ForSaleByOwner.com's Predictions for the 2010 Real Estate Market

ForSaleByOwner.com not only helps connect sellers and buyers through a host of real estate tools and resources, but we are also relied upon by the real estate media to share our thoughts and opinions on the real estate marketplace.

As such, we developed our "Top 10 Predictions for the 2010 Real Estate Market" and shared it with reporters throughout the country. As consumers have become more educated about real estate, we'd like to share our thoughts with our blog followers.

Among our predictions are an increase in sales volume, a decrease in home prices, another increase in buyers using the Internet to search and successfully find their next home, and more home sellers using Internet-based resources to price, market and sell their home without the expense of paying commissions to a real estate broker.

We feel that the behavior of the real estate consumers will continue to change in 2010. More real estate data and information is available through numerous online resources and consumers will rely more on the Internet than real estate agents to buy and sell their homes. Sellers will resist paying real estate commissions and will instead look to ‘by owner’ selling alternatives, especially as falling home prices are motivating sellers to retain as much of their home value as they can as they sell their house.

ForSaleByOwner.com’s Predictions for the 2010 Real Estate Market

1. Overall homes sales – existing home sales and financially distressed homes – stabilized and slightly increased in 2009. Mortgage rates should remain low in 2010 and the extension of the first-time homebuyers tax credit should help the housing market. Prediction: In 2010, all home sales should see a slight increase in volume of 1-2%.

2. The median home sales price was $221,900 in 2006 and fell to $219,000 in 2007 and $198,100 in 2008. Median home sales decreased again in 2009 and will likely end up in the mid $170,000 range. Foreclosed properties and other distressed sales, with their severely discounted prices, helped to lower the median home price in 2009. Prediction: Distressed properties will continue to dominate home sales in 2010 and will keep pricing pressure on homes and they will fall approximately 4-6%.

3. According to the National Association of Realtors (NAR) 2009 Profile of Home Buyers and Sellers report, 36% of buyers found the home they purchased by first seeing it online and 36% of buyers found the home they bought through a real estate agent. The Internet and real estate agent as the sources for finding a home have trended in opposite directions annually since 2001, when 48% of buyers found their home through an agent and just 8% found it on the Internet. Prediction: In 2010, for the first-time ever, more people will find the home they purchase by seeing it first on the Internet compared to those who first learned of the home through a real estate agent.

4. Due in part to the $8,000 tax cut for first-time homebuyers, first-timers comprised nearly 50% of all home sales in 2008. Prediction: The extension of the $8,000 tax credit to June 2010 will attract more first-time homebuyers into the market and they will continue to be the most common type of homebuyer in first half of 2010.

5. According to NAR, 90% of all buyers use the Internet as part of their home search, up from 87% in 2008, 84% in 2007 and just 71% in 2003. Prediction: In 2010, more than 90% of all homebuyers will use the Internet to search for a home.

6. According to NAR, home sellers who sell their home “by owner” sell their home in six weeks while those who sell it through an agent sell the home in 12 weeks. NAR also discovered that the “by owner” seller achieves a sales price that is 97% of their asking price, while an agent-assisted seller gets 95% of asking price. Prediction: In 2010, “by owner” sellers will continue to sell their home quicker and for closer to asking price than agent-assisted sellers.

7. In 2000, there were 756,000 members of the National Association of Realtors. As the housing market boomed in the early part of the decade, its membership grew to a peak of 1.37 million members in 2006. People have left the profession as the market declined and NAR’s membership now stands at 1.13 million. Prediction: There will be fewer than one million real estate agents in 2010 due to increased competition for listings and as the Internet makes it easier for people to sell and buy homes without an agent.

8. Real estate agents have historically lowered their commission rates during a seller’s market and increased their rates during a buyer’s market. Prediction: Real estate commission rates have been approximately 5.2% the past couple years and will rise closer to 6% in 2010.

9. As home values have declined, more homeowners have realized that paying commissions to get their home sold decreases the amount they receive even further. Prediction: More home sellers in 2010 will explore other alternatives to paying commission and will choose to sell their home “by owner” to retain more of their home’s value.

10. Studies from Northwestern and Stanford universities have found that people who sell their home “by owner” are as effective as agents in maximizing the sales price of their home. Consumer Reports magazine found that “by owner” sellers get closer to their asking price than agent-represented homes. Prediction: More home sellers in 2010 will utilize Internet-based tools and information to compare recently sold homes and price their home more effectively.

Industry Data Shows FSBOs Sell Quicker & Closer to Asking Price than Agent-Represented Homes

Tucked away in an annual report from the National Association of Realtors (NAR) were statistics and data that compared selling through a real estate agent versus selling "for sale by owner." The findings would make any real estate agent cringe and any home seller gain more confidence in selling their own home.

