking up the pace, you will find more and more buying competition as the season goes on.

It’s also a great time to sell your home with so many buyers out there looking to make an offer in time for the warmer months of the year.

As always, we welcome your calls or email and look forward to assisting you with your real estate needs!

The Baltimore and Harford County Area Market Update – December 2012

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In the wake of our nation’s housing market ups and downs over the past several years, 2012 has certainly been a strong one in terms of a comeback. Particularly at the cusp of the New Year, we are seeing some good things happening. There are still some challenges but overall this is a great time for buyers and sellers alike.

Fewer Distressed Sales on the Market

At one point foreclosures had a significant presence on the market but slowly they have dwindled downward. Today we have some foreclosures in our inventory but not so many that they impact the industry and price indexes. With interest rates as low as they are today, many investors are grabbing well-priced homes – often resulting in multiple offer situations and artificial price inflation.

Short sales, however, are still taking a long time to process. Though most banks have streamlined their processes, people should still be wary of the many steps involved. In fact, if buying a short sale home in our area, buyers must be willing to accept two things. First, prices are not as low as they were just a couple years ago. Second, banks are now expecting sale prices closer to market values before they will approve the short sale. It’s imperative for buyers to be patient during the process and to confirm whether there are any encumbrances on the property such as multiple mortgages or tax liens.

Holidays Still a Good Time to Sell

One of the biggest holiday season misconceptions many sellers have is the notion that there is less real estate activity during this time. The truth is that though there may be fewer buyers, there are equally as fewer homes on the market. Since the buyers that are out there are very serious, the result is about the same number of sales as in the “busy season” during the spring and summer in percentage compared to active inventory.

Spring Sales Require Wintertime Prep

If you are like the countless homeowners that are comfortable with selling once the spring season begins, now is the time to start preparing your home. Whether you need to fix up things that need repairing throughout the home or remodel – try to do it in advance. Once you are ready to put your home on the market, it should be in tip-top condition so you can expect to yield top dollar.

We offer a complementary thorough walk through to share with you the things we feel could use some R&R. We also have a stager share their tips with you on how to maximize marketability and ultimately get you the best price, in the quickest time and with the least hassle.

Strengthen Your Credit Now for a Strong Future

A lot of people have unfortunately faced many hardships during the past several years, with anything from job loss to relocation, downsizing, health concerns, death, divorce or more. Credit scores have been impacted so much and banks have tightened their lending guidelines to a level that rebuilding credit is actually now a part of the home buying process for many. If you are unsure where you stand financially according to mortgage guidelines, contact us and we will put you in touch with a reputable lending partner. You will receive guidance on how to rebuild and replenish a strong financial standing.
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No matter what your home buying or selling needs are, we encourage you to start exploring your options now. We can be reached at 410 638 9555 or directly via email at lee@leetessier.com. Thank you for the opportunity to serve you!