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For Sale by Owner - Oh Really!!

by Doug & Gwen Campbell at Sun Bay Associates

For Sale by Owner.  This sign shows up everywhere, even in the Palm Harbor, Dunedin and Tarpon Springs areas.  Homeowners believe that they are saving a lot of money and getting lots of market exposure when they get some realtor to list their house in the MLS and then never hear from that agent again.  They get no real support, no representation, no marketing help, no negotiation knowledge and they get to take all the phone calls for showing their homes, whether the "buyer" is qualified or not.

Licensed realtors screen out the unqualified buyers, they handle the phone calls and the showings, they do the marketing and the negotiation to protect the seller with the laws and other business realities involved in such a large business transaction.  Realtors market their listed houses to more than just the MLS and depending on their brokerage, may have a very significant internet presence beyond that available to the MLS.  The realtor knows the market value of a house, not the personal "memories value" of a house, and thus can negotiate accordingly with a buyer.

A key bit of information that fsbo's often overlook is the commission factor.  They think that buy having their house as a For Sale by Owner, or listed in the MLS by an agent they will never see again, that they are saving a ton of cash.  Well, to attract a buyer they pay a commission to the buyer's agent, which is usually about half of the full commission.  Then, either the buyer's agent has to take on the workload of what should be the seller's agent, or the seller has to do the work, or hire an attorney.  If the buyer's agent takes on this workload, the interest of the seller is coincidental, because the buyer's agent is working for the buyer's best interest.  By the time all is said and done, including aggravation, the savings is non-existant.  In fact, when a licensed real estate agent represents the seller and deals with the buyer's agent, according to the National Association of Realtors, the seller realizes about 13% more NET profit than relying on For Sale by Owner only.

This is typical nationally, and is repeated in the Palm Harbor, Dunedin and Tarpon Springs area.  Do yourself a favor, list your home with a licensed realtor.

FHA Changes Will Cost the Buyer

by Doug & Gwen Campbell at Sun Bay Associates

As reported in the Los Angeles Times recently, the Federal Housing Administration, or FHA, is making changes that will cost the consumer a few more dollars to buy a home.  The FHA needs to make these changes, or increases, to provide a buffer for it's low cash reserves.

Among the coming changes are:  increased mortgage insurance premiums, higher FICO credit scores and down payments and a reduction in allowable seller concessions to 3% from the current 6%.

HUD Secretary Shaun Donovan outlined the FHA proposals in December.  The higher down payment requirement will now require a minimum FICO credit score of 580 instead of the present 500 for a 3.5% down payment on a new home.  Home buyers with FICO scores below 580 would have to have a 10% down payment.  This may not have much impact since most lending institutions already require a FICO score of at least 620. 

Also, the FHA wants to increase the mortgage insurance premium to 2.25% of the loan amount, up from 1.75%.

Making an Offer on Real Estate

by Doug & Gwen Campbell at Sun Bay Associates

Is an offer to buy a house an insult even if it is very low??  Of course not.  An offer indicates that the buyer at least has more interest than everyone else who has looked at a house and kept on shopping.  Owners shouldn't get insulted about low offers, they should look at a low offer as the beginning of a negotiation.  All business deals start somewhere and often the two sides are very far apart, in the beginning.  This happens very often in the Tampa Bay real estate market, as well as everywhere else where real estate transactions happen.

The art of negotiating a real estate transaction is the heart of the deal.  The realtor has to present the offers to the seller, and then present the counter-offer, if there is one, to the buyer's agent.  Seller's who get insulted at a low offer, make the deal personal and refuse to negotiate cause one unavoidable result.  They are left holding on to a house that is not going to sell to that buyer - ever.  The seller who may not like the first low offer, and makes a counter-offer, is the seller who will in time sell the house to that buyer, for more than the original offer.  This is a win-win situation and is the goal of all business deals.

When a seller refuses to negotiate when they get a low offer they are simply making a higher offer than that buyer did and "buy" the house, in a manner of speaking.  Since the potential buyer couldn't buy that house, they moved on.  The owner has in essence, outbid that buyer, and ends up continuing to own the house. 

It is important to remember that many times the first, "low" offer came from a serious buyer who took a shot that the seller would be desperate and accept a known low offer.  The buyer in this case fully expected the seller to come back with a counter offer and start a negotiation.  No counter offer equals no deal.

The long and short of it, no matter how "low" an offer is, it is well worthwhile to come back with a counter offer.  This will tell the seller if the buyer is serious and willing to negotiate, or not.  If a buyer makes only very low offers, and will not accept a counter offer, nothing is lost by the seller.  In the Tampa Bay real estate market, this happens quite often because of the number of foreclosures and short sales.  If the seller refuses to negotiate, there can never be a successful negotiation that results in a sale.  Most sellers in the Tampa Bay market will respond with a counter offer and this leads to more successful transactions.

New HAFA Guidelines

by Doug & Gwen Campbell at Sun Bay Associates

 

Federal Short Sale Guidance Out

On November 30, 2009, the U.S. Department of the Treasury announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL). The guidelines provide $1,500 in federal funds to help borrowers relocate, $1,000 to help servicers offset their  processing costs, and up to $1,000 to investors to secure release of subordinate liens. The guidelines prohibit a reduction in agreed-upon commissions (if they're not more than 6 percent) and take effect April 5, 2010, but can be implemented by servicers at any time.

If you would like more information on the HAFA program, send us an email and we'll respond within 24 hours with additional details.  Doug@SunBayAssociates.com - request HAFA guidelines.

 

 

 

Displaying blog entries 1-4 of 4

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Photo of Gwen and  Doug Campbell - Sun Bay Realty Group Real Estate
Gwen and Doug Campbell - Sun Bay Realty Group
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908