5 Reasons Not to Do “For Sale by Owner”

I was sitting down to write this week’s blog but I came across this article by Keeping Current Matters and frankly couldn’t have stated it any better myself. Would like to share their article with you here. Please leave your comments and questions on the subject of FSBO.

For Sale by Owner

Some homeowners consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). We think there are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of our reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value
  • Your bank in the case of a short sale

2. Exposure to Prospective Purchasers

Recent studies have shown that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an extensive internet strategy to promote the sale of your home. Do you?

3. Actual Results also come from the Internet

Where do buyers find the home they actually purchased?

  • 43% on the internet
  • 9% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 9% over the last 20+ years.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real commission. The seller and buyer can’t both save the same commission.

Studies have shown that the typical house sold by the homeowner sells for $184,000 while the typical house sold by an agent sells for $230,000. This doesn’t mean that an agent can get $46,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

What is the Function of the Park City Board of REALTORS®?

Most people know that a real estate agent functions as an intermediary and sales person to facilitate the exchange of real property between buyers and sellers. Real estate agents have a fiduciary responsibility to the party who they represent. But, not all real estate agents are REALTORS®. Only members of the National Association Of REALTORS® (NAR) are REALTORS®.

Park City Realtors

From left to right: Marcie Davis, 2014 President; Deb Hartley, 2014 Secretary; Tami Whisker, Past President; Marc Coulam, Past Board Member; Nancy Tallman, 2014 President-elect; Suzanne Sheridan, 2014 Treasurer

NAR: The Parent Organization

Founded in 1908, NAR has 720,000 members and is the world’s largest professional organization. Each member belongs to at least one local and state association. The Utah Association of REALTORS® is our state association and the Park City Board of REALTORS® is our local association.

As the “voice for real estate”, the NAR and its state and local member organizations work with government and the public for the purpose of preserving the free enterprise system and the right to own real property. Think about how this affects all of us. For example, any time legislators want to cut the mortgage interest deduction, NAR uses its influence to defeat such legislation.

How The Park City Board of REALTORS® Serves the Public

The Park City Board of REALTORS® (PCBR) was formed in 1980 and has almost 900 members. The Park City Board of REALTORS® serves the public in many ways:

  1. We champion private property rights and home ownership.
  2. We ensure local REALTORS® are educated and adhere to the NAR code of ethics. PCBR enforces the NAR Code of Ethics and Standards of Practice. In addition, the PCBR provides professional development, awards of recognition for its members, collects market statistics and improves the standard forms Park City REALTORS® use in their transactions.
  3. We manage the Park City MLS Multiple Listing Service and collect and distribute sales data to the public. This service allows brokers and agent members to post their listings electronically and to offer cooperative payments to one another. This means that as a Park City MLS member, I can show any other agent’s listings and know that we automatically have a cooperative commission sharing agreement. A more recent development is our ability to syndicate (share) our listings with public real estate websites, such as Zillow, Trulia, realtor.com, Yahoo, etc.Luxury Home Tour 2014
  4. We are also stewards of our local community, raising and distributing money for local charitable organizations. Our Philanthropic Foundation is very active. We have raised hundreds of thousands of dollars for community organizations through fundraisers like the Luxury Home Tour and the Turkey Drive.

I am currently the President-elect of the Park City Board of REALTORS®.  In January, I’ll become its President. It’s an honor and privilege representing Park City’s REALTORS®.

Park City New Construction Update, July 2014

There are several new construction projects in the Park City area and they are very popular. Some of my favorites are:

  1. Stein Eriksen Residences ($2,400,000-$6,900,000)
  2. The Parkite ($1,595,000-$5,495,000)
  3. Enclave at Sun Canyon ($1,799,000-$1,960,000)
  4. River View ($452,000-$519,000)
  5. Black Rock Ridge ($429,900-$499,000)
  6. Park’s Edge ($339,900-$349,900)
Enclave at Sun Canyon, River View & Parkite
Enclave at Sun Canyon, River View & Parkite

What do these new properties have in common?

  • Mountain Contemporary Style
  • Vaulted and/or high ceilings
  • Oversized solid wood doors
  • High end finishes throughout, such as solid surface counter-tops and stainless, commercial grade appliances
  • Big windows that take full advantage of views
  • Excellent insulation to minimize sound penetration from neighbors
  • Energy efficient/”green” construction & use of technology
  • Decks for indoor/outdoor living
  • Hardwood and/or natural stone flooring
  • Stein Ericksen Residences and Enclave have “floating” staircases
  • Many of theses homes allow the buyer to select their own finishes.

Buyers Prefer New Construction

How many older homes can you think of that have the above list of popular features? Even a home that has been gutted and remodeled may have a floor plan or system that is now functionally obsolescent. Park City’s homebuyers love new construction and all of the above-referenced homes are selling faster than they can be built. As a home seller, it is important to note the newer homes you may be competing with and price accordingly.

