ForSaleByOwner.com Makes News Again!

As the leading real estate website for the "by owner" home seller, ForSaleByOwner.com is often found in news articles about home sellers who are selling their home without an agent in order to save thousands of dollars in would-be commission costs.

CBS MarketWatch recently interviewed us and one of our customers for a feature real estate article. We'd like to share this article with you, which includes some great tips on what you can do to get your house sold.

Be sure to also check out the video that's embedded in the article!

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.

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.

The Root Causes of the Underwater Homeowner

The Wall Street Journal is reporting today that, as of the end of 2008, a disturbing 20% of all U.S. homes that have a mortgage on them were "underwater." That means that when the New Year's Eve Ball dropped in Times Square, there were more than 8.3 million homeowners throughout the country that owe more on their mortgage than their home is worth.

Experts agree that this 8.3 million figure has climbed since that time.

But how did we get here? Declining home values have received much play in the media as the reason why so many are underwater, but declining home prices only tell half of the story. Considering that a mortgage is simply a home's sales price minus its down payment, we can accurately state that mortgages are more likely to become underwater whenever a smaller down payment exists.

A 2008 report from the National Association of Realtors provides us with critically important statistics about down payment amounts (click on the above image for complete information). According to the National Association of Realtors:

• The median down payment amount for all home buyers is ONLY 9 percent;
• The median down payment amount for first time home buyers is ONLY 4 percent;
• 29% of all home buyers put 0% down to buy their home; and
  
• 34% of first-time home buyers put 0% down to buy their home.

Such low down payment amounts, coupled with decreasing home prices, are the reasons why there is such a large percentage of home owners who are underwater. These folks obviously made a bad decision to leverage themselves so greatly, but a fundamental question is, "Who was advising them to buy homes that they couldn’t afford?"

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Home Prices Drop 18.2 Percent

The Standard & Poor's/Case-Shiller U.S. National Home Price Index fell 18.2% in the fourth quarter of 2008 from the fourth quarter of 2007, which represents the largest drop in the Index's 21-year history. Home prices are now at levels last seen during the third quarter of 2003.

The peak of the Index was the summer of 2006, and the 20-city index is now 27% below those levels.

Below are home price changes as tracked by the Standard & Poor's/Case-Shiller U.S. National Home Price Index:

	Dec. 2008	Change from Nov.	Change from Dec. 07
Atlanta	113.87	-2.30%	-12.10%
Boston	153.05	-1.30%	-7.00%
Charlotte	122.41	-2.50%	-7.20%
Chicago	137.16	-3.00%	-14.30%
Cleveland	105.21	-2.10%	-6.10%
Dallas	115.63	-2.30%	-4.30%
Denver	125.74	-1.50%	-4.00%
Detroit	80.93	-3.00%	-21.70%
Las Vegas	131.4	-4.80%	-33.00%
L.A.	171.46	-2.50%	-26.40%
Miami	165.01	-2.70%	-28.80%
Minneapolis	127	-4.60%	-18.40%
New York	183.5	-1.70%	-9.20%
Phoenix	123.93	-5.10%	-34.00%
Portland	158.5	-2.50%	-13.10%
San Diego	152.16	-2.10%	-24.80%
S.Fran	130.12	-3.80%	-31.20%
Seattle	160.19	-3.60%	-13.40%
Tampa	156.04	-3.00%	-22.00%
Washington	176.34	-2.20%	-19.20%
10 cities	162.17	-2.30%	-19.20%
20 cities	150.66	-2.50%	-18.50%
Note: index=100 in 2000 Source: S&P, Fiserv, USAToday Follow me on Twitter @ http://twitter.com/FSBO_Guy

Obama Unveils $75 Billion Foreclosure Prevention Plan

In many ways, the Phoenix metropolitan area is ground zero for the nation's housing crisis. Home prices has plummeted nearly 40% in the past couple years, and approximately 60% of homes bought in the last five years are worth less than their mortgaged amount. More than six percent of all Phoenix homes have received a foreclosure filing in the past 12 months. Unemployment has risen, making it even more difficult to find buyers in this depressed housing market.

