Tuesday, July 29, 2014

By-Owner Sellers Share the Secrets to FSBO Success

Saving the 6 percent commission they would have paid a real estate agent is a major factor in why so many people are satisfied they took the FSBO approach in selling their home. But there are other reasons why by-owner sellers embraced online services like ForSaleByOwner.com.

Here by-owner sellers share the secrets to their success and why selling their homes without an agent proved to be such a rewarding experience.

1. Use the Power of MLS. Fully 80 percent of buyers find their home through an MLS listing. Less than 24 hours after listing his five-bedroom, four-bathroom house in Frisco, Texas, Jeff LoParo had a buyer who met his $370,000 asking price.

2. Your Buyer Is Someone Like You. Roberta Billings says dogs have always been a huge part of her life, so much so that when Billings moves into a new residence, she makes sure to accommodate her two Great Danes and collie. When selling a home, Billings looks for dog-friendly buyers. Within a week of listing her latest home, she had an offer.

3. Make the Most of Your Space. Fort Myers, Florida, resident Laura Brown and her husband loved their roomy dining table. An agent contracted to sell the home ordered them to remove it. When the agent's contract expired, the Browns listed their home for sale by owner and returned the table to its place of prominence. The woman who bought the home loved that table so much that she asked that it be included in the sale.

4. First Impressions Count. Marcia Bennett knew when selling her home in Ocala, Florida, to be mindful of what consumers look for when inspecting used goods — so she gave her house a thorough once-over worthy of even the most exhaustive home inspection. "That's a powerful selling point," she says.

5. Sniff Out Buyers. Kathleen Henon knew from experience that pleasant smells captivate prospective buyers. Many years ago when she and her husband were looking for a home, they were entranced by one that smelled of chocolate chip cookies. They lost out on that house, but Henon realized she'd found a great selling tool.

6. Learn From Agent Mistakes. Gloria Menendez of Dayton, Ohio, has sold three homes. She used agents for the first two and learned she could have earned thousands more. So when she sold that third house, Menendez went the FSBO route. "There's so much information out there when it comes to pricing, showing and selling your home. You just have to do your research and trust your gut."

7. Cater to Special Tastes. Agents told foodies Linda Albright and her husband that when it came time to sell their Dallas home, highlighting its $85,000 custom kitchen was a half-baked idea. But the Albrights knew better. The house was bought by a young couple who loved to cook and used the dream kitchen as inspiration to start a catering business.

8. Spread the Word. Peter Fiore didn't even list on his local MLS because he knew he could get every penny of his asking price of about $1.5 million for his Manhattan apartment on his own. He found buyers through word of mouth and social media — and sold his home in a little more than a month for even more than his asking price. Fiore says he saved at least $75,000.

9. Accentuate the Positive. Thomas Nyle also owned a place in Manhattan: a studio in Greenwich Village. Like Fiore, this by-owner seller targeted his market with laser precision, but to buyers who don't own cars. He sold the studio to a schoolteacher who takes public transportation (or bikes or skates) around town.

10. Work It Out. Aaron Stanton customized his home to create the office of his dreams and used it as a selling point for like-minded individuals. Ironically, FSBO seller Stanton sold his home to a … wait for it … real estate agent who loved the office space.

11. Don't Be Afraid to Speak Up. Paula Ramos of Tampa, Florida, ignored conventional agent wisdom and shared with prospective buyers all the ways they could customize her home. A retired New York City cop bought Ramos' home — and turned the garage into his ultimate man cave.

12. Set Your Own Timetable and Be Flexible. Paul Lopez realized he was breaking many agents' rules by listing his Indianapolis ranch in the middle of winter. But the power of FSBO did not fail him and he sold in just four weeks. He also appreciated the flexibility that a by-owner seller has. He worked out an agreement with the new owners to move out gradually over the course of three months and even ended up selling them his old hot rod in the process.

13. Look Out for No. 1. Brianna Walker went the FSBO route and placed her two-bedroom Omaha, Nebraska, condo on the MLS after being less than impressed by the prospect of dealing with agents. Walker's winning strategy: "You have to be in constant contact with people because you never know which phone call or email is from the person who's going to buy your house." She sold her condo within three months for the exact price she wanted.