Are you interested in learning more about some of the newer developments in the Park City area? Contact me at 435.901.0659 or nancytallman@gmail.com.

12 Strategies for Winning Real Estate Multiple Offers

winning offersIn the Park City real estate market and many areas of the country, low inventory, high demand and low interest rates have created a seller’s market. Multiple offers should be anticipated. It can be extremely emotional to lose a dream home to someone else over a couple of thousand dollars.

To help you in your quest, here are some strategies to win multiple offers. As a buyer, it’s best to use as many of these strategies as possible to stack the deck in your favor.

How to Win in Multiple Offer Situations

how to win real estate multiple offers

  1. Be ready. You MUST be preapproved for financing or demonstrate sufficient cash funds. This is the most important step. You really can’t compete if you have a home you must sell before you can buy.
  2. Be fast. Preview a home the minute it hits the market and don’t delay in writing an offer. If you are not present in Park City when the home hits the market, don’t be afraid to write an offer before physically seeing the property.
  3. Write a full price offer.
  4. Use “escalator” clauses.   (If you don’t know what this is, contact me for an explanation.)
  5. Reduce or eliminate contingencies.
  6. Write a personal letter.
  7. Understand that the home may not appraise and be prepared emotionally, mentally, and financially to deal with that.
  8. Have a “Plan B”, a second choice home if the first choice doesn’t work out.
  9. Understand that an appraisal is a reflection of where the market has been over the past 3 months and the market value or purchase price is the value today. These two numbers may not be exactly the same.
  10. Find out what terms are most important to the seller. You would be surprised that oftentimes price is not the most important term.
  11. Don’t be afraid to write a back up offer. In today’s market, many buyers get cold feet and back out of transactions.
  12. Understand the risks and rewards for coming up with creative terms that allow you to purchase the home.

multiple offersAnd last, it is critical to work with a buyer’s agent who you trust. Your buyer’s agent should understand exactly what you are looking for and your financial situation. This will allow you and your buyer’s agent to work together as a team to push the envelope as much as possible to get you into the home you want to own for the best possible price and terms. If you get into a real estate multiple offers situation, don’t panic. Follow these steps, and may the odds be ever in your favor.

This blog post was inspired by a recent webinar by Larry Kendall with “Ninja Selling”.

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It’s Shoulder Season, Park City!

Shoulder Season Park City, UT65° and sunny. 40° and rainy. Six inches of snow. What do they have in common? They are all weather possibilities during spring in Park City, Utah.

It’s that time of year again. In what is generally referred to as the “shoulder season”, the town is letting out a collective sigh after another successful ski season under its belt. On the tails of being named Outside Magazine’s Best Active Town last fall and some fantastic powder days this past ski season, the first quarter of 2014 real estate sales showed an increase in sales volume of 16.6% over the first quarter of 2013. We holidayed. We Sundanced. We skied and enjoyed the day and night with friends and family. But now it’s time to change gears.

The schizophrenic weather patterns don’t even bother us. You know why? Because if it’s sunny, we’ll hit the trails. If it snows, we’ll hit the trails. And if it rains, we’ll take the rare excuse to relax and do nothing. We do need a reason, after all. We Parkites tend to feel guilty if we are couch bound for longer than an hour.

The great news for businesses which rest their livelihood on the tourists that visit our town, and for tourists who want to visit during this time, is that the shoulder season isn’t nearly as quiet as it used to be. 15 years ago, Main St. was a ghost town after mid-April and well into the summer. Now, a few businesses may take a couple of weeks off, but then the summer pulse, albeit quieter than winter, starts to tick.

Another thing about the shoulder season is that it’s a great time to buy or sell your Park City real estate. School is about to let out, so you can make your big move while life is just a little less busy. We are constantly adding new listings, so bookmark our site and find the next property of your dreams this spring. (In between biking and skiing, of course.)

Are Real Estate Agents a Commodity?

7042 Powderhorn Ct Park City-small-004-DSC 1043-666x445-72dpi

With Zillow, Trulia, Realtor.com and other home search sites easily available, what value does a real estate professional bring?  

 

Clients don’t need me to find properties for them.  The truth is, most of my buyer clients send me lists of the homes they want to see.  However, a list of properties for sale is essentially useless without a deeper understanding.  My clients know that the neighborhood knowledge, understanding, insider information, analysis, and negotiation skills that I bring to the table are how I provide value.

 

 

Commodity-Definition2-e1378358514548

A great real estate agent will help clients understand the differences between properties, values and neighborhoods.  We can help our clients win in multiple offer situations.  We can write contracts that protect our clients from buying a home full of structural problems or getting sued.  We can make sure our clients’ earnest money is not at risk during the inevitable bumps in the lending process.  

 

True real estate professionals provide tremendous value.  Searching a list of homes for sale requires minimal skills.  Navigating the complexities of a home purchase in the best interest of our clients is where we really shine.