NAR's report (The 2009 Profile of Home Buyers and Sellers) found that people who sell their home on their own are able to sell it, on average, in six weeks, while it takes an agent double that time (12 weeks) to sell a home (see above image). The report also found that “by owner” sellers received 97% of their asking price on average, while those represented by an agent got 95% of their asking price on average. Considering that the goal of any home seller is to sell a home for as much money as possible and as quick as possible, this report is strong evidence that selling "by owner" is a smart choice for home sellers.

In addition to selling quicker and for closer to asking price, selling FSBO also allows the home seller to save on commission. Real estate agents typically charge a commission equal to 6% of a home's sales price, or $18,000 on a $300,000 home. As home prices have fallen, more sellers are quickly realizing that real estate commissions are costing them more of their home's value.

ForSaleByOwner.com has seen double digit growth in the second half of 2009 and our extensive real estate resources & tools help customers price, market and sell their home in an effective and cost-saving manner. Use our "Home Seller's Checklist" to learn how to become a "for sale by owner" home seller.

FSBO Fact: Agents are not lawyers

I did an interview the other day with a television station out of Ohio. During our conversation, he asked how do sellers handle legal paperwork and questions. I simply responded, we recommend all sellers and buyers have legal representation to limit and avoid legal risk and to make the closing of your sale much easier. He then asked if Real Estate Agents handle legal documentation and questions for their clients.

Unless and a Real Estate Agent is an attorney, they should not offer legitimate legal advice during a close.

Fact 1: Real Estate Agents are not lawyers so they can not provide buyers and sellers with binding legal advice. Meaning if something were to happen during the close process or post close, you the buyer or seller are on the hook.

Fact 2: Home sellers and buyers pay for any legal representation regardless of whether they are working with a real estate agent or not.

Homebuyers Tax Credit Extended to June 2010

Uncle Sam is giving more homebuyers a tax break. An $8,000 tax credit for first-time homebuyers, which was due to end on November 30, has been extended by the federal government until June 2010. The IRS estimated than 1.4 million people have taken advantage of the tax credit thus far and the extension will undoubtedly attract more first-timers to buy homes.

In more good news, the tax credit also extends it to those who already own a home. A new $6,500 tax credit is being made to attract repeat homebuyers to trade up and purchase their next home.

All real estate transactions must close by June 30, 2010 in order to reap the tax credit. In addition, buyers must meet certain income limits. Single buyers who make up to $125,000 will qualify, as do married couples with a combined income of $225,000 or less.

Click here to visit a section of the IRS website that provides additional information about the tax credit and specific tax forms that a homebuyer will need to get the tax credit.

Let For Sale By Owner's sell in peace -

Yesterday, I listened to a customer tell one of our wonderful customer service representatives that he was tired of having Realtors call him 5 times each day trying to scare him, telling him he will fail, asking to list the house, etc. Simply put, this is childish activity and down right unethical. I understand agents need to make money but they should not "scare" people into doing something - it is not good business and it is morally wrong.

For Sale By Owner customers have the right to sell their homes without an agent AND without being bombarded with scare tactics. This would be like eBay.com telling someone they can not sell their furniture at their Church Bazaar (or garage sale). Or, a travel agent calling a customer and telling them they will not pick the right hotel at the right price at Walt Disney World when they book on-line, without an agency. Or stock brokers telling good, hard working citizens they can never buy and trade their own stocks on-line, that it is too dangerous!

Life has risks. I understand this, as do our important and respected customers on ForSaleByOwner.com. Risks bring reward. These hardworking citizens are empowering themselves to be successful and improve their financial security. So please let every For Sale By Owner seller - regardless of where they are advertised - sell their home in peace. Thank you.

Driven By First-Timers, Home Sales Show Dramatic Increase

New data from the National Association of Realtors found that in the month of September, which is the latest data available, existing home sales increased 9.2% from September 2008. While this is great news for the housing market as this is the highest increase we've seen in two years, the increase is likely due to the fact that the $8,000 tax credit for first-time home buyers is expiring November 30 and these buyers are racing to close on their home sale. In fact, early estimates are that first-timers have comprised 45% of all home sales thus far this year.

Unless the tax credit is extended, we suspect that October and November figures will also show increases and that we'll see a noticeable drop in December.

Home sellers, especially with homes geared for first-timers, should keep close attention to housing news regarding the tax credit. We'll keep you informed here as well, but we've found that the most successful "by owner" home sellers are aware of the latest news affecting the housing and mortgage industries. Not only because buyers are more confident working with such knowledgeable sellers, but because sellers who are aware of the latest trends are more likely to market and accurately price their home to attract qualified buyers.