14. Break Rules When It Makes Sense. Paula Tiller broke them to her advantage when selling a two-bedroom home in a Cape Coral, Florida, retirement community. Tiller decided to keep her personal items on display. In fact, she says she went out of her way to place photos of her grandchildren on the mantle, the bookshelves and the nightstands. Her strategy worked: A couple moving south from New Jersey bought her home.

15. Understand What's Wrong With Your Picture. Accumulated stuff in unopened boxes from previous moves caused prospective buyers to hit a speed bump when touring FSBO seller Kathryn Vaughn's home. So she called a local women's social services agency and a junk removal company. "They came on the same day," she says. "I went from living like Fred Sanford to living like a normal person." She sold her (now neat and organized) home for her exact asking price.

16. Realize That It's Just Business. Risa Martinez of Milwaukee learned a valuable lesson as a by-owner seller. You can clean your home to within an inch of its life, you can point out its many attributes, but sometimes it just won't immediately click with buyers. "They are not rejecting you," Martinez says. "They just don't necessarily like what you're offering them. There's a perfect buyer out there, they just have to find you." Her perfect buyer found Martinez's home after it had been listed on the MLS for about five months.

17. Don't Fool Yourself. Erin Walton learned a lot selling four houses in the past 10 years — the first two with a real estate agent, the last two on her own. The biggest lesson: Be honest with yourself. When Walton listed a home in Joliet, Illinois, the house had some serious foundation problems. She offered to reduce her asking price to prospective buyers, but none would accept those terms. It was only after she fixed the issue that she received a concrete offer less than eight weeks later.

18. Sell at a Distance. Dustin Sullivan and his wife needed to sell their vacation condo in Sugar Mountain, North Carolina. They lived six hours away, so they put a lock on the door and provided the combination to agents who saw their MLS listing. After six months and a cash offer on their condo, the Sullivans bought a boat.

19. Improve the Odds. To sell their Las Vegas home, Rita Carr and her husband avoided the gambling motif so prevalent in area homes and instead focused their home-staging efforts on strategically placed floral arrangements. The second offer, which came from a buyer who appreciated the blooms, topped the Carrs' asking price.

And the biggest lesson...

20. Make the Connection. A recurring theme through all of these homeowners' stories is that they were able to make a personal connection with potential buyers better than any real estate agent could. That's where the power of FSBO came in and allowed these empowered sellers to reach like-minded buyers looking for just the right home.

Wednesday, July 23, 2014

Buying Foreclosures in Any Market

Joel Cone is a freelance writer based in south Orange County, California. For nearly a quarter century Joel's career — both as a journalist and as a marketing communications specialist — has focused on the residential and commercial real estate industries, as well as the legal community. After a decade as a staff writer for the Daily Journal Corp. group of newspapers, Joel was a regular contributor to California Real Estate magazine for the California Association of Realtors; was the original Orange County reporter for GlobeSt.com; wrote executive profiles for OC Metro magazine; and has been published in a number of real estate-related publications. 

There are many reasons why homes end up in foreclosure and a number of opportunities to purchase foreclosure properties at various stages of the process no matter what economic conditions exist at the time.

During the nation's most recent economic downturn foreclosure activity came in two waves: the first caused by the crash of both the stock market and the U.S. economy resulting in millions of homes losing equity and going "underwater," and the second wave caused by high levels of unemployment.

It would be a misconception to assume, however, that foreclosures only occur during bad economic times. The fact is that foreclosures never totally disappear in any real estate cycle. But buying them requires patience and tenacity.

Available Options to Purchase Foreclosure Properties
The foreclosure process consists of three basic stages, each of which presents homebuyers and real estate investors opportunities to purchase a home potentially below current market value. Those stages — laid out by the state foreclosure laws — include the pre-foreclosure stage, the auction stage and the bank-owned stage.

The Pre-Foreclosure Stage
Once the decision to foreclose has been made, the lender must record the borrower's default in the county where the property is located. In a non-judicial foreclosure state the paperwork filed is called a Notice of Default (NOD), while in judicial foreclosure states it is a Lis Pendens (LIS) — meaning "litigation pending."

