Saturday, January 31, 2009

Forecast: FSBOs cometh in 2009

FSBOs are poised to take the market by storm, according to a website founded on the FSBO way.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - As home sales and prices continue to decline this year, more consumers will try to sell their own homes, says ForSaleByOwner.com, a do-it-yourself web site that promotes, you guessed it, the FSBO (for sale by owner) way.

No matter what really unfolds for FSBOs this year, do-it-yourself sellers should be aware that in the time it takes to sell a home he or she will have to exercise at least some semblance of experience a professional real estate agent often takes years to achieve. That assumes the FSBO wants top dollar, a buyer who can really close the deal and no legal entanglements after the close of escrow.

Real estate agents say that's a lot to ask during the greatest economic downturn since the Great Depression, a recession triggered by the housing crash.

However, based on little more than the thought that a free society allows homeowners to take a crack at selling their own home -- and maybe they should to save a few thousand bucks -- the leading FSBO listing and information Web site predicts for 2009:

A continued slowdown in homes sales. The weak credit market will continue to make it harder for Americans to obtain mortgages, causing the number of homes sold in 2009 to fall for a fourth straight year. (Check.)

Falling home prices. An increase in foreclosure sales and short sales - which have significantly discounted prices - will cause a decline in the average price of all homes sold in 2009. (Two for two.)

The Internet will become more effective than realty agents helping buyers find homes. In 2009, for the first time, more buyers will find the home they purchase by seeing it first on the Internet rather than learning of it from a real estate agent. (That's a stretch, but you heard it here first.)

More browsing for housing. Ninety percent of homebuyers in 2009 will use the Internet to search for their next home. (Not such a stretch. The National Association of Realtors last year reported 84 percent of all buyers identified the Internet as a source in their home search including 87 percent of first-time buyers, 82 percent of repeat buyers, 79 percent of new home buyers and 85 percent of buyers of previously-owned homes.)

A continued decline in the number of real estate agents and brokers. As the housing market continues to cool and the Internet makes it easier for people to sell and buy homes, there will be even fewer real estate agents and brokers in 2009. (This will happen more so because of the economy, rather than Internet empowerment. With fewer homes to sell, fewer agents will be needed.)

Higher commissions. Real estate commissions will increase from 5.12 percent in 2007 to nearly 6 percent in 2009. (The law of supply and demand mentioned in the last prediction would indicate commissions will tank.)

More consumers will resist real estate commissions. Even more sellers in 2009 will use FSBO methods to sell to their homes in order to avoid paying commissions, and to maximize the amount they get from the sale of their homes. (Which is why the previous prediction makes little economic sense.)

More competition for traditional real estate agents. More web-based real estate services will follow the lead of ForSaleByOwner.com. (Perhaps, but with advertising down, who will pay the bills? FSBOs looking to save money? Not.)

Increase in lease-to-own deals. Lease-to-own will become more commonplace in 2009, as sellers need to realize cash flow from their properties and many buyers find themselves still unable to obtain mortgages. (Check. Look for equity sharing growth too. Buyers will have to pull out all the stops to get in a home for the next year or so.)

"While 2008 will be remembered as perhaps the most painful year for real estate in decades, declines in home sales and prices will likely continue well into 2009," said Greg Healy, Vice President of Operations at ForSaleByOwner.com.

"As a result, we're seeing new trends emerge that will affect both the industry and consumers who need to sell or buy a home," he added.

There's more FSBO news that hits home!

Steep FSBO learning curve pays off
Sellers corner commission concessions
FSBOs fall flat

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!


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1 comment:

Larry said...

It think the prediction of significant moves toward FSBO may be a little overstated. Owners have neither the savvy nor stomach to pay for adequate advertising of their homes. Although many daily newspapers are starting to melt down to just a relative few pages, as they lose lots of advertising to other media, I note that in my own Hartford (CT) Courant, there are still pages and pages of home listings. And then there is the home buyer psychology that would rather work with an agent of their own who is working with a professional on the seller's side as well. When it comes to an investment of a few hundred thousand dollars, most sellers will still defer to a professional lest they have a fool for a real estate agent.