FSBO’s Fizzle In Orlando
The Orlando Sentinel reports on ahousing bubble trend. “Last year, 29 percent of the homes sold in Orlando were by owners, according to the Orlando Regional Realtor Association. That’s more than 10,000 properties, and, while there isn’t any historical data, it’s surely a record. My prediction? That percentage will head south, way south.”
“Last year, Orlando was one of the hottest real-estate markets in the country. And the thing with FSBOs is that they blossom in a seller’s market, because there really isn’t much selling you have to do. And, now? This is a buyer’s market, with lots of browsing and shopping around. Realtors are having a tough time, too. Some have wondered if agencies that staffed up during the heyday will eventually shrink.”
“In January alone, more than 6,000 homes were listed, about double the number of year ago. A chunk of those, I bet, were once for sale by owners. Overall, there are more than 12,000 homes in the metro inventory now. At the height last year, there were only a few thousand.”
“Prices are flattening. Builders are loading new homes with all sorts of freebies. Hindsight tells us the market changed at the end of the summer. If I were one of those housing investors who was doing funky flips and interest-only loans, I’d be shaking in my Guccis right now.”
“Beth Mallery bought one of those red-and-white ‘for sale by owner’ signs. She stuck it in the front yard. She waited. Then she went to a flat-fee listing, paying to get her College Park house in the computer database that Realtors use. She waited some more.”
“But after nearly five months with no sale, Mallery broke down and hired a real-estate agent. ‘It wasn’t as easy as I thought it would be,’ said Mallery, whose home has been listed for a few weeks.”
“I can’t blame Mallery for assuming she’d have a fast sale. She did her homework. She checked out what homes were selling for in her neighborhood. And she was a witness to the selling frenzy: Signs put in the yard one week were gone the next when a deal was done.”
“‘I was on the market for 45 days and had two people,’ said Kathy Parker, recounting her FSBO experience in Casselberry.”
“As for Mallery, she wishes she had put her home on the market several months earlier. And now she’s working with Sutton & Sutton to help her sell. ‘They tell me they see an increase in sales at the end of February,’ she said. ‘I’m hoping that the trend follows this year.’ But for now? She’s still waiting.”
With that mountain of inventory, turning to the toothfairy won’t help without price cuts. Still, it is a predictable sign of the bubble bursting.
Also noticed most FSBO signs in this area eventually changing over to some RE companies sign after a couple months. (Destin, FL)
Does seem that those RE companie signs are remaining up just as long though… so as we all know, no matter who is selling it, price talks…
I wonder how many of those FSBOs were actually realtors unloading their own homes? In CA, 1 in 50 are RE agents. Any data for FL?
Bottomfisherman -
Good point. My wife, on the way out the door this morning, just commented to me that about half of the FSBO’s we closed for in Washington State (sorry slightly OT regarding Florida) were Realtors. Certainly you could take a dual approach to that comment. One, they are unloading/selling “investments.” Two, they are doing the very same thing some counsel the public away from–being a FSBO and the commission savings issue.
I know in Palm Beach County we have 10,000 or so realtors and had 13,000 sales in 2005 (possibly a record). That is 1.3 sales per year per realtor. They better make that sale count. There will be many realtors and mortgage brokers answering to “Hey waiter/waitress” very soon.
FSBO’s tend to price their homes too high. They are not informed about the market as much and price off of emotion. FSBO’s can be successful but need to carefully look at comps and direction of market. Usually they place a sign in the lawn with price too high and hope for somebody to buy. NEver hope for anything my friends!!!!!!!!
A great saying from TX.
Hold out your hands palms up, wish in one hand and crap in the other and see which one fills up first.
“And, now? This is a buyer’s market, with lots of browsing and shopping around.”
Is it a buyer’s market? It seems like a very risky time to buy. Just because a market gives buyers choices and a small amount of leverage doesn’t mean it’s a “buyer’s market”. IMO you would be foolish to buy right now, unless other factors could justify the risk of being upside-down on your purchase in the next few years.
That’s the realtors’ spin for the slowdown; “Oh, you’re lucky, it’s a great time to buy.” Yeah, sure it is.
You are very correct. Buyers market will be some time again for me. I want to see some pain here first.
