FSBOs (Homes for sale by owner) aren’t just growing in popularity in the States. Turns out, giving power back to the buyer is becoming a global trend. Take a look at these recent articles, all showcasing dissatisfaction with the current real estate models:

NEW ZEALAND

“The real estate industry cannot afford to insist on the traditional model of selling property, an academic and former real estate agent says.

“”Participants in the market are largely caught within the system and … in many cases people cannot see value for money.””

(from The New Zealand Herald, 2/27/08)

THE U.K.

“[One particular] couple paid £398 in fees to have the flat listed online at Hatched.co.uk - a sum that covered photographs, floor plans and ’shuffling the paperwork’, but otherwise the couple handled the sale themselves. ‘We had three local estate agents around and, frankly, nothing convinced me that they were going to be worth us paying £4,000 commission,’ says Mat. ‘Anyway, it’s hardly rocket science. The property programmes tell you how to make your home presentable. We didn’t go as far as having bread baking in the oven or coffee brewing in the kitchen - we didn’t have to. We sold at the right price in two weeks.’”

(from The Observer, 2/24/08)

KENYA

“Selling on your own — while potentially a hassle — could save you roughly five per cent in broker fees. This varies, of course. For hard-to-sell properties, the savings could be as high as seven per cent, but in highly competitive markets (where brokers are cutting their commissions), the savings may be lower.”

The article goes on to suggest these tips for selling a property without an agent: Price properly, Cast a wide advertising net, and Do your research on making and closing the deal.

(from The Standard, 2/28/08)

BACK HERE IN THE U.S.

“When it takes more hours to become a cosmetologist than a real estate agent you know there is something seriously wrong with an industry,” says Stefan Swanepoel, author of the new 170-page real estate report. “It is unbelievable to think that the standard required to become a licensed real estate agent is between 30-120 hours whereas it takes about 1,200 hours to learn how to cut hair and do nails,” he says.

(from TransWorld News, 2/25/08)

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Tags: for sale by owner, FSBO, real estate, rel estate sales

I recently came across an article that put something so well and so clearly that I really don’t think I could improve upon it. Everyone interested in real estate investing would do well to check it out.

In “Why Do You Still Need an Agent to Sell Your Home?” author Douglas Gantenbein makes an excellent case for the thing I am most passionate about: homeowners getting the power back in their real estate transactions (i.e., selling their own homes).

Written all the way back in 2004, this article cited the then-statistic that “Americans will spend about $1.14 trillion buying 6 million homes this year-both [setting] records.” And of that $1.14 trillion, Gantenbein writes, an enormous chunk would go to realtors. Is this fair?

Here are some highlights from the article:

1. Realtor work doesn’t equate with realtor commission.

   “And what do Americans receive in exchange for that commission, which can total up to $24,000 on a $400,000 home? In many cases, not much. A realtor’s license can be had after as little as 50 or 60 hours of training (the person who cuts your hair probably has 1,000 hours or more).”

2. Realtors seldom work in your best interest.

I was flipping through Freakonomics recently and remembered this little anecdote from one of the authors’ real experience:

“K. wanted to buy a house that was listed at $469,000. He was prepared to offer $450,000 but he first called the seller’s agent and asked her to name the lowest price that she thought the homeowner might accept. The agent promptly scolded K. ‘You ought to be ashamed of yourself,’ she said. ‘That is clearly a violation of real-estate ethics.’

K. apologized. The conversation turned to other, more mundane things. After ten minutes, as the conversation was ending, the agent told K., ‘Let me say one last thing. My client is willing to sell the house for a lot less than you think.’

Based on this conversation, K. then offered $425,000 for the house instead of the $450,000 he had planned to offer. In the end, the seller accepted $430,000. Thanks to his own agent’s intervention, the seller lost at least $20,000. The agent, meanwhile, only lost $300-a small price to pay to ensure that she would quickly and easily lock up the sale, which netted her a commission of $6,450.

So a big part of the real-estate agent’s job, it would seem, is to persuade the homeowner to sell for less than he would like while at the same time letting the homeowner know that a house can be bought for less than its listing price.”

3. The NAR is an exclusive group that doesn’t want to give up dominance.

“Overall, the NAR has ensured that nearly all residential real-estate transactions still are conducted between two agents in cahoots. And they’re largely responsible for keeping commissions close to that 6 percent level when any normal law of competition would suggest they’d be lower.”

4. Therefore, FSBO has a lot to offer, in my opinion.

Using a quality FSBO company like Buy Owner puts the power back in the hands of the investor. It’s definitely a smart decision for savvy investors.

Tags: by owner, for sale by owner, FSBO, home, house, real estate, real estate agent, realtor, sell real estate

Prospective homeowners rejoice: conventional loan limits have been raised. Homeowners on the coasts should be especially excited, where the median price of homes often far exceeds the traditional $417,000 limit on loans.

If you were unaware, home buyers who needed loans for more than $417,000 would previously need to obtain a “jumbo” loan, with matching jumbo interest rates and monthly payments. This new law would now allow homeowners to take out bigger mortgages without knuckle-biting, arm-twisting interest payments each month. This should also stimulate the markets in high-end locations with home prices above this range.

Peter Miller of RealtyTimes.com has a different perspective on higher loan limits:
“To have jumbo mortgages–there must be investors who buy mortgage-backed securities. If securities buyers…don’t purchase mortgages with bigger loan limits, then it doesn’t matter what Washington wants. Without investors, super-jumbo loans simply won’t be available…regardless of what the rules say.”

