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BRADFORD PRATT CRS 
REAL ESTATE BROKER IN MASSACHUSETTS

           


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NEVER FORGET 9/11/01

1.      Homeowners shouldn't go it alone, because often they lack the knowledge to price their homes.  
Inexperience may lead owners to overprice their homes. While property languishes on the market, sellers incur expenses for advertising, taxes, interest, insurance, utilities, and so on. And they sacrifice time preparing for showings and waiting for prospects who might not keep their appointments.
Undervaluing represents the flip side of the ticklish pricing game. Many sellers aren't familiar with property transfer expenses, prorating, and other closing costs and will agree to accept what started out to be a satisfactory price. At settlement, however, they may net much less than they anticipated. In addition, sellers aren't always aware of changing market conditions that may make their home more valuable than they think it is.  If a market has been depressed, sellers might calculate a low asking price, not realizing, as a REALTOR would, that the market might be shifting in their favor.    Sellers may make a handsome profit over what they paid several years ago but still not realize optimum value from the sale because of inflation.
 
  2.      Buyers won't buy until they believe the selling price is justified. 
And many FSBO'S don't have the data to prove that.  A REALTOR, on the other hand, has the time to prepare the buyer with all the information that they need to compare the value of your home to the other properties on the market.  A REALTOR can demonstrate such things as yearly appreciation by emphasizing the value of individual features and pointing to neighborhood, city, county, state and regional trends.

  3.      FSBO’S are not objective about their homes and often do not prepare the buyers properly about the many facets of the home. 
Perhaps they don't see some of the physical characteristics that will turn buyers off.  Although a REALTOR can empathize with sellers' nostalgia, they won't allow emotion to thwart the sale. A REALTOR will show off the home to its best advantage by explaining what it takes to get buyers emotionally attached to it.
 
  4.      FSBO’S may spend money on needless repairs to improve their property.  In some cases, repairs or modifications, such as choosing the wrong color or countertops could be an over-improvement that would not translate into the increased marketability of the property. 
REALTORS know what should be repaired, painted, or changed, is best determined by their experience and objectivity in regularly dealing with buyers.

  5.      FSBO’S may lack negotiation skills. Owners may not be prepared to negotiate price, terms, amenities, and the personal items that will or won't be included in the sale, especially when emotion and attachment get in the way.  They may also lose buyers if they decide not to counter a low first offer because of a knee-jerk reaction that their home is worth much more. In addition, FSBO'S can lose their bargaining power if they follow up with buyers after a showing.  The buyers might think the owners are desperate to sell.  Using a REALTOR to mediate the negotiations will remove much of the emotion that can create conflict.

  6.     FSBO’S may not know how to get financing. 
 Although buyers are supposed to arrange their own financing, a REALTOR will probably help them with the loan process by recommending three competent lenders.  On their own, buyers may not find a loan they qualify for, and the sellers have to start the sales process all over again. Meanwhile, they've wasted valuable time by taking their home off the market.

  7.    FSBO’S are inexperienced in handling objections.  
Fielding objections professionally and effectively may be one of the most difficult of all selling techniques.   REALTORS know what objections or roadblocks buyers may raise and how to respond. 

  8.   FSBO’S lack advertising experience and exposure.  
Writing newspaper ads takes experience to ensure a ringing phone.  REALTORS know what types of ads draw responses in your area. In addition, REALTORS know that newspapers and fair housing groups are paying increased attention to legally incorrect ad copy. REALTORS can help sellers avoid using language that could get them into trouble or alienate prospects.  Most importantly a REALTOR has a time tested marketing program that will expose and sell your property to the widest possible market. 

  9.    FSBO'S have to change their schedule and personal life drastically. 
 Are FSBO'S willing to sacrifice vacations and weekends? Are they prepared for the volume of calls they might receive at all hours and the appointments that might not materialize? Will they be able to leave home knowing that they may miss the buyer?   Also the selling process can cause friction between spouses.  But the sale of a home doesn't have to be an unpleasant experience.

 10.    FSBO'S have job conflicts and aren't always available.
  Often, one or both of the decision makers are working or out of town at times convenient for showing or negotiating.  One spouse may not feel comfortable negotiating or showing the home without the other spouse and might therefore lose potential buyers.

 11.    FSBO'S may not have experience dealing with contracts and other forms as well as settlement responsibilities.  
Many sellers haven't had the training to prepare a sales agreement that's enforceable. For instance, they might not think to include an acceptance date on the contract, so they end up with an unenforceable document and a buyer who refuses to close. They may also use a preprinted form that doesn't include all the particulars relevant to their sale and neglect to get it reviewed by an attorney.   FSBO'S may not know how to comply with the legalities pertaining to the lead paint issues in the state of Massachusetts.  Once the agreement is drawn up, things may get even more complicated as the date of settlement and transfer of ownership approaches. A myriad of details and processes must be initiated and followed up so that there aren't any errors or delays or a lost sale.  REALTORS are full-time transaction coordinators just to keep on top of this detailed work.