Mortgage Rates Dip Below 5 Percent

Freddie Mac has just reported that the average 30 year fixed mortgage rate was 4.87% for the week ending Thursday, October 8. It's the lowest that mortgage rates have been since the spring. For a $250,000 mortgage, the monthly payment at a 4.87% rate is $1,322. The 30 year fixed rate was 5.94% last year at this time, or a monthly mortgage payment of $1,489 on a $250,000 mortgage.

Buyers and those who want to refinance are not the only people interested in low rates. Sellers need to keep track of mortgage rates because rate changes will make their home more or less affordable. Real estate agents typically contact home buyers who are sitting on the fence to alert them to low interest rates, and "by owner" sellers should do the same. The smart "by owner" seller should take some time this weekend to call or email people who have showed interested in their house and let them know about these low rates. Buyers will appreciate that you are helping them save money in today's economy.

Click here to get started on getting approved for a mortgage.

Selling For Sale By Owner - Yes you can!

You - anyone - can sell their home "by owner". I had a conversation with someone this week and they said "I thought you had to use an agent" to sell your home.

FACT: Every consumer has the right to buy and sell property without using a real estate agent.

Sadly, many consumers are mislead to believe there is some special law or policy which states they have to use an agent during the buying and selling process. Ten (10) years ago, information was controlled by agents which lead people to believe they had to work with them. Today, the internet and easy access to every key piece of information to help you - the consumer - buy and sell property is at your finger tips.

About 4 years ago, an independent study (Real Trends) found out about only 50% of consumers were aware of the For Sale By Owner method of selling their home. I hope during the past 4 years this has improved and made more people are aware you have the right and greater opportunity to sell via the For Sale By Owner method.

Every consumer has the right - and more tools today - to sell and buy your home and to save a lot of money. Empower yourself. Empower your friends and neighbors. Make sure they know they have a powerful choice to make which can provide them financial independence by selling For Sale By Owner.

$8,000... Time is Running Out!

As any first-time home buyer probably knows, one of the best deals in today's market is the $8,000 tax credit that the government is offering to people purchasing their first home. According to figures from the IRS, it has been very successful as more than 1.4 million people have used the tax credit thus far.

The home buyer has to meet certain guidelines in order to qualify for the tax credit (click here for specifics), but most importantly the real estate transaction has to close by November 30, 2009. That date is quickly approaching, and prospective first time home buyers should not let this opportunity pass, especially since there have not been any strong signs that the federal government will be extending the deadline.

Choosing a good real estate attorney, as well as getting pre-approved for a mortgage, will help ensure that you will be able to close on your dream home in time.

Existing Home Sales - August, 2009

Yesterday the National Association of Realtors reported "existing home sales" dropped 2.7% from July. This is no surprise and should not be a shock. For the next 15-18 months, we will see months of increases along with months of decreases. Meaning, the industry as a whole will not see 12 straight months of non-stop increases. The weak economy, unsteady housing market, weak job prospects, and foreclosure volumes will combine to make the housing market uncertain and a bit unpredictable.

That said, I believe consumers have the opportunity and power to sell their properties if they know and understand their market. Today, more than ever, consumers who sell their home via the For Sale By Owner process have more access to resources, knowledge and information to correctly price their home. In this market, the consumer should monitor home inventory on a weekly basis and follow these basic steps:

• What new homes (similar to your home) decided to sell this week?
• What are the prices of homes similar to mind?
• Visit your competition - see what "selling" features they have.
• Understand how many foreclosures are listed in your neighborhood (this will likely lower final sales prices but check the price of these properties too.
  
• Finally, find out what homes similar to yours, sold for in the past month or two.
• Note: Every consumer has access to this information via the internet - it is freedom of information and quite empowering.
  

In this market, selling For Sale By Owner gives you and extra 6% of pricing power against your competition. Example: If you competition is listed at $300k, price your home at $295k. Your competitor who is using an agents will only take home $282k ($300 - $18k in commissions) so you come out way ahead.

Build confidence & empower yourself -

FSBOs Finding Success in Selling Own Homes

As previously discussed, the real estate brokerage industry has highlighted the benefits of selling "by owner." The average ForSaleByOwner.com seller saves $12,750 in commission and utilizes our online marketing tools to attract buyers and get their home sold. Here's what some of our recent sellers have told us about their experience with ForSaleByOwner.com.

