Anne Uchtman

As a Realtor, I can't blame sellers for trying to sell their house For Sale By Owner (FSBO) first before listing it with a Realtor. The economy is not the greatest and funds are tight everywhere. I also know that the majority of these homes don't sell FSBO and are eventually listed with a Realtor, such as myself. There are numerous reasons why a seller should employ the help of a licensed Realtor, but too often people don't realize why buyers should be using a licensed Realtor in transactions such as this as well.

Real Estate Commission in Cincinnati is typically 6-7 percent. This is paid by the seller, not the buyer. If you are a buyer and are looking for homes and come across a FSBO that might interest you, the best thing to do is to call your Realtor. Tell your Realtor the address and the phone number for the home if you have it. Your Realtor can call the FSBO for you and obtain information and proceed like any normal transaction. As previously stated, most sellers list their homes FSBO to avoid paying commissions. If Real Estate Commission is 6%, it's safe to assume that the listing agent will receive 3% and the buyer's agent will receive the other 3%. Even though a house is listed FSBO, the sellers are often willing to pay the 3% to a buyer's agent.

How does this affect you? Do you know the process of buying a home? Does the seller know the process? If the seller claims to know exactly what to do, do you trust them with this matter? This may possibly be the biggest transaction of your life. Do you want to put that into the hands of someone who may or may not know what they're doing?

Here come the caution flags... You may be paying too much for this house. Almost every seller thinks their house is worth more than it actually is. As Realtors, we study the market on a daily basis. We know what a house is worth. Are we ever wrong? Occasionally... but not often! When I take a buyer though a house, I will know immediately if it is overpriced or not. If I'm not sure, I can do research on the MLS and compare it to recent sales and similar houses. If my buyer wants to make an offer on this house, I will guide him/her and give my advice on what I think is a fair price for the house. If you pay too much for a house, when you go to sell in a few years, it will be difficult for you to break even. Buyers aren't concerned with what you paid for the house or what you owe on it. They are only concerned with what it's worth in this market.

Perfect example... Jeff & Leah owned a condo and were building a house. The house would be finished in six months. Jeff & Leah, not wanting to pay a Realtor, decided to list the condo FSBO. The condo never sold. They move into the dream home and were forced to pay two house payments. Money is even tighter now than it was six months ago and Jeff is worried he may have to pick up a second job. Jeff's sister Erica was looking to buy her first home. He convinces Erica that she should buy the condo. It would really help him out, plus, he could give her a good deal. Erica agrees and she buys the condo for $95,000. She loves the condo, but two years later, gets engaged and decides to purchase a home together with her fiancee. Erica calls me to look at the condo and tell her what I think fair market value would be. Most condos in her complex are selling for $85,000 -- yes, even the really nice ones. This is not what Erica wants to hear. Not only will she not break even, but she will have to bring money to the closing table when it sells. What happened? She overpaid for it two years ago. Had she involved a Realtor when she purchased the home, the Realtor would have told her that the $95,000 price tag was a bit lofty and that while the seller thought it was worth that much, it was really worth much less. Two years ago, the condo should've sold for $85,000.

The difference may not seem like a lot of money, but when it comes to selling a house, even a couple thousand dollars can be a big deal.

In FSBO situations, it can also be difficult to negotiate directly with the seller. People tend to take it personally if a buyer makes a low offer or if a buyer asks for something such as closing costs to be paid for by the seller. If you have an agent, they can do the negotiating for you and most times put both the buyer and seller at ease during the transaction. You must also watch out for defects on the property. While there is a process FSBOs are supposed to follow, they don't always play by the rules. They may not be aware that they are required to complete a property disclosure form ... they may also not know that buyers are entitled to have an inspection on the property.

Bottom line: there is huge liability not just for sellers of a FSBO, but also for buyers of a FSBO. Better to be safe than sorry. Call me if you see a FSBO that interests you or if you have questions pertaining to this or other real estate matters.

With each new year, we reevaluate our current situations. I've been in real estate for three years now. I came into this business in a down market and so our current market is the only one I've ever known. With the economy in turmoil and a "recession" finally declared, has the housing market gotten worse? I don't think so... 2008 was my best real estate year so far and I'm looking to make 2009 even better.

I'm looking into my crystal ball and what does it tell me? Well, whether you voted for him or not, the Barack Obama Administration seems to be promising. In conjunction with the new $7500 tax credit, historically low interest rates (last time I checked, 4.875%) and a continued interest in first-time buyer programs, from here the market has nowhere to go but up! I'm looking forward to my best year ever.

If you would like to learn more about the $7,500 tax credit or first-time buyer programs, don't hesitate to contact me for all your real estate needs.