Video Courtesy of KSL.com

The fact is, it is tough to sell real estate by owner. Only a small percentage of sellers who list their homes by owner are able to sell by themselves. For sale by owner homes are not part of “the network” and don’t get nearly the exposure homes listed with real estate agents get.

From a buyers perspective it is less convenient, and less comfortable to view and buy for sale by owner homes. A few of the reasons include:

• More difficult to find the homes for sale – It’s hard for buyers to find out about FSBO properties for sale as they’re not easily sorted and filtered and found on the MLS and on top Utah homes for sale websites. Nearly every home buyer begins their home search online at sites like NorthernUtahHomeSearch.com or UtahCornerstone.com that easily allow buyers to view all the MLS listed homes for sale. Most for sale by owner homes are non existent to potential buyers.
• More difficult to arrange showings – It’s much more difficult to get hold of the sellers directly than Real Estate agents who answer calls and show homes for a living. When sellers are finally, and actually contacted they need to coordinate their schedules to come up with an convenient viewing time for both buyer and seller.  In contrast, when a potential buyer arranges to see homes for sale with a Realtor, they simply need to tell their agent the time they want to see homes, and the list of homes they need to see. Working with a buyers agent, buyers can see dozens of homes in just a few hours.
• Uncomfortable Showing Experience – When viewing for sale by owner homes, the seller is almost always present. This creates an uncomfortable and awkward situation for buyers who would much prefer having the privacy to view the home at their own leisure, in an environment where they can share their honest opinions about the home’s features. When the seller isn’t present buyers don’t have to worry about offending the seller who may be emotionally attached to their home. When viewing listed homes, sellers are instructed to leave the home and buyers are escorted by their buyers agents, who represent them.
• Uncertainty of how to handle the transaction – Most buyers, especially first time home buyers, have no idea how to write up an offer, let alone get the purchase transaction started. It is especially unknown to buyers how to account for issues like: how to handle earnest money, how to include contingencies, what to do about due diligence, home inspections, repairs, and how to protect themselves from financing and appraisal issues.
• Uncertainty of handling complications that arise – What happens after the home inspection is completed and the inspector recommends repairs? What is the seller required to do? How do you go about getting repairs done? What happens if the lender is unable to perform and the mortgage won’t be ready by the set deadline?

Most people who attempt selling by owner do so because they want to save money. They want to net the maximum possible dollar amount out of the real estate transaction. There’s nothing wrong with this, but there are a couple of points sellers attempting to go about it by themselves need to consider if they want their house to actually sell:

1. For Sale by Owner homes must be priced less than market value- Selling by owner is a huge disadvantage in terms of marketing exposure. Buyers aren’t going to go about the extra work of finding a home, unless they are going to be rewarded by a discount in price.

2. FSBO sellers need to be flexible with the price – For sale by owner sellers should make sure the advertised price allows room to pay for a buyers agent commission/and or closing costs.

When home buyers begin the search, they almost always begin by using a real estate agent. Most homes for sale in Utah are listed by real estate agents, and chances are that a listed home will be the one they eventually buy. When buyers begin working with real estate agents, they sign a “buyers agency” agreement. Buyers don’t have to pay ANYTHING to their buyers agent if they buy a home that is listed on the MLS. If the home is not listed on the MLS, then the buyers must pay their agent a commission, typically 3%, if a FSBO seller is unwilling to pay their commission.

Home buyers themselves almost Never have money themselves to pay their buyers agent a 3% commission. They usually need every penny they have saved to go towards down payment and closing costs. So, if for sale by owners aren’t willing to pay a 3% commission, then they have essentially eliminated 90% of the potential home buyers who can actually find their home that is for sale.

This last week I helped a potential buyer look at a for sale by owner home. Before viewing the home, we asked the potential seller if they would be willing to pay an agent commission. They said they would, and I ended up showing them the house for sale. The buyers really liked the house, and were ready to make a FULL PRICE offer. When we talked to the sellers again, they said they would only pay a lower agent commission, and that the commission would have to be added on to the purchase price. When the buyers heard this, they decided to back off. The FSBO sellers waffling cost them the deal of represented, qualified, home buyers. Had the home been priced a couple thousand more, and had they been willing to pay the buyer agents commission, this house would likely be under contract today.

By Alan Barker, Cornerstone Real Estate

This morning the ever knowledgeable and on top of it real estate agent Taylor Clark mentioned to me that USDA is out of money for the popular rural housing loan. He said that Wells Fargo has already stopped applications for Rural Housing loans as they won’t be able to be underwritten.