I think that the reference to buyer’s market refers not to whether it is or would be a good time to buy, but whether the buyer or the seller has more bargaining position or leverage. The argument that it is not a good time to buy if you are a buyer, is absolutely true.
You are very, very right.
Buyers market means buyers now control the tempo, negotiations, and overall market action and are now setting the price trend (down of course!)….. the pool of ready and willing buyers is shrinking across the entire national market and prices are now reflecting that.
The real bloodbath is coming beginning mid summer as the pool of buyers dries up totally and only lowballers and lottery winners are actively making offers.
Such is the life of a would be flipper. Hoping for quick bucks. Now she will be lucky to keep her shorts on. Multiply her experience by thousands across the bubble areas of the country, and it will be interesting. She will be lucky to not go completely belly-up if that was her only investment source. Ciao
“As for Mallery, she wishes she had put her home on the market several months earlier. And now she’s working with Sutton & Sutton to help her sell. ‘They tell me they see an increase in sales at the end of February,’ she said. ‘I’m hoping that the trend follows this year.’ But for now? She’s still waiting.”
And she is still waiting to sell! Come on. If you’re going to write a story about how FSBO is a bad idea, and how one should use a RE agent, well at least find an example where the RE agent sold the house!
I’ve sold in all markets as FSBO- if you have brains ,it’s easy
after the bust realtors will get 2% just like the UK
just like travel agents and stock brokers
LMAO wishful dreams.
From reading that article this is what I see.
Oh Please please please Mr Realtor save me from my stupidity. I have gazed upon zillow, reality trac, public records, and rehabbed with marble and granite. And the RE Gods have not been good to me. Please save me!!.
What is that you say you have a database full of people who were squeezed out and ready to buy. If i’m in a hurry you also have a database full of bottomfeeders from the last downturn that will gladly close in 2 weeks. What must I do to have you work with me? 6% commission oh is that all.
Please Please Please Mr Realtor save me from loosing my job because the seat shiners at my bank flooded the market with voodoo loans and the fed is threatening to take our charter because we have too much non-performing paper on our books and our R.E.O.’s could construct a city the size of miami. How can you save us.
6% commission oh is that all.
Please please please Mr Realtor can you help me stop the bleeding?
What’s that you say? Have I heard of short sale?, Um no. Can I bring 10k to the closing? Um no. What do you mean what year is that shiny SUV that I took out a heloc to pay cash for? Why it’s a 2005 of course I paid 70k for it. What exactly do you mean you’ll give me 8 grand for the keys??
Please please please Mr Realtor we’ve dropped the price and it still won’t move.
How much of the Buyers closing costs will I have to pay? A 7% commission is really not that bad. 10k bonus to the Realtor who closes it sure why not. Um what exactly do you mean is my wife available Saturday night cause the buyer likes her?. Sure she’ll be there at 8
LMAO 2 % not anytime soon
Living in Orlando, seems like there are a lot less FSOB signs. I called on one yesterday for kicks. An investor who bought a 1960’s 2 bed 2 bath home towards Oveido. I asked him about the home for sale and he immediately went on and on about all the renovating they did, new paint, put in a patio (concrete slab in back yard), tile through out the house and yada yada yada blah blah… Stuff most people would end up having to re-paint or rip out. I finally asked whats the price he said $257K.
Funny I can buy a brand new home for that right now and get incentives at a new developement down the road. One builder is selling new town homes 3 bed 2 bath pretty big, and offering closing costs and they start in the 230’s and they are with in 2 miles of this house. There are ads all over the radio stations down here most 3 bed 2 bath homes are starting in the mid 200’s and all kinds of upgrades and incentives.
Sounds like a lot of investors and speculators are getting run out of town by builders… If inventories don’t start moving fast I think Real Estate in Orlando is going to get ugly. Prices cuts have already started on the condo-conversions.
I hear you on that. My favorite weekend event now is driving down 436 and laughing at all the condo conversions’ bum-vertizing. Most of the ‘new’ condo developments you hear about on the radio are now starting in $100k’s. I think I heard on the news that the vacancy rate for apartments is 2% because of all conversions. I bet after a few months of no one buying them, they’ll convert back to apartments. Then watch the vacancy rate soar and rents plummet.
