FSBO Sales Increase as Median Home Prices Continue to Drop
March 22, 2007
USA Today/ CNN Money reports that despite a significant increase in home sales
in January, there is still more downward pressure on housing prices and it will
likely continue for the coming months. One of the biggest forces cited in their
coverage is the inventory of homes for sale, which rose 2.9% at the end of
January to 3.55 million – more than a six-month supply.
Median prices for a single family home in the USA a year ago were around
$250,000. Recently they have been charted at $223,000 and below.
Several factors are acting to keep price momentum on a negative trend:
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Tighter restrictions on mortgages due to concerns over lending practices.
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The evaporation of subprime loans for buyers to use for easy purchases.
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Excessive inventories of new homes, prompting builders to cut prices.
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A glut of existing homes and sellers dropping prices to remain competitive.
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Uncertainty about the future, causing buyers to stay on the sidelines.
When homeowners need to squeeze equity from their property during a buyer’s
market, the first place they typically look to save money is real estate
brokerage commissions. So it is not surprising that alongside the recent drop
in home prices, a corresponding surge in the number of do-it-yourself listings
– and For Sale by Owner (FSBO) signs and classified advertisements – has been
observed throughout the USA.
One nationwide real estate data and listing service – Bargain Homes – shows
almost 500 FSBO listings in the Miami area and approximately 200 in and around
Atlanta, Houston, and Orlando, respectively. The available For Sale by Owner
properties cover a wide range of prices, styles, amenities, and locations,
including these we selected at random:
4439 Greenwich Pkwy NW, Washington, DC: List Price $1,345,000
This huge 1920's Tudor near historic Georgetown is just steps from parks and
jogging trails and has 5 bedrooms and 4 ½ bathrooms. One of the finest
selections of cherry trees in the city is right out the front door, and the
home was meticulously renovated with 9-foot ceilings, a heated whirlpool tub,
skylights, and a balcony between bedrooms. The large modern kitchen is equipped
with top-of-the-line appliances. Spiral stairs take you down to a media room in
and new suite in the basement.
1632 Lucretia Ave Los Angeles, CA: List Price $860,000
A traditional 1925 California Spanish design 4-bedroom home with all original
architectural features. A 700 square foot mother-in-law apartment downstairs, a
beautifully landscaped garden with patios and fruit trees, copper plumbing, and
the price is negotiable if agent fees are omitted.
8200 Oceanview Ter Apt 408 San Francisco, CA: List Price $549,000
A 2-2 modern condo with a master bedroom suite that has a balcony overlooking
the garden courtyard. The kitchen has granite countertops and hardwood
flooring, and this unit is located on the top floor with stunning views of the
mountains and skyline. Near Golden Gate Park.
1238 Cedar Park Place, Stone Mountain, GA: List Price $170,000
Commuting distance from Atlanta, this home is situated on a spacious two-story
corner lot with 5 bedrooms and 2 1/2 baths, a fireplace, hardwoods, a side
entry double garage, and a large sunroom.
138 W Lake Ave. NW Atlanta, GA: List Price $165,000
The remodeled ranch-style 3-bedroom, 2-bath brick home is conveniently located
near downtown Atlanta, and sits a lovely half acre lot. The house has 2700
square feet, a fireplace, and a finished pine-paneled basement with a separate
entrance. Harvest fresh pecans from the two healthy pecan trees in the
backyard.
86 Randolph St. NE Atlanta, GA: List Price $128,000
This solid two-story duplex with great investment potential is centrally
located, and was recently completely renovated with all new plumbing,
electrical, HVAC, bathrooms, and kitchens. With hardwoods, 4 exposed brick
fireplaces, and front and rear porches it retains all its 1924 southern charm.
As the buyer’s market continues to exert its muscle, more sellers will go the
FSBO route in order to save money on commissions, rather than cutting their
asking prices. And a recent ruling by the Federal Trade Commission is also
contributing to the popularity of For Sale by Owner.
In the past, the National Association of Realtors (NAR) did not allow
non-members to list property in the MLS database. But the Federal Trade
Commission said that the regulation was unfair and has, for all practical
purposes, put a stop to the practice and opened up the MLS to anyone who is
willing to pay the entrance fees.
As a result, many home sellers are not fully represented by Realtors but only
pay a real estate broker to include their property in the Multiple Listing
Service (MLS). In essence, they are nothing more than traditional FSBO sellers
who participate in the MLS through a professional Realtor.