The Status of Foreclosures in Park City

 

Summit County Distressed Sales ComparisonAbout a year and a half ago, I wrote a post title “Bye, Bye Foreclosures”

What is the picture like today?

The opportunity to buy short sales and foreclosures continues to decline. Distressed properties accounted for less than 2% of all listings and less than 3.5% of sales in the Greater Park City area during the last quarter of 2013. The average discounted price was only 2% off retail.

Nationally, distressed sales accounted for 25% of all sales last December, with an average discount price of 18% off retail.

This is great news for the Park City real estate market. Buyers should feel confident that although they missed the bottom of the market, the absence of distressed property means our market has recovered. It’s good news for sellers, too. They no longer have to price against distressed properties or worry about bank owned sales that will skew appraised values.

Summit County Distressed Sales Q4 2013

Zillow, Trulia & Realtor.com-What’s the Difference?

Graph Source: NAR
Graph Source: NAR

These are generally regarded as the top 3 real estate search sites in terms of the number of property views.   All of my listings are syndicated to each of these sites and many others.  But does quantity of views measure up to quality of views?  I looked at data collected by my brokerage, Summit Sotheby’s International Realty, to take a closer look.

We measured the number of property views and the number of email inquiries.  While Zillow had the most property views (more than double Trulia and Realtor.com combined), it had the least number of email inquires.  The Sotheby’s International Realty Website, came in at number 4 in terms of number of views, just slightly behind Trulia and Realtor.com; but it had more than twice the number of inquiries as each of those sites and more than 4 times the number of inquiries as Zillow.   Our local brokerage website, came in 5th for property views, but third for number of inquires, with almost twice as many inquiries as Zillow.

What conclusions can we make from this data?  Quantity does not always equal quality.  While it’s nice that hundreds of thousands of people are looking at my listings, the people I care about are the ones who will actually turn into buyers. These are the people who are making email inquiries.  The Sotheby’s International Realty website and our local brokerage site are attracting more serious buyers.

Where do Park City buyers come from?  It turns out that the number one state for searches was Utah, followed by California, Texas, New York, and Florida.  This is no surprise to me, as these states make up the majority of where my clients live.  There is no question that it is important for properties to be syndicated to real estate websites, as 92% of buyers use the internet to search for homes.  It is even more important for properties to be syndicated to the right real estate websites.

What do you think?  Which websites do you use to search for property?

Buy That Fixer-Upper-Uncle Sam Will Finance the Improvements

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FHA 203(k) loans are a great tool for buyers who are looking to buy distressed, old or run down properties that require improvements.  They can also be used to finish a basement, add a room or remodel a kitchen.  These loans are perfect for buyers with more vision than cash and who want to live in the home for at least one year after taking ownership.

The financing is based on the purchase price negotiated for the home plus the cost of improvements.  FHA will finance up to 110% of the after-improved value of the home.  The buyer must come up with a 3.5% down payment.  The improvement funds are held in an escrow account and dispersed in 2-5 increments, depending on the complexity and cost of improvements.

I can see this type of financing as being perfect for first time buyers considering homes in Summit Park or Old Town.   Imagine transforming an ugly duckling in desirable neighborhoods such as Park Meadows, Thaynes Canyon, Jeremy Ranch, Pinebrook and Silver Creek into a swan.  The best part is that only 3.5% down payment is required.

If you would like more information about how these loans can benefit you, please contact me.  Thanks to Amy Sharpless and the Academy Mortgage Team for educating me on this great resource.

Why Hiring a Realtor Saves you Money

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1.     Looking for a new home or trying to sell yours?  Realtors network with one another and in today’s fast real estate market can often match buyers and sellers before a home even hits the market.  Realtors are familiar with the local inventory and know about homes that recently left the market.  This saves time and money for both buyer and seller.  Example:  A local real estate agent just showed and sold a home I recently took off the market.  This was a win-win for both the buyer and seller.

2.     Realtors know the sales process.  They understand the terms they can negotiate on behalf of the buyer; they know what is unreasonable for a seller to pay.  Example: I negotiated a $4000 credit towards a new roof for one of my recent buyers.

3.     Realtors understand property values.  Location and floor plan are not evident when viewing comparable sales.  Realtors can help sellers establish a sale price in accordance with current market values and can help buyers negotiate the best deal possible.  Example:  In a recent multiple offer situation, my buyer paid less than the highest offer because of how I positioned her in the negotiation.

4.     Realtors act as a buffer between the parties and take the emotions out of the negotiation.  Negotiations can get heated and parties can take things personally and become offended.  The realtors help smooth the process and focus on the bigger picture, which is to get to the finish line.  Example:   One of my buyers told me “I don’t negotiate with skunks”, a reference to the seller, who she decided she didn’t like.  I kept her focused on the purchase of the home and not the personality of the seller, and she is now enjoying her dream home.