To locate these homeowners in default, buyers can go to the county recorder's office and check out the default notices themselves; find a real estate professional who is familiar with the foreclosure process and has resources to garner that information; or subscribe to a service like RealtyTrac, which provides a listing of default notices for a monthly fee.

There are downsides to working in the pre-foreclosure stage. First, homeowners in default have the opportunity to bring the loan current. Secondly, if they can't afford to "cure the loan," you are potentially working with people who can be in a highly emotional state of financial distress and can therefore be unrealistic in their expectations.

For buyers who are willing to deal with highly charged emotional situations, working with distressed homeowners to find a viable solution to their financial problems by getting them out from under their mortgage may result in a successful purchase at a reasonable discount.

The Auction Stage
Once the pre-foreclosure period allowed by the state's law has passed, the foreclosing lender can set a date for public sale of the property at auction to the highest bidder.

This is the most difficult stage of the foreclosure process for inexperienced buyers to pursue foreclosure properties. These are all-cash purchases, and the competition is fierce as professional investors come prepared with cashier's checks to buy as many properties as they are interested in on any particular day.

For the uninitiated, it is a good idea to attend an auction to familiarize yourself with the process before trying to participate. With today's lower inventories, properties that do make it to auction typically end up selling for far less of a discount than they used to during the market crash.

Still, the auction process is a viable way to buy foreclosure properties. For those who want to pursue buying at this stage of the process, there are online sources such as Auction.com that provide lists of upcoming auctions — including date, location, time and amount of the opening bid. Remember to bring lots of cashier's checks with you!

The Bank-Owned Stage
Many times during the foreclosure auction no bidders are interested in buying a particular property for a number of reasons. Sometimes it is as simple as the opening bid is so close to the amount owned on the loan being foreclosed that is not enough of a profit margin to make sound financial sense.

Properties that do not sell to interested third parties at auction go back to the foreclosing lender as an REO (real estate owned) property. These bank-owned properties are then sold, in most cases, by real estate agents who have been pre-approved by the lender to represent them in the sale of the property. These properties are then listed on a Multiple Listing Service (MLS), making their availability known to a largest potential buyer pool possible.

Today's inventory of REOs is much lower than normal. With fewer properties available comes more competition and multiple offers – many times coming in at a price well above the list price.

Also, don't forget about U.S. government agencies. They are also in the business of selling off the REOs in their portfolios. For properties owned by Fannie Mae check out HomePath; for properties being sold by Freddie Mac check out the inventory at HomeSteps; and the U.S. Department of Housing and Urban Development (HUD) has homes in inventory as well. Check out the HUD website for REO properties for sale.

In Conclusion
Whether you are a homebuyer or a real estate investor, so long as you have the patience and tenacity to work the system, you can be successful in buying foreclosure properties in any market.

When it comes to buying foreclosures, however, the most successful buyers tend to be those who select one of the three purchase strategies — working either the pre-foreclosure, auction or bank-owned stages of the process – and then stick with it.

This information is provided by Auction.com, LLC, the nation's leading online real estate marketplace. Founded in 2008, the company has sold nearly $20 billion in assets since 2010. Auction.com has more than 900 employees and offices in Irvine and Silicon Valley, California as well as offices in Atlanta, Austin, Denver, Miami and Newport Beach. Visit us at www.auction.com, or on Twitter, Facebook and LinkedIn. 

Friday, July 18, 2014

Simple Staging Tips that Make Buyers' Dreams Come True

Paula Ramos has no idea how she accumulated so many magazine pages, newspaper clippings and website printouts, but she can tell you that they no longer fit in one box.

Or two, for that matter.

In fact, Ramos' collection of home decor ideas now fills three filing boxes stowed under the kitchen table in her Tampa, Florida, home. "I like to dream, as my husband says. I like to be ready to try something new and different, and all these clips come in handy when I'm feeling inspired," says the 31-year-old occupational therapist. "One of these days, I'm going to build my dream house, and I'll put ideas from a lot of these clips to good use."

Until then, Ramos says she's more than willing to tell others how to use their residential space, including buyers who have looked at the last two homes she and her husband have sold without an agent.

"One of the best things about not working with a real estate agent is you don't have to necessarily play by their rules," Ramos says. "I know all the conventional wisdom, and how sellers are told to downplay the cool things they've done with their space, or the cool things they want to do, but if I'm showing my house, I want to give my potential buyers some ideas. I want to see that spark in their eyes if I suggest something or show them a picture of something that might work."

Ramos says she always asks the buyer a few questions before she schedules a showing. Nothing too intrusive, she adds, mostly just the basics. "I just ask how many people might be moving in, what their ages are, real baseline stuff," Ramos says.

The answers to those questions give her a place to start when she begins showing those prospective buyers around. "It's easy to get people to tell you how they'd like to use the house, or how they use the house or apartment they live in now," she says. "When I walk into a den, I don't say it's a den to a family with small kids. I say it's a game room or a playroom or a family room. Then I might show them a picture I cut out of a magazine and say, 'If we had kids while we were here, I was planning on doing a chalkboard wall right here because there are no windows and it's a great big open canvas.'

"All of a sudden, they see your house as their house, and that's pretty much the goal."

Ramos says her most successful selling suggestion occurred last year, when she and her husband sold their home in Sarasota before moving to Tampa. "Our house had a nice big garage that we used for our cars, but there are some people in Florida who use their garages as an extended living room," she says. "I found these great photos of man caves online and basically laid out how our garage could be a great place for the man of the house to hang out with his friends."

The buyers agreed, adding a portable air-conditioning unit, indoor-outdoor carpeting, a big-screen TV, a sound system, a leather couch, a few chairs and a poker table before they even moved in. "The guy was a retired cop from New York who wanted a place to watch Yankees games with his friends," Ramos says. "It's a perfect spot for him."

Read more: Home Improvement Projects with the Biggest Payoff

Thursday, July 17, 2014

6 Simple Summer Selling Tips for FSBOs

This unique Kansas home is listed on ForSaleByOwner.com.
The summer season often means jam-packed schedules. School vacations, backyard barbecues and baseball games don't leave a lot of time left over for preparing, marketing and selling your home. Following these six easy tips can help make summer selling a breeze.

1. Hit the Refresh Button. Midsummer is the ideal time to add beautiful photos to your property ad. Pick up our tips for crafting a picture-perfect online listing.

2. Make Showings Count. It's prime open house season, so make sure visitors leave with a positive impression. Get your home ready for a stellar showing with this printable checklist.

3. Don't Break the Bank. Spruce up your home before a sale without going broke. Check out these tips for staging on a budget.

4. Play Nice with Buyers' Agents. Welcoming real estate agents who bring buyers to your door is just good business sense. Here's how to create a pain-free and profitable relationship with buyers' agents.

5. Consider the MLS. Maximize your listing's exposure to reach more buyers during the summer selling season by getting your home on your local Multiple Listing Service.

6. Tap Into the Social Network. Each week, we showcase one home on ALL of our social media pages. Send us a Facebook message, or email socialprofiles@forsalebyowner.com with your listing ID and a few sentences about what makes your home so special. We'll be in touch if your home is chosen!

Attention All Successful Home Sellers: Did you sell a home on your own between January 1 and May 14, 2014? Congratulations! You're eligible to enter our Home Seller Sweepstakes to win up to $25,000.

Wednesday, July 16, 2014

Due Diligence: 10 Steps to Take Before You Buy

Rick Sharga is executive vice president of Auction.com. As one of the country’s most frequently quoted sources on foreclosure, mortgage and real estate trends, Sharga has appeared on NBC Nightly News, CNN, CBS, ABC World News, CNBC, FOX and NPR. He has briefed government organizations such as the Federal Reserve and Senate Banking Committee and corporations like JPMorgan Chase, Citibank and Deutsche Bank on foreclosure trends, and done foreclosure training for leading real estate organizations. Sharga shares his advice on how to protect yourself before you buy any type of property.

Due diligence is one of the most critical periods in any real estate transaction. But many buyers cut corners in the due diligence process in their haste to have their bid accepted. Here are 10 due diligence steps you shouldn't skip, especially if you're considering a foreclosure, bank-owned property or short sale.