"Awesome service ... in today's economy and market, people are on the lookout for the best deal for the money. ForSaleByOwner.com is just that deal! Thanks for helping me sell my home!" - Jarett in Cabot, Arkansas

"Nothing negative to say. Placed the ad on forsalebyowner.com on Sunday and received an offer on Monday. Can't complain about that!" - Bryan in Cary, North Carolina

"We got several calls from interested buyers. More than we did when our home was on the market with (a Realtor) for 5 months. We have been speaking nothing but good things about your service and will continue to talk you up. We will be doing this again. I guarantee it! " - Tania in Converse, Texas

"Extremely pleased with service. Saved over $10,000 in Realtor fees! Would highly recommend!" - Patrick in North Olmsted, Ohio

"We were very satisfied with the service. It just shows that selling a home on your own is much easier than the use of an agent of which most had no clue on how to price in this market." - Edward in Jersey City, NJ

"Great service, great product, very effective. I had a purchase and sale agreement within two weeks. Thanks." - Ethan in Veradale, West Virginia

Tips on How to Price a Home

A home's asking price is one of the first pieces of information that buyers will want to know about any home on the market. If sellers price it too high they risk scaring potential buyers away. If it's too low the sellers risks risk losing money. In order to price a home accurately, a "by owner" seller has to become educated about the local real estate market. Doing so will allow the seller to set an asking price that will compete favorably against other comparable homes.

But don't worry, it's easy to do if you just follow these simple steps:

1. Know the Competition: Visit real estate websites and drive through your local area to search for homes for sale that are similar to yours in size, number of bedrooms & bathrooms, lot size and square footage. Educate yourself about their asking prices and, especially for condos, calculate the price per square foot. Trulia.com will do most of this work for you and allows you to print out a list of comparable homes, but you'll also want to visit Realtor.com and ForSaleByOwner.com to get a more complete list of available homes on the market.

2. Visit Open Houses: Now that you know what's on the market, visit as many open houses as you can in order to find out how your home compares to others. Your goal is to learn as much about those homes as possible, such as upgrades and renovations to the kitchen, bathrooms and bedrooms.

3. Learn About Recently Sold Properties: Your next step in educating yourself about the local market is learning how much homes have sold for in the recent past. Home sale information is public information and can be found a number of ways. Your county clerk's office and/or local town hall can provide you with this data, but the Internet has made the task even easier. Trulia.com and Zillow.com each have a "Recently Sold" feature that will list all information about properties that have sold near any given address.

4. Get a Starting Point: For a simple, cost-effective way to get a ballpark range of how much your home is worth, consider getting an Automated Valuation Model (AVM). Similar to a real estate agent’s Comparative Market Analysis, an AVM will compare your home to similar nearby recently sold properties. The AVM won’t know if your home has an upgraded kitchen, finished basement or new roof, etc., but it will give you a suggested range to price your home. The AVM will also provide you with a list of nearby recently sold properties. ForSaleByOwner.com offers an AVM tool that is available here.

5. Evaluate Your Research: Now that you have information about homes currently on the market, data on recently sold properties and a price range, you have all the data you need to compare your home to others in your neighborhood and local area. Evaluate the information you have learned and ask yourself how your home stacks up with the others. Be honest. What condition is it in and how does in compare in location, features and aspects like a remodeled master bathroom?

6. Live in the Now: One of the biggest mistakes sellers are doing in today's market is pricing their home at price points of one, two or three years ago. The national median home price has dropped more than 15% in the past 12 months (in markets in CA, FL and AZ the median home price has fallen by more than 20 percent!), and those that price their home too long will just see it sit on the market. The homes that are selling today are those that are priced competitively to other homes are on the market, providing buyers with the sense that they are getting "a good deal."

7. Take Advantage of Being "For Sale By Owner": Owners of homes being sold through a real estate agent will have to fork over expensive commission fees equal to 5-6% of their home's sale price (or $18,000 for a $300,000 home). Or, in other words, the seller of that $300,000 home will only "pocket" $282,000. As a smart "for sale by owner" home seller, you won't have that expense and -- depending on how quickly you want to sell -- you have the unique ability to price your home anywhere in that $282,000-$300,000 range and still come out ahead financially compared to sellers of similar homes. You'll also be able to get more buyers as well because they'll be attracted to your home's asking price.

8. Set the Price: The time has come. You now have a complete picture of your real estate marketplace. Set the price using all the information you've learned through the above steps.

Congratulations! You have reached a major milestone in your home selling process. Not only have you arrived at an asking price, you have become an expert in your local real estate market. Prospective buyers will be impressed with your sense of knowledge and honest assessment of your home's value, and you'll be able to communicate about its strengths and weaknesses as compared to other homes in your neighborhood, town and area.