By Robert Irwin
Last summer a consensus seemed to form amongst sellers that the bloom was off the housing market. Many sellers across the country, feeling that prices had peaked and were going to start heading downward, panic sold.
There were many reasons for them to feel this way. The economic recovery, such as it is, had been going for more than two and a half years, which is about par for recoveries before beginning to run out of steam. The Fed was talking about raising interest rates and, indeed, home mortgage rates were rising. And the housing boom had been on for four to five years. With prices staggeringly high in many areas, sellers could be forgiven for thinking, "How can they go higher?"
As a result, a wave of panic selling set in. Many "by owner" sellers immediately listed their properties hoping to sell more quickly through an agent. (A common misconception is that you can always sell faster through an agent than through yourself.) With so many properties suddenly coming onto the market, inventories rose and the average time to sell increased. In my neck of the woods, Los Angeles, DataQuick (which follows such trends) reported that the time to sell nearly doubled from around 30 days to about 60 days. That, of course, suggested that the market was collapsing and even more sellers jumped in.
Of course, hindsight is always 20/20 and as we now know, the demise of the real estate market never really came about. Today, housing prices are higher than ever and continuing to rise. In Los Angeles, December prices (the last month available) were more than 21 percent higher than last December and inventories were significantly lower (although the average time to sell still remains about 40 days). The NAR (National Association of Realtors) reports that nationally, sales prices are up a solid 10.4 percent.
It's hardly time for panic selling - plenty of time to consider selling "by owner."
Again, there are many reasons that the housing market didn't go "bust." For one thing, houses are in short supply in most parts of the country. Construction during the 1990s was off due to a severe real estate recession and it has never caught up with demand. There simply aren't enough homes to go around, and that's sure to keep prices high.
Further, while mortgage rates did rise a bit during the summer, they've since come down. Last week's average rates were about 5.6 percent, close to historic lows.
Finally, though the current housing market boom has been going for four or five years, that's not long. Over the last century most housing booms lasted 7 years or more.
All of which is to say, while no one can predict the future, this market may have a lot of steam left in it.
To get a quicker sale when you're the "by owner" seller, consider giving the buyer a discount. Instead of claiming for yourself all of the savings you get by not paying a commission, spread the wealth around.
Consider, if your house is fairly priced at $400,000 (just because it's a FSBO doesn't mean it will fetch more than market), at a 6 percent commission, you're saving $24,000 selling it yourself. For a quicker sale, cut that amount in half - discount your home $12,000. Suddenly, your home is selling for 3 percent less than your neighbor's listed property. That's a big incentive for buyers to move quickly to cut a deal with you.
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn. In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column forOwners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.