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November 12, 2007


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We have kicked around the idea of selling our home by owner with some help pricing and whatnot from my wife's aunt who is a realtor. I was worried about exposure to the public, but it seems like Iggyshouse will take care of a lot of that trouble. On the buy side, we would probably use the aunt to help with that, so she can earn some $$ on the deal.

I am always wary of “For Sale by Owner”. There are a lot of people who have an inflated view of what there house is worth.

“I mean who wouldn’t want to pay top dollar for our duck wall paper, and 4 foot fountain in the bathroom.”

I bought my last two homes "by owner" and I sold my previous condo by owner as well. The first of these two was a one bedroom condo, the second is a townhouse I live in now.

Granted, condos are easier since you can find out how much the condo units in a similar complex are selling for by just visiting a local real estate and asking.

Both times I ended up buying "by owner", I had a real estate agent show me around as well. In both cases I found a better and cheaper property sold "by owner". The condo units were in the same complex, and the units I ended up buying were in more convenient locations in the complex and in comparable or better conditions.

Interestingly, when I was still looking I saw another unit advertised "by owner". I went there, looked at it, and didn't like it. Within a few days a real estate agent called me about the same unit. I told that I'd seen it and that I can read "Pennysaver" too. This showed me that real estate agents don't just show you listed properties, but they actively go after owners selling on the own. So it really pays to look at what is available "by owner" or you'll end up buying exactly the same thing from an agent except for the owner may be less likely to go down in price.

When I sold the one bedroom (this was a few years after I had bought a townhouse, as I had been renting it out for a few years), the real estate market was 'hot'. Most properties were selling at or above asking price, sometimes there were bidding wars. There seemed to be no reason for me to go with real estate. I did visit a couple of real estate offices, said I was interested in this particular complex and asked about recent sales information. I used the final sale price of the last couple of units as guidance; should've asked for a few thousand more in hindsight as the market was going up and my complex was the most thought-after in town with nothing else available at the moment. I had a full asking price offer within a few days. Actually, the very first offer was above, but it fell through.

A few days after I had listed the unit, after I got a full asking price offer, but before I accepted it, a real estate agent called me and asked if she could bring a potential buyer. I asked about commission, and she told - 3%. I said, OK, this means the offer I get through you should be 3% higher than what I could get myself.

The agent brought an elderly couple. They seemed to be interested, but they tried not to look too enthusiastic. After waiting a day for them, I figured they are not interested and accepted the full asking price offer I had gotten on my own. Then the agent called me with the offer from this couple - 7% below my asking price. This was an all cash offer, but given the difference in price it didn't make a difference to me. I wasn't in a particular rush, since this difference was several times greater than my carrying costs for a couple of months. The first buyer was qualified and planned to give over 20% down - this was some rich family buying a place for their young son. I was a bit sorry for the elderly couple, as there was no way they could buy another condo for what they offered, but the agent should've explained to them that it was a seller's market. The next condo that appeared on the market was priced higher.

Sean - don't be wary. Look with real estate agent, look at what is available "by owner" and compare. Also keep in mind that a real estate agent reads "by owner" ads as well. You don't want to be brought into the same house that is sold "by owner" by a real estate agent as your asking price goes up without you knowing it. It might be OK in a buyer's market, but if we are ever in a seller market again, you'll be at a disadvantage. Even in a buyer's market, the owner is going to be more likelly to go down in price if you come without an agent.

I am all for these Internet tools that provide greater access for buyers and sellers. I think the 6% commission will soon fall to the wayside. There are tons of sites that help people trying to buy or sell a home. I frequently visit, a site that shows estimated values for most homes in the country. You have to be wary of those values, since they're frequently too high, but nevertheless, it's a great starting place. With Zillow you can also search for homes nearby that recently sold.

One note about BuySide Realty, which FMF discussed. It appears to only be available in six states: CA, FL, GA, IL, VA, and WA.

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