SayEducate

FSBO or For Sale By Owner remains a popular marketing alternative for people who are buying or selling a home. Sellers like them because they can cut out the realtor’s commission, thereby saving them thousands of dollars while buyer’s like them because they usually can find a home at a good price.

However, just because a home is listed FSBO doesn’t make it a good deal. In fact, there are some things both the seller and buyer can do to help close a deal quickly and at a price acceptable to both parties. Read on and we’ll examine how a seller and a buyer can make FSBO work for them:

If You Are The Seller

Secure Your Home’s Market Value — Prior to putting your home on the market, you’ll need to get it professionally appraised. Hire an appraiser who can help you determine a price for your home, the same price that a realtor would recommend your home be listed for.

Get Ready For Show — Assess the interior and exterior of your home and spruce it up as needed. Remove excess furniture, touch up the walls with paint, clear the clutter off of the kitchen counter, plant new flowers, and trim shrubbery. You may need to tackle additional improvement projects when the home inspection report is completed; anticipate what needs to be done before the home sells now to avoid rushing around later.

Start Marketing — Selling FSBO means a big time commitment, something that should be considered before doing it yourself. List your home in Craigslist and find a good FSBO site to feature your home. You’ll need a For Sale and information holder to place in front of your house, with plenty of pamphlets or sheets listing your home’s many features. Price your home at our below its appraised amount, but no lower than 5% lower or you cancel out the reason for not using a realtor in the first place.

If You Are The Buyer

Ask For A Copy Of The Appraisal — Dealing directly with the owner puts you at a good advantage, allowing you to ask the seller questions directly. Secure a copy of the seller’s appraisal and do your own market analysis on the neighborhood to confirm that the house is being sold for its appraised price.

Make An Offer — Most FSBO homes are placed on the market for the same price a realtor would list the home for. This means that the seller has some latitude when it comes to price. You probably can’t shave a full 5-6% off of the price of the home, otherwise the seller basically loses the money they would have paid in commission to you. On the other hand, if the home has been on the market for several months, offering 3% below the appraised value of the home can be a fair middle ground for both parties.

Get An Inspection — An independent inspection (that you pay for) from a trained home inspector can be the most valuable investment you make. Once you have the completed report in hand, ask the homeowner to handle whatever items should be addressed. The homeowner could counter and slash his price and ask your to handle repairs or simply refuse to address major problems. Estimate the cost of these repairs and subtract them from your final offer.

Toward Completing A Satisfactory Transaction

Once an agreed upon price has been reached and repairs made, then you’re ready to set a closing date. As a seller, your organization skills have paid off; as a buyer, your diligence has been rewarded resulting in a home at an attractive price.

The condominium market has imploded over the past year or two thanks to a downturn in the overall housing market and overbuilding in many local markets. Complete condo projects remain unfinished in Miami with some nearby completed units half empty due to foreclosure and/or a failure to sell.

Bad news for one person could be good news for another one, particularly for the investor who wants to snap a bargain while the market remains depressed. But, condo living isn’t for everyone and when condo fees are included, that bargain can quickly yield some nasty surprises.

Unlike most other residential housing options, condo costs are difficult to predict long term. Certainly, both the house owner and the condo dweller must pay property taxes, insurance, and similar expenses, but there are other costs which tend to go up much faster than the rate of inflation, expenses which are added to condo fees.

Let’s take a look at the charges which drive condo fees:

Age of Building — Newer projects don’t have quite the overhead of older buildings, namely the need to update or overhaul old equipment, repair fascia, replace flooring, paint walls, you name it. Your particular unit may have been updated, but the common areas may need a refreshing or, worse, a complete makeover. You’ll be responsible for a portion of these costs which are frequently added to monthly condo fees.

Utilities — Everyone is paying more for gas, electricity, and water. Condo owners are responsible for their share of the building’s utility usage and these rates have gone up dramatically over the past few years. Add in garbage removal, recycling, landscaping, sewer, and related expenses too.

Insurance — You have insurance on your own unit, but the association governing your building has to insure the entire property. Condos close to the ocean or in major cities have seen their rates skyrocket. These costs, of course, are passed on in the form of higher condo fees.

Of course, buying a condo may be the only option for people who have to live in a particular area. If you are planning to buy, examine the financial documents closely before you sign. Learn how much reserves the condo association has on hand to cover planned maintenance including a new roof, elevator, pool, etc.

If the funds are insufficient, you can expect your condo fees to increase dramatically even before maintenance is needed. That $225 monthly condo fee could suddenly jump up to $350 or $400 per month, a figure that must be added to your own mortgage costs, insurance, and property taxes.

Most defintely, if you are planning to buy a condominium, condo fees are going up and, in most cases, at a rate much faster than inflation. Think before you buy!

Resources

7-Step Home Buying Guide

Home Buying Map (download)

Lending Calculators

Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question — if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you’ll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners’ insurance isn’t as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn’t any longer.

You’ve done your homework finding an excellent mortgage loan. Now go and check out what you’ll be paying for property taxes and homeowners insurance to see if you can really afford your new home.