This is a pretty big deal for Cache Valley Real Estate. The USDA Rural Housing loan is one of the few 100% financing loans available, and most of the towns in Cache Valley are classified as rural areas that qualify for this loan.

Well after looking things up I found this information from mortgagenewsdaily.com:

This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.” This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita. Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you. Should you have any questions, you may contact the Single Family Housing Guaranteed Loan Division at (202)720-1452.

Every year USDA runs out of money for their fundings and normally you are not affected by this however, this year is very different. The USDA Section 502 guaranteed Rural Housing Program will have exhausted there 2010 fiscal funds by the end of April. The USDA would need to receive about 150 million in funding to be able to continue funding loans for the rest of fiscal year 2010.

In past years USDA has appropriated funds from other areas to make up for the shortfall in funding dollars giving lenders the oppurtunity to continue to fund USDA loans.

Why is this year any different then past years? USDA is removing the “subject to receipt of appropriated funds” from their conditional commitments meaning there is no guarantee that lenders will be able to guarantee the loan and fund it.

Why are they doing this? The money usually runs out around the end of the government’s fiscal year which is September 30th and USDA basically tells everyone we’ll get you’re funding commitments either this year or next. Since the money is running out so early in the fiscal year USDA is not sure where the money will come from therefore will not put “subject to receipt of appropriated funds” on their conditional commitments. Last year the money ran out in March but the stimulus provided the gap funding to carry the program thru to the end of the year but this year there is no stimulus money.

via USDA Rural Housing Funds to Run Dry by April. Lenders Already Dropping the Program.

The Utah commercial real estate market still has a long way to go before it begins to rebound from the current economic slump, according to a local analyst.

Speaking to an audience of about 520 people at the Utah Commercial Real Estate Symposium in downtown Salt Lake City, Michael Morris, vice president of the Zions Bank real estate banking group, predicted this year would be a lot like last year: very challenging.

“The recession we’re experiencing now is an over-leveraging event,” said Morris, who prefaced his comments by stating he was not speaking on behalf of Zions Bank.

He said previous downturns have been due to over-building. Because this recession is debt- and credit-driven, he said, 2011 will probably be the time the market begins to make a more sustained comeback.

One analyst predicted that 2010 will “likely bring flat to slightly negative growth” in commercial real estate. Wesley Cornelison with CB Richard Ellis wrote in the symposium market analysis that it will probably “take several years to work out office space usage inefficiencies once job growth starts to rebound” in the Salt Lake metro area.

The retail and industrial sectors are also expected to struggle through 2010 as the economy struggles, the report stated.

Meanwhile, the event’s keynote speaker, Gov. Gary Herbert, said his administration is dedicated to helping the market grow through policies that promote “free markets.”

Free markets and free enterprise are critical to growing a strong state economy, he told the audience of commercial real estate professionals in the ballroom of the Hilton Hotel.

“Every decision I make is based on the prism of ‘Will it grow the economy?’?” Herbert said.

If the state is unable to grow, it won’t have the financial resources necessary to accomplish its economic goals, he stated.

To that end, Herbert — who once owned a real estate firm — said he work diligently to provide an environment that will be conducive for business growth.

Also at the Tuesday meeting, officials will unveil the Envision Cache Valley plan which involves principles of growth gathered at a series of public meetings. Runhaar says the gathering is a chance for the county and cities in the county to learn from each other.

The Logan area lost 23 percent of its construction jobs from November 2008 to November 2009, according to a new report from the Associated General Contractors of America (ACG).

The decline ranks Logan 16th among metropolitan areas in the U.S. that have lost the most construction jobs. As for actual numbers, Logan’s employed construction workforce dropped from 3,100 workers in late 2008 to 2,400 workers in late 2009.

Chris Nelson with the University of Utah’s Metropolitan Research Center said this week that by 2030 the Wasatch Front, including Logan, would need 450,000 additional housing units — 50 percent more than now — and 1.1 billion feet of commercial space, more than double what’s out there now.

Not all real estate brokerages and agents are the same. Cornerstone Real Estate Professionals are the premier Logan Utah industry leaders. When buying or selling with Cornerstone, you can be confident you are getting high quality, top producing agents who get results. Cornerstone is different. Not anyone can be a Cornerstone Real Estate Professional. Cornerstone only highers agents they would want helping them in a real estate transaction.

Cornerstone Real Estate Professionals:

* Embrace Technology
* Know how to communicate
* Are Honest, Dependable, and Reliable
* Are there when you need them
* Have a system which yields results
* Work closely with owners trying to sell fsbo to help them sell their homes, or to help home buyers have a more inclusive home searching experience.
* Work for you and your customer satisfaction