SHOULD I TRY A FSBO SALE?
What about selling my home by myself, without a realtor?
It’s a valid question many homeowners ask and one that became more common within the last few years when the housing market was in a frenzy. When houses were flying off the shelves and for-sale signs couldn’t go up fast enough, why wouldn’t you try to capitalize on bidding-war prices and avoid paying realtor commissions? The simple answer: a vast majority of For Sale By Owner homes end up netting less money than homes listed with a great realtor.
According to The National Association of Realtors (NAR) annual research report, 10% of homeowners sold their property “FSBO” (For Sale By Owner) in 2022. This was a large increase from 2021, most likely due to the ever increasing low inventory and wildly strong seller’s market, which led more homeowners to try FSBO than in previous years. We also saw eager homebuyers contacting more homeowners of unlisted homes directly in an attempt to grab a sale prior to the home going on the market. Until the 2022 report, the rates of FSBO homes hitting the market had been dropping. Now that the real estate market has changed and is rapidly cooling off, most expect the next NAR report will show the rate of FSBO home sellers on a downward trend again.
In 2022, the median sales price of a FSBO home was $260,000 (in cases when they didn’t know the buyer). When compared with the price of homes sold by a Realtor who listed the property on the public market, there’s a huge difference - a whopping $120,000!! The median sales price for a Realtor listed home was $345,000 across the country, a difference of 25%! The number one reason a home seller chooses to FSBO their home is to avoid real estate agent commissions. The average real estate agent commission is approximately 5%. Therefore, homeowners chose to save on average 5% of their sales price, but lost 20% of their home value in the process. That doesn’t sound like a sound financial decision, does it?
If you have questions about the numbers on your own home, we’re happy to help and will always advise you to take the path that’s in your best interest. Just hit reply or give us a call today!
An Update On Fed Rates:
The Federal Reserve recently raised rates by another 0.50 percentage points in an attempt to curb inflation. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher. For a 30-year, fixed-rate mortgage, the average rate you'll pay, as of December 20th, is 6.47%, which is a decline of 16 basis points compared to one week ago (a basis point is equivalent to 0.01%). The most common loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will usually have a greater interest rate than a 15-year fixed rate mortgage - but also a lower monthly payment. Although you'll pay more interest over time - you're paying off your loan over a longer time frame - if you're looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
* Information provided from an article written December 20th by “CNET.”
Why Now Is A Good Time To Buy
Echoing our last newsletter, we believe it’s still a uniquely great time to purchase a home, despite higher interest rates. Many buyers are still in a “holding pattern”, so there’s much less competition from a buying standpoint than we’ve seen in the past several years. Bidding wars are a thing of the past and the majority of buyers right now are receiving larger credits from sellers, such as repair and price negotiations. This unique market for buyers won’t last forever, so it’s important to really think about buying a home soon if you think you want to make a move in the next year or so.
We believe more buyers will enter the market in 2023 as Spring arrives, which will create more competition and possible multiple offer negotiations. If you can comfortably afford a mortgage payment right now with a higher interest rate, the amount of money you can save when buying a home in the next 4 months compared to later in 2023 could be significant. As we’ve advised our current buyer pool, it’s better to buy now when competition is low and refinance later when interest rates inevitably decrease.
Merry Christmas friends!
We hope you all have a wonderful holiday season that’s full of joy and serenity! The holidays are a hectic time for many, so make sure to take the time to relax and reenergize when you can. Soak up the quality time you get with loved ones and surround yourself with the things you’re grateful for! It has been another spectacular year and we wanted to do something a little different as a token of our appreciation.
We all know so many people in need here in our local communities, in our nation, and across the world. So, we will be looking into some organizations to give back to in the coming year as part of our continued mission to build up our community and our fellow humans. If you have an organization you love, support, and want us to look into, hit reply and let us know! Thank you again for your trust in us. We wish you and all your loved ones a wonderful Christmas and New Year!