With home prices still dropping in many markets, and neighborhoods nationwide suffering from a surplus of real estate owned (REO) homes available for the choosing, home sellers have important decisions to make. One of those decisions involves how to list and market a house for sale. Selling a home on your own without using a real estate agent - generally referred to as "for sale by owner" (FSBO) - can be an attractive option, most notably because it eliminates the need to pay a real estate agent's commission. However the trade-off for trying to pocket a tidy sum of cash is that you're responsible for marketing the property and securing a buyer on your own. Listing your property online is an increasingly effective way of doing both. (Investing in this kind of real estate takes capital, time and careful planning. Learn more in Foreclosure Investing Not A Get-Rich-Quick Venture.)
By the Numbers
An overwhelming number of home buyers are using the internet to find homes locally or long-distance. According to a 2007 Appleton-Young/California Association of Realtors (CAR) study, 70% of buyers surveyed said they used the internet as an important part of their home-buying and selection process. That's up from 28% in 2000 - a 150% increase in seven years. And 100% of all buyers surveyed went online to find a home before they searched for a real estate agent to help in the buying process.
Knowing that buyers are using the internet, the question is how can you get your property online and what are the potential drawbacks of challenges to doing so? First, you need to realize what you're up against when you're marketing your home online as a FSBO property. One tool that realtors have at their disposal to attract buyers and market properties is the online Multiple Listing Service (MLS). Realtors nationwide post their listings and share other agents' listings with their buyers. If you have ever used a real estate agent's website, you're viewing homes on your local MLS, and even other realty sites use the national MLS. Real estate agents and CAR pay dues to maintain both the local and national MLS.
Listing on MLS
Don't be discouraged by the MLS presence. It is possible to market your home online as an owner-seller - you can even get your property on MLS. However, you can't post your home on MLS by yourself. You will need to work with either an individual agent or an organization serving FSBOs that will charge a flat fee and/or a reduced commission to get your home on the local and/or national MLS. Getting your listing on MLS does not guarantee other marketing services a traditional real estate agent employs. Scores of real estate companies serving FSBOs offer an a la carte menu of supportive marketing services for owner-sellers, including development of your own website with unique URL, creation of print flyers and lawn signs, etc. In addition to the MLS, there are sites to specifically engage buyers that are looking for a FSBO property.
The Pros and Cons of Listing Your Property Online
- You are more likely to connect with a prepared buyer. The Appleton-Young/CAR study found that internet buyers spent, on average, nearly five weeks doing research while a traditional buyer (one relying on print marketing materials only) undertook less than two weeks of research.
- You can reach a wider scope of buyers. The survey also revealed that internet-using home buyers searched an average radius of 242 miles from their current residence for a new home, while traditional buyers' new home purchase was only 25 miles from their current residence.
- Your listing may go unnoticed. One of the primary benefits of FSBO is that you do not have to pay a real estate agent commission. However, that's also why many agents simply will not share FSBO online listings they find with their buyers. Unless you note that agents are welcome (meaning that you are willing to pay a portion of the buyers' agent commission, which typically average 2.5-3% of the home selling price), you may miss out on connecting with qualified buyers that are working with agents.
- You may not get other, needed support. Just getting your home online may not be enough to attract a buyer. Depending on your local market conditions (the number of other local properties at your price point), you may need to employ more aggressive marketing tools, such as search engine optimization (SEO), website development, listing on locally-focused sites and national sites.
Buyers are searching for homes online and in a buyers' market it can pay to make sure your property is on their radar screen. Do a little research to find the best, most affordable service to help you effectively market your property online. (Find out if the house you're eyeing is really a good deal. Find out more in Foreclosures: Bargains Or Money Pits?)