1. Do a title review. Always get a preliminary title report on any foreclosure property you're interested in buying, and look for any secondary liens or tax liens. Make sure there aren't any hidden liens or encumbrances on the property that will blossom into unpleasant surprises later.

A lot of paperwork got lost during the real estate crisis as companies like New Century went through bankruptcy. The courts are still unwinding cases where people sold properties they didn't own. That's why it's so important to ensure that the title is clear and that the property really is for sale. You'd be surprised at how many investors decide they're not going to get title insurance, but it's just not worth the risk.

2. Inspect the property thoroughly. You may not be able to get inside a foreclosure property that's still occupied. But if you can, have a licensed professional inspector review the house for evidence of structural defects, water damage or other major problems.

But most importantly, make sure everything is functional. I know of one case where an owner who had lost his home to foreclosure did what some owners do in that situation: He ripped the wiring out of the walls and took the piping. But then he did something different: After he was done, he put up new drywall. So when they did an inspection of the house, it looked fine, but there was no wiring or piping behind the walls.

3. Consider the surrounding property and neighborhood. Don't confine your inspection to the structure itself. Look around at the landscaping. Does the property back up against a bank that has no vegetation? Will the drainage work in the event of a heavy storm?

Check out the surrounding neighborhood as well, as its condition can affect the value of your property. Do you see pride of ownership in the other homes? Or do you see abandoned properties in the area? And note that abandoned houses aren't just a problem in "bad" neighborhoods. Because of the recent housing crisis, you might find abandoned or unfinished homes even in relatively new housing developments.

4. Examine recent sales activity. Look at how many days homes have stayed on the market. Are properties moving quickly or languishing? What are the buy vs. rent trends in the neighborhood? How many of the homes sold were distressed inventory? Too many sales overall could suggest that people are leaving the neighborhood — see if there's an underlying reason why.

5. Review price trends. Are they going up? Have they plateaued? How do they compare to what they were during the last peak? That information should give you an idea of whether property values are going up or down, and help you figure out what you should be spending.

6. Find out how many homes in the area are in foreclosure. Too many suggests price weakness over the near term. Are there a disproportionate amount of distressed properties in the area? Before the crisis, only about 1 percent of properties went into foreclosure in any given year — or one home out of every 100. In today's environment, you might see maybe three or four. But more than that might indicate a problem and a reason the property is priced as attractively as it is.

7. Look at the upside potential. Are you near a good school? Are you near a transportation hub? Are there new businesses that are popping up or being launched in the area? Those are potentially all good upside opportunities for you. Conversely, has there been a plant shutdown recently? That will probably lower property values. The local chamber of commerce can supply some of this information; it also helps to have some local connections.

8. Go to open houses. See what the standard of quality is in other homes that are currently for sale. Are tile countertops fine, or do I need to install granite or do other home improvements? This is a good thing to do whether you're planning to flip the home or rent it. It doesn't mean you have to overspend. But you want to meet the neighborhood standard or be slightly above it, and spend as little as you can to attain that standard.

9. Research zoning requirements. If you're going to rent out the property, consult with a real estate attorney to see if there are any local ordinances or laws that might make it difficult to be a landlord. Some areas aren't zoned for rental property. Some developments limit the number of rentals in the neighborhood; others have limits on the number of adults who can live in a single house, which could be a problem if you plan to rent to people who want to room-share (like college students).

10. Check your liability insurance. If you're going to be a landlord, check with your insurance agent to find out how much liability and property insurance you'll need.

While these 10 steps may sound like extra work, they'll pay off in the long run. Whether you're going to occupy it, flip it or rent it, real estate is one of the most expensive investments you'll ever make. It makes sense to protect it.

This information was originally published on Auction.com, LLC, the nation's leading online real estate marketplace. Founded in 2008, the company has sold nearly $20 billion in assets since 2010. Auction.com has more than 900 employees and offices in Irvine and Silicon Valley, California as well as offices in Atlanta, Austin, Denver, Miami and Newport Beach. Visit us at www.auction.com, or on Twitter, Facebook and LinkedIn.