President Obama today used the Phoenix market as a backdrop to unveil a $75 billion plan to help home borrowers affected by declining home values and an increasingly inability to keep up with monthly mortgage payments.

Dubbed the Homeowner Affordability and Stability Plan, the President's plan will offer:

1. refinancing help for four to five million homeowners who receive their mortgages through Fannie Mae or Freddie Mac
2. new incentives for lenders to modify the terms of sub-prime loans at risk of default and foreclosure
3. steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages
4. additional reforms designed to help families stay in their homes

Details of the plan are still coming out. The White House is doing a good job keeping the public informed though this informative blog that contains documents to help Americans understand the plan and how it can help affected home owners.

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Home Buyers Tax Credit, Part II

Last Summer I blogged about a new $7,500 tax credit available for first-time home buyers. One of the provisions to the tax credit, however, was that it would have to be repaid over a 15 year period. This prompted most tax experts to call it more of a loan, and I agree.

Flash forward to today. The $819 billion economic stimulus package that is being debated in Washington, DC, right now includes legislation that would remove the "repayment" provision to the $7,500 tax credit.

The change would apply to any home purchased between Jan. 1 and the end of August, so people who bought (yours truly included) when the tax credit was first enacted last summer would still have to pay back the tax credit.

Why not include first-time home buyers who bought the last half of 2008, you might ask? Well, the removal of the "repayment" provision is being pushed by the National Association of Realtors to drum up future sales & commissions for their Realtor membership. Do you think that NAR really cares about people who already bought?

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More Housing News...

More depressing housing news came out today that home prices in the nation's largest markets dropped 18% in October from the prior year. The S&P Case Shiller index tracks homes prices in the nation's 20 largest metropolitan areas, and every market experienced a year-over-year price decrease. Phoenix (-32.7%), Las Vegas (-31.7%), San Francisco (-31%) and Miami (-29%) had the largest declines, while Boston (-6%), Denver (-5.2%), Charlotte (-4.4%) and Dallas (-3%) had the smallest.

These sellers probably paid around 6% in real estate commissions to get their home sold, meaning that these folks actually lost 24%. For a typical seller in San Francisco, where the median home price in 2007 was $805,000, he/she would have lost more than $280,000 in just one year ($250K in lost home value and $33K in real estate commissions)!

Having a home lose its value is obviously a tough thing for any home owner to stomach, but sellers really need to think how wise it is to lose another 5-6% in the form of a real estate commission. Especially when studies from Northwestern and Stanford universities each found that "for sale by owner" sellers are as effective as agents in maximizing the sales price of their home.

Here's what some of ForSaleByOwner.com customers recently told us when they sold their home themselves:

"I did with forsalebyowner.com in one month what an real estate contract didn't do in six months...I sold my house for the asking price!!!!" - Lia in Carlisle, PA (sold home Dec. 21, 2008)

"I feel fortunate to have sold the property in such a tough economy. Not having to pay a real estate commission helpped me sell it for a lower price." - Dan in Roscoe, IL (sold home Dec. 15, 2008)

"We sold our house through your advertising only and no real estate agent was needed. Thank you for this service!!!" - Steven and Vicki in Vinalhaven, ME (sold home Dec. 15, 2008)

http://www.forsalebyowner.com

First Time Home Buyers & the Housing Rescue Bill

hThere's been much in the news lately about the housing rescue bill that was passed by Congress and signed into law by President Bush. The massive bill includes benefits for virtually anyone that currently owns a home, or is looking to become a first-time home buyer. As a recent first-time home buyer myself, I naturally wanted to know "what's in it for me?"

The bill includes a tax credit for people who bought their first home between April 8, 2008 and July 1, 2009 of up to 10% of the home's purchase price or $7,500, whichever is less. In other words, the only home buyers who will be able to get the full 10% tax credit will be those who purchased a home priced at $75,000 or lower.

