Real Estate Advisor: January

The Risky Side of Selling a Home on Your Own

The vast majority of sellers list their home with a real estate agent, but some individuals choose to go through the selling process on their own. Selling a home “For Sale By Owner”, while entirely possible, does come with a list of hurdles and some significant risks.

Un-represented sellers are motivated to save the cost of the agent’s commission. In many cases, however, selling without assistance can result in a lower closing price that negates such gains. In a survey of more than 7,800 buyers and sellers from around the country, the 2005 National Association of Realtors® Profile of Home Buyers and Sellers showed that the median price for homes sold directly by the owner was 16 percent lower than homes sold with the assistance of a real estate professional.

FSBO vs. Direct Sales
In 2005, only 13 percent of home sellers conducted transactions without the help of a real estate professional. However, of these transactions 39 percent were “closely held”, meaning that the two parties knew each other in advance and the home was not fully placed on the open market.

Risks
So just what are the potential downfalls of selling your home by yourself?

Setting the Wrong Price - In the world of real estate, setting a good asking price is absolutely critical. Owners frequently have a difficult time setting a realistic sales price, even if they have paid for an independent appraisal. Impartially evaluating your home and all it’s shortcomings (and selling points) is a lot to ask. An overpriced listing can linger on the market and necessitate later price drops. An under priced listing can either scare off wary buyers or can result in a closing price significantly below market value.

Under Exposure - Attracting serious buyers requires much more than a classified ad and a sign in the front yard. Many of the marketing avenues that agents utilize are costly or require resources that the average homeowner just doesn’t possess. Between 75 and 80 percent of buyers use the Internet during their home search. Savvy agents come equipped with a strong Internet presence that draws online buyers to your listing.

Lack of Marketing Experience - Most of us are not practiced in the art of promotion, and don’t possess a great deal of knowledge or perspective when it comes to marketing real estate. A skilled real estate professional knows the techniques to make your home competitive with comparable properties in the local marketplace.

Buyer Wariness - Some buyers will avoid a FSBO listing for fear either there is “something wrong” with the property or that the asking price will not be based on current market trends.

Buyer Haggling - A FSBO listing can attract buyers out to find a “deal”. These individuals are more likely to see the listing price of a FSBO property as merely a starting point.

Failure to Disclose - Failing to disclose or fully disclose any defects in your home is huge liability for any seller. Improper disclosure or nondisclosure usually results in lawsuits, an unpleasant prospect for all parties. Licensed real estate agents must are required to stay up to date on all mandatory local, state and national disclosure requirements

Commission to Buyer’s Agents - Nine out of ten homebuyers use a real estate agent in the search process. If a potential buyer is using the services of an agent, their commission will generally be taken out of the selling price.

Lack of Negotiating Experience - One of the most important services real estate agents provides is the negotiation as a transaction nears closing. Sellers without representation can employ the help of a real estate attorney, but their primary function is to ensure that the contract is not marked by errors or omissions.

Preventing Water Damage in your Home

For homeowners, water can be a quiet villain. This seemingly innocuous elemnt can harm your house gradually over time or in sudden disastrous events. A home that is water damaged can be a health hazard to its occupants and is very often expensive to repair.

Common Causes of Water and Moisture Damage
Water damage can be grouped into two general sources: 1) leaks of external water through the home’s exterior and 2) moisture accumulation from internal sources. Below are some of the most frequent causes of moisture damage:

Roof/Flashing Needs Repair – Worn or broken roofing material can expose your home to moisture intrusion and damage. Most leaks occur around joints and intersections of roof surfaces.

Gutter/Downspout Problems – Clogged gutters or downspouts can create water overflows that damage walls or the home’s foundation.

Changes in Landscape – Alterations to the landscape’s grade or newly installed sprinklers may alter the drainage of water towards the home’s foundation.

Window/Door Seals Need Repair – Damaged, worn, or improperly installed seals and flashing can allow wind driven rain to enter your home.

Collecting Groundwater/Rainwater – Pools of un-drained water that from in the rainy season can damage foundation walls and lead to mold growth.

Plumbing Leaks – Plumbing fixtures can suffer from slow leaks or sudden bursts, and leaks inside walls may go undetected for an extended period of time.

Condensation – Condensation that forms on windows, un-insulated pipes and interior walls can cause significant damage.

Poorly Maintained Home Systems – Heating and cooling systems that are not regularly maintained are subject to leaks, mold and moisture problems. Unchecked sump pumps can lead to major water damage if failure occurs.

Prevention: Room by Room
No home will ever be immune to water damage, but a regular assessment of common risk areas can greatly reduce the chance of future water damage.

Bathroom

Kitchen

Utility Room

Attic

Basement

Laundry Room

Outside Your Home

Roof

If Major Water Damage Occurs
Even well prepared homeowners can be hit with the headaches of a major water event. Burst pipes, overflowed toilets or natural disasters can occur with little, if any, warning. Should a major water damage event affect your home, taking action quickly and safely is essential.

Timely action can reduce the amount of damage to personal items and lower the chances that any structural damage will occur. Responding swiftly will also reduce the amount of mold, rust and rot that occurs in the home.

The number one priority in such instances is to protect your loved ones. In the case of natural disaster, heed the precautions of local emergency management officials. Make sure any water-damaged areas are structurally safe and disconnect all electronics and electrical devices in the room. If necessary, stop the flow of water by turning off the main water supply to the house.

If an extensive water level is present, contact a plumber or water extraction service (don’t forget to ask for an itemized estimate). Remove standing water by using a pump or wet-dry vacuum. Begin ventilating the area as soon as possible with the use of fans or dehumidifiers. Water-damaged materials should be removed from the home for health reasons. Carpets damaged by clean water may be salvageable, but carpets damaged with dirty water will likely need to be replaced.

Resources
The information in this guide is based in part on the U.S. Department of Housing and Urban Development publication titled Moisture-Resistant Homes. To read the full guide, visit http://www.huduser.org/publications/destech/moisturehomes.html.

Other resources:
EPA “A Brief Guide to Mold, Moisture and Your Home” http://www.epa.gov/iaq
HUD Healthy Homes Consumer Information http://www.hud.gov/offices/lead/hhi/consumer.cfm
FEMA “Repairing Your Flooded Home” http://www.fema.gov/hazards/floods/lib234.shtm