  12.   FSBO'S Lack a source of serious, qualified prospects.  Many FSBO'S conduct limited marketing.  
Bulletin board notices, classifieds, and perhaps relying on friends and neighbors for leads.  REALTORS cull buyers from a larger and constantly renewing pool of prospects based on their farming activities, referral network and thousands of other agents and their networks using the multiple listing service.  And unlike FSBO'S, who have only one house to sell, a REALTOR can offer buyers more property possibilities, which brings more buyers to you.
           In addition, owners typically don't have the experience to determine buyers' needs and wants and qualify them. A REALTOR can suggest alternative financing, for example, REALTORS can help seemingly unqualified buyers become qualified. They can also show buyers how to reschedule assets and debts to make inroads with lenders.

  13.   FSBO'S must contend with lookers and other strangers. 
Real estate ads shake out many lookers and curiosity seekers who aren't qualified. With pre-qualifying experience, you're more likely to home in on prospects who are financially able to buy and who are interested in a specific type, style, size, and location of home. Perhaps the most unpleasant aspect of home selling for FSBO'S is that their FOR SALE sign may invite trouble. Unfortunately, thieves have posed as buyers to look for valuables, which they can later steal when no one is home. REALTORS reduce that risk by pre-qualifying callers to be as certain as possible they're legitimate. Another downside for FSBO'S in selling their own home is that they have to give their address to callers. History tells us that this can be dangerous. 
         Some prospects may be turned off when they see the exterior and drive away before viewing the interior.  As their salesperson, a REALTOR can pre-qualify prospects, drive them to the property to build rapport, and, if appropriate, prep them about a problem exterior so that they aren't surprised.  

   14.     Most FSBO'S don't realize buyers may also have a problem selling their home. 
In fact, a lot of FSBO'S take their home off the market assuming that the buyers' home will sell. But they do not know whether that property is priced right or whether it's in showable condition. Point out that besides protecting the sellers' interests in this regard, you can suggest trades, exchanges, guaranteed purchase plans, contingent agreements, or equity advances to help buyers help themselves.

  15.   FSBO'S may receive insincere offers from speculators or bargain hunters.
  Speculators may take unfair advantage of FSBO'S, who may have sold only a few homes in their lifetime, through the purchase price, expensive terms, a delayed closing offer, and improperly prorating the escrow, insurance, and taxes. They may even get the sellers to pay closing costs that are customarily paid by the buyers.

 The bottom line is that if you needed medical help would you call a doctor?  If you had complex taxes would you call a CPA.  If you had a major legal issue would you consult a lawyer.  There is a reason why over 70% of For Sale By Owners eventually end up having to use an agent to sell their property, many when it's too late.

SOME RAW FACTS ABOUT THE FSBO MARKET

The 2003 NATIONAL ASSOCIATION OF REALTORS^®' Profile of Homebuyers and Sellers shows that the number of consumers selling their home without a real estate professional stabilized at 14 percent in the first quarter 2003 after slipping to 13 percent in 2001. This was down from 16 percent in 1999 and a cyclical high of 18 percent in 1997.

However, 44 percent of buyers who purchased their home directly from an owner in early 2003 knew that seller in advance of the transaction, compared with 27 percent in 2001. Only 5 percent of buyers purchased directly from buyers they didn't know in advance of the transaction, down from 11 percent in 2001.

These findings are a clear reversal of previous trends in which more people attempted to sell homes on their own in a strong real estate market. Since each of the years above reflects a higher sales record than the previous period, the old adage no longer applies.

Several factors appear to account for the decline: the increasing complexity of the transaction process, with more disclosures and legal requirement than ever before; the amount of time required to market and show a property; and security concerns about the motivation of strangers dealing directly with owners and walking through their homes.

The typical FSBO (for-sale-by-owner) is 46 years old and has a median household income of $75,800 close to the $74,600 median income of those who use real estate professionals. However, the median For Sale by Owner selling price was $145,000, compared with the median agent-assisted transaction price of $175,000.

Since For Sale By Owner sellers do not use a real estate professional, they have to do their own marketing to attract potential buyers. Real estate professionals have an expertise in marketing that can help sell a home for more money in less time.

The latest NAR survey found that only 20 percent of FSBOs used the Internet as a marketing tool, 71 percent of home shoppers used the Internet in their search. Most buyers, 41 percent, first learned about the home they purchased from a real estate agent.

Because sellers are faced with a number of challenges, only half of recent FSBOs said they would sell their current home without the assistance of an agent, while many were unsure of what they'd do. The biggest problem areas for FSBOs were understanding and completing paperwork, preparing a home for sale, getting the right price and having enough time for all aspects of the sales process.

Real estate professionals assist both sellers and buyers with a variety of the details surrounding a real estate transaction. Real estate pros can help a home seller set a realistic price for the property and ensure the proper paperwork and various inspections are handled correctly.

In addition, real estate professionals are experts in marketing properties to attract qualified buyers. A broker or sales associate also can show a home more objectively than can a seller who is emotionally attached to the home and who might become unnerved by prospective buyers' critical comments.

The real estate pro also checks the financial capability and bona fides of buyers before allowing them onto a seller's property.