Considering that the median home price is $215,100 (as of June 2008), the overwhelming majority of people won't qualify for the full 10% discount. More people will be able to claim the $7,500 tax credit. For a person who bought a home for $300,000 and is in a 28% tax bracket, the tax credit will total $7,500 and will lower his/her tax bill by roughly $2,100.

Sounds great, right? But before you take that $2,100 and go shopping for a new 50" LCD HDTV at Best Buy, people need to know that, under the provisions of this tax credit, you have to pay back your tax savings in equal installments over the next 15 years. So it' not really a tax credit, but rather an interest free loan that has to be paid back to Uncle Sam.

It's anyone's guess why the bill includes this provision, but my guess is that the government knows that once people have $2,100 burning a hole in their pocket, they're going to spend it in the economy.

There's much more to the housing bill, and there's endless articles and commentaries from tax experts and financial writers. Here's a great article by Holden Lewis of Bankrate.com that I found to be very informative.

The Virtual Vacation Home

It's Friday and while most of us are sitting at work, the Wall Street Journal has an interesting article today on how people are enjoying their vacation home through virtual means.

Utilizing an inexpensive webcam set up on a computer in their second home, these folks are able to monitor their beloved vacation home. Not only does it help inspire daydreaming about spending time at the beach or lake, WSJ reporter June Fletcher also notes that many people are using webcams as an inexpensive home monitoring system.

While I'm not lucky enough to have a second home, I think I'll go out and purchase a webcam for my house. I've always wondered what exactly my dog does all day at home.

Trump Sells $95 Million Mansion... What About the Commission?

The Palm Beach Post is reporting that Donald Trump has sold his Palm Beach oceanfront mansion (at left) for $95 million. He and his real estate broker originally listed it for $125 million. Since it sold for $30 million less than the asking price (or 24% less than the asking price), we now have another great piece of evidence that agents don't do a good job in effectively pricing homes. For a better way to price a home, click here.

We'd also like to know how much in commission The Donald had to pay his agent. While the average commission rate is in the 5-6 percent range, we suspect that he is paying more in the 3.5% range. Even at this percentage, Donald Trump is paying a $3.325 million commission!

Commissions & New Construction

Kudos to the North Carolina Real Estate Commission, which has taken a great step to protect the interests of home buyers.

We all know how real estate commissions work... a seller hires a broker/agent to sell their house and, once it sells, they get paid commission fees to their agent as well as to the buyer's agent.

But what most people don't know is that many homebuilders also offer additional bonuses targeted at agents who represent buyers. So when your agent is talking up those newly developed homes, instead of pre-existing homes, buyers should be mindful that the agent might have a financial incentive to have you buy the newly constructed home. To help inform buyers of these incentives, the N.C. Real Estate Commission passed a rule requiring that agents provide a written disclosure of bonuses they might receive if their client buys new construction.

Only a few states have this requirement, which are important so that consumers are aware of their agent's financial incentive as they go through the home search process.

http://www.ForSaleByOwner.com

Got Mortgage?

So you're thinking of buying that home you found on ForSaleByOwner.com. But, like most Americans, you've seen the headlines about mortgages and have questions about whether it's easier or more difficult to get a mortgage. As this CNBC news item reports, there's still three main ingredients to getting a mortgage. You need:

- Good credit
- Proof of income
- Money for a down payment

A reputable mortgage broker will give you solid advice on what you can and cannot afford. For more mortgage information, read this informative article.

Woman Suing Real Estate Agent

NBC reported on this horror story from a California woman who relied on a real estate agent for her home purchase. To avoid a similar situation, I'd suggest using a ForSaleByOwner.com home valuation report so you can get a full report on similar homes within your neighborhood.

Home Improvement

Are you planning on selling your home but first want to install granite countertops or remodel a bathroom? According to this article that's appearing today on CNNMoney.com, people are getting a lower return than before on home improvement projects... especially on interior projects. You might do better on some exterior home projects to improve your house's curb appeal.