Money doesn’t come from trees; it comes from big, wealthy foreign investors. If they aren’t willing to take on a high-risk mortgage, then Congress’s move won’t do much for the housing market. With two sides to every story, it will be a true test to see if the housing market is uplifted by this move, or if the popped housing bubble will remain stagnant.

What do you think?

I was thinking this past week: what is it that home buyers want? Of course, each individual is different and has specific needs. But overall: are there general themes that dictate what buyers are looking for right now?

If there are, think of the potential power in real estate investors’ hands: We’d know what we should buy, because we’d know what they’ll buy from us. We’d know what kind of improvements are worth investing in, because we’d know what adds value in a buyer’s mind. We’d know, essentially, what really matters.

So, what say you: Are there all-important aspects of a home that are definitely a worthwhile investment and a fool-proof key to adding value today? What convinced you to buy? What convinced a buyer to purchase your property?

Not sure? Maybe a look at some expert opinions will get the ideas flowing:

1. HGTV:

   ”10 Things That Make Buyers Bite”: Stainless steel appliances, hardwood floors, updated lighting, organized closets…

2. About.com:

   ”Trends for Home Buyers”: Pre-WWII, Mediterranean and Mid-Century styles, modern or mint-condition kitchens, fancy bathroom fixtures, earthy colors, open floor plans…

3. Chicago Tribune, citing Mark Nash (whose in-the-know list made it to over 500 publications and web sites):

   “What’s ‘in’ for Real Estate in 2008”: concealed kitchen appliances, bathroom televisions…

Your turn. Agree? Disagree?

(Image borrowed from The Barker Blog)

Tags: predictions, Real Estate Market, What buyers want

Okay, NAR, we understand what you’re trying to do. You’re a big organization, and you’ve obviously got some congressional clout. Included in the recently proposed Economic Stimulus Plan, the NAR has lobbied for higher loan limits from both Freddie Mac and Fannie May; higher loan limits will also be applied to FHA loans, which are insured by the government in the case of a possible default. This plan will raise conventional mortgage limits by 50 percent to about $625,000, and FHA loans will be raised from 95% to 125% of the local median sales price. While this will stimulate the market in higher-priced regions of the country (many of which have remained stable through the housing bubble), this will also make it easier to refinance with sweet, post-bubble mortgage rates.

Well, the NAR is excited, for sure.

But let’s say that the economy, and the housing market in particular, does not make an immediate or significant turnaround within the year. FHA loans alone could be more difficult to pay when interest rates rise, and the government could see an increasing number of large loan defaults. The government will eat this cost, and homeowners with conventional mortgages will suffer the same.

With bigger mortgages comes greater risk, and while this may be great for real estate brokers, it may not be good for homeowners in such a turbulent economic situation. We’ve seen what speculation has done to the current market. Just because the NAR will see a short-term gain in business, the long-term effects could be just as daunting as our current situation.

NAR, Economic Stimulus Plan, refinance, economy

In the world of real estate marketing, getting people to see a property is half the battle. Assuming you can get them to look, you are much more likely to get them to buy. After all, why wouldn’t they see all the many benefits the given home offers, benefits that made you invest in the property in the first place?

Take this to heart: you have to get them interested. The first impression your home makes on a buyer–-I’m talking at the advertising stage even-–is all-important. You want stunning photographs and quality copy. In this article, let’s talk about the copy.

What is important in a good real estate ad?

1. PRIORITIZING
Depending on the length of your ad, this may be more or less important. When I sold through Buy Owner, I had a large amount of text included with my ad package, and professional writers did the hard work for me. But whether your text is short or long, you need to figure out which features are most important to highlight. Hardwood floors? good. Updated lighting? good. The fact that the bathrooms have sinks? probably a given, and you don’t need to say it.

Yes, this is a little tongue in cheek, but I’ve seen bad ads. Sometimes I think marketers just don’t know what’s worth highlighting.

2. ATTENTION-GRABBING BEGINNING
Think about something that will grab a reader’s attention. What might be helpful is a quick skim of current real estate ads–look at all kinds of sites and note what seems to be working. If something captures your eye, it might work on others. Don’t be afraid to get inspired!

3. CALL TO ACTION
Very important: include a way for the buyer to contact you. List a phone number or, even better, list the next open house date. After he or she is interested, there needs to be a next step to keep them mindful of your property.

Above all: think like a buyer!

real estate marketing, property, advertising, real estate ad, buyer

Tags: ad-writing, real estate marketing

The bottom line is that gourmet kitchen is still an objective term. What a buyer can expect from a kitchen termed “gourmet” is still evolving, but these are some of the stand-out features that are often included:

A Spacious Feel

Today’s gourmet kitchen offers maximum space: think plenty of room for moving around, preparing food and organizing utensils. Offering maximum storage space and optimal organization, it’s designed for the true chef. Common characteristics are open space and high square footage.

High-End Appliances

Top-of-the-line, built-in appliances mark a gourmet kitchen by creating a streamlined look. Popular touches include appliances that match the cabinetry, stainless steel appliances and separate ovens.

Top Products

Certain trends are gaining in popularity in kitchen design: pull-out cabinets, cutting boards that slide out and counters at a low height. Also common in gourmet kitchens are specialty counters like granite or bacteria-retarding marble.

Built-Ins

Bookshelves for cookbook display can create cozy corner nooks for flipping through recipes, and built-in cabinets can double as buffets. Adding value to gourmet kitchens by providing storage and work space, built-ins work as included furniture.

(Photo taken from Pillar Development)

Tags: gourmet kitchen, kitchen, kitchens, rehab kitchen