Tuesday, July 15, 2014

How FSBO Sellers Work With a Buyer's Agent

Although a few by-owner sellers are able to completely bypass agents, it's generally in your best interest to not only seek them out, but use them as partner who, like you, are leveraging the power of the local MLS.

"The key to these relationships is that it's all about cooperation," says Derek Morgan, manager of broker services at ForSaleByOwner.com. "Licensed brokers join together and create a local MLS for the sole purpose of creating a consistent marketplace where sellers can offer homes to buyers," Morgan explains. The only difference with FSBO sellers who list on the MLS is that they pre-pay their agent for specific services.

A Marketplace of Cooperation
Because more than 80 percent of homes sold are listed on the MLS, it makes sense for a by-owner seller to have a presence there — and services like ForSaleByOwner.com make it easy and inexpensive to do so.

"Even when deciding to sell on your own, you have the opportunity to use the MLS provided that you understand it's a marketplace of cooperation," Morgan says. In doing so, the FSBO seller gains access to an additional pool of buyers represented by agents.

By-owner sellers have a responsibility to follow established MLS practices, Morgan emphasizes. In terms of your MLS listing, this means keeping it current to indicate whether your home is "active," "pending," "contingent" or "sold," and ensuring that the list price itself reflects any changes you've made.

Far from undermining a FSBO seller's autonomy, agents perform a valuable service in recommending that prospective buyers look at the listed property, Morgan says. As an added bonus, these are likely to be good leads, since agents are in the business to make money and don't want to waste a seller's time — or their own.

How Agents Funnel Buyers to FSBO Sellers
First off, Morgan reminds by-owner sellers that the benefit of listing on the MLS means you'll reach both types of buyers: those who don't yet have agents and those who have committed to working with one. Keep in mind that 42 percent of buyers look for homes online as a first step, according to the National Association of Realtors.

Although it's possible to sell a home to an unrepresented buyer, the fact that 88 percent of buyers purchase their home through an agent (according to the National Association of Realtors) means that most FSBO sellers will be working with agents at some point.

Morgan says there are two key times when this is especially important:

• When, based on contact information in the MLS listing, the buyer's agent will contact the FSBO seller to arrange for a showing.
• Then, after the showing, when the seller will ask the prospective buyer's agent to let them know when and if an offer will be submitted to the flat-fee broker handling the FSBO listing.

But that's not all a by-owner seller needs to do. "A FSBO seller should manage their buyer leads the same way regardless of whether they're dealing with an agent," Morgan says. "This means collecting contact information and then reaching out after the showing."

Questions to ask prospective buyers and their agents include: When are you looking to buy? How often are you looking? How is your home search going? What type of home are you looking for? Is my home the best you've found so far and are you considering submitting an offer? Or should I cross your name off my list?

"The answers to these questions determine how often you contact them," Morgan says. "And re-contact everybody whenever you update the listing price to see if that increases motivation."

Keep It Professional
The real estate business is built on networking and maintaining relationships, so the vast majority of professionals a FSBO seller meets will be exactly that: professional.

"Still, the by-owner seller needs to be aware that not every agent is going to view their model of selling favorably," Morgan says. "Your decision to sell and show your property yourself might be a new concept to a buyer's agent."

His recommendation is that FSBO sellers focus on answering questions about their property and making sure that prospective buyers and their agents know what your home has to offer.

In the unlikely event that a buyer's agent becomes assertive in his or her dislike for the FSBO process, Morgan says that the seller should stay calm, not allow themselves to be baited and to stay on point.

He also reminds FSBO sellers that they are under no obligation to discuss their relationship with their flat-fee listing broker with a buyer's agent.

You Can Do It
"At the end of the day, a real estate transaction can be easy — even a FSBO," Morgan says. He points to the many resources offered by online services, which are a great guarantee against the unknowns.

"Don’t be intimidated," he says. "Selling a home yourself can be a simple, financially rewarding process. It's simply a matter of following time-tested steps, conducting yourself as professional and realizing that if you've chosen to work with a full-service online service, experts can talk you through any stressful moments."

Read more: The Best Ways to Reach Home Buyers Online