“If I were one of those housing investors who was doing funky flips and interest-only loans, I’d be shaking in my Guccis right now.”
Gucci’s??? You’ve got your questionable occupations mixed up. Gucci’s are for lobbyists. Most speculators wear jeans and sneakers.
Does anyone have any good data on the number of FSBOs currently on the market in SD? Any way to figure out what share of recent sales were FSBO? And am I correct in assuming ziprealty.com inventory excludes FSBO?
Thanks for your insights.
GS
Mad-tiger: You got that right… They drive around in Hummer H2’s, Ford Excursions or other massive SUV’s with signs on them that say “we buy houses”. The older ones wear jeans and white sneakers and try and look like contractors.
The young 20 somethings try and dress like donald trump. Show up at grand openings in suit and tie and always on the cell phone talking about the next big deal.
Any smart ones (speculators) are long gone, having sold out to the final fools. The greedy ones who are idiots think the gravy train will never end (it’s been such easy money so far) and are leveraged to the hilt, having taken whatever profit they made on their first few successes and spread it out on numerous more speculations. It will be FUN to watch them lose it all and have to turn in the keys to the Hummer.
Off topic but this article might explain why Fannie Mae stock is hanging in there while homebuilders crumble.
It’s failed before. Trust me. We all worked 7 day weeks from 1989 - 1994/1995 working out bad loans and disposing of properties.
Ahhh so you played in that garden too. Amazing how short some memories are.
Someone PLEASE explain how adding in the cost of a Realtor LOWERS the price of the home to the buyer? Name ay other asset where you have a middle man in the deal as an added expense and it lowers the cost.
The realtor will explain to the FSBO seller what price is likely to generate a sale. This can result in a lower listing price, and a lower price for the buyer. A lot of FSBO sellers way overestimate the value of their house and it just sits there - or some really ignorant buyer comes along eventually over pays for the property. The comission is irrelevant to the buyer (unless they’re dealing with a smart seller). I’ve always been of the opinion that an FSBO seller should give the buyer 1/2 or more of what they save in comission. In other words you use your “discount” to under price your represented competition and maybe still have a bit extra for yourself.
The other value of having representation in a slow market is that the agent gets to field all the calls and arrange the showings. Sometimes a buyer will look at a house 3-4 times before buying. When I was selling a house in a bad market a while back there would often be 5-6 showings a week - with no offers. It took 3 years to sell the house. That’s a lot of showings to arrange. Also, if stuff comes up missing in the house you have an impartial witness that can help in the investigation. In slow markets it can become a problem where certain less than honest “buyers” can remove small valuables while “looking” at the house. At least with an agent around it’s easier to verify who was where when.
bigdaddy: they can sell the house faster, reducing the time you have to hold the house. Also for the past few years realtors have been able to market the home to more people and spending more time selling the home, they will expose the property to more potential buyers some of whom might be willing to pay more.
Sell it yourself and you are limited in time and advertising potential. You list the house and only so many people see it but vs a realtor who is getting it a lot more exposure might be able to find you that “greater fool” willing to pay top dollar for the home.
Bottom line, list with a realtor, they have access to buyers. They team up with sources that FSOB can’t. Relocating services, advertising services, ect ect.
Its the old sales saying “sling enough crap at the wall and of its going to stick”.
Nah, just lowering the price gets plenty of attention.
Lower the price and pay a commission to the realtor that brings a buyer. That’s a 50% discount on part of the transaction costs.
That doesn’t work in a down market smart guy. The whole concept of the deal changes. And it increases your exposure to whatever can go wrong will go wrong. Especially with plenty of competition around and if your area is infested with R.E.O.’s your gonna wind up taking less than wholesale on it. Because the only thing that will be swimming to fsbo’s is the sharks and they love idiot FSBO’s trying to save a few bucks while they tie up there property in escrow while they try to double escrow it to some credit unworthy borrower.
Hope your not bleeding red while your trying to save a few bucks.
I’m not sure I understand the Arizona guy who says, “I want to see some pain here first.”
What is that about?
Why would you want someone to suffer? Will that somