Real Estate Investing

Perhaps one of the most horrible things I’ve ever heard from a fellow real estate agent was, “What’ll it take to get you to write a contract for this house today?”

The listing agent didn’t place a lockbox on the door so he could be there while the house was shown. The agent followed us from room to room, working hard to sell the home that was hungry for some tender loving care. To his credit, the agent knew the home was worth about $10,000 less than the neighborhood because it did need new flooring and paint. But when the showing ended with the used-car-salesman “What’ll it take…” question, frankly I was rather embarrassed.

In today’s market, agents do seem to be swimming against the current. Like agents, home owners seem to be desperate to sell. One man offered to name the buyer of his home as the beneficiary on his life insurance policy - collectible if the seller died of natural causes within the next 10 years.

The insurance policy would only remain valid as long as the death is natural or by accident. There should be no interference on account of either party or the deal would be null and void. What are the odds? Fanning said he has no current health problems, but both of his parents died before age 79, as did his sister. He even indicated that he would be willing to disclose his medical records to the future buyer.

What I saw this weekend in no way compares to that extreme, but it was a first for me. I held an open house on Sunday for one of my colleagues. Another home was also open across the street. A buyer came in who was already working with another agent, so I courteously showed her around and gave her a packet of all the homes available in the subdivision. I suggested that her agent make appointments to show other properties of interest, but added the home across the street was also open if she wanted to see it.

She walked across the street and I busied myself turning off lights and packing up. Ten minutes later, I glanced out the front window and saw the agent across the street firmly planted in the front door, blocking the buyer from leaving. I loaded my free pens, notepads, and calendars, locked the side door and closed all windows. I then looked out the front window again and noticed the agent was still blocking the buyer. I took a picture with my camera phone, though you can only see the green skirt in the doorway.

That open house agent kept the buyer there for at least 25-30 minutes. I was amazed at her audacity and don’t believe I’ll be trying the linebacker tactic to sell a home.

As of 2005, more than 85 percent of first time homebuyers started their search online. This could be directly related to the number of homebuyers under age 25 (the Internet generation) increasing to 14 percent of the total market in 2005. If your property is not on the Internet, your chances of success are vastly decreased. And once it’s listed on the Internet, you must have good pictures to go with it.

Listing with a realtor can get your property included in the Multiple Listing Service. The MLS is starting ground for many a prospective homebuyer. Realtors can help in overall marketing as well, and may even have a ready, willing and able buyer waiting in their back pocket. For owners wanting to sell without a realtor’s assistance, FSBO.com or ByOwner.com can be of great assistance. These sites offer such things as mortgage partners and yard and directional signs. They are among the most well-known and popular of FSBO search sites.

Believe it or not, Craigslist has also become a hotbed of real estate activity. Don’t bet the farm on this one, but it’s a nice supplementary site because the listings are free and get a lot of looks, particularly from younger shoppers. Because the Internet is so popular, clever, eye-catching wording is key to raise your home ad above the rest. And did we mention quality photos? It’s a new, highly digital world - make it work for you.

For Sale By Owner is often viewed as the smartest way to make more money on your home. Eliminating realtors’ fees makes sense, right? How hard can it be to schedule and conduct showings of your own house? Well, FSBO transactions are actually a lot more difficult than you can imagine at first glance. It is important to weigh the pros and cons before committing one way or the other.

FSBO PROS

Control: You have control over when people will be in your house. No more last-minute, surprise visits.

Enthusiasm: Nobody is as enthusiastic about selling your home as you are. With the current glut of houses on the market, realtors may be distracted and spread thin.

Competitive: With the savings on seller’s agent commission, you can offer a slightly more competitive buyer’s agent commission to entice more foot traffic.

No pressure: You are under no pressure to reduce your asking price, although this can be a double-edged sword if you priced too high to begin with.

MLS listing: Now is the most glorious time to do FSBO because you can get an MLS listing through a flat fee broker, without relinquishing control.

FSBO CONS

Fewer contacts: A realtor, particularly a well-seasoned veteran, will have more contacts in the market and may even have the perfect buyer waiting in the wings.

Less expertise: A realtor knows all the tricks to sell a home. Again, this is particularly true of a well-seasoned veteran who has been on the housing market roller coaster ride before.

More work, less time: FSBOs are a ton of work and stress. You must schedule the showings, hold the open houses, coordinate marketing and research the market to make sure you are pricing competitively. You must also handle the oft-intimidating negotiation phase all by your lonesome.

Who’s in your corner? FSBOs have a reputation for being underpriced, another reason to do research before deciding the asking price. As a result of this perception, FSBO sellers may be seen as easy targets to be taken advantage of. Have an attorney, banker, property inspector and appraiser all in on the process to protect yourself. The first two will help during the closing phase to ensure legalities and financial matters are in order. The latter two will help back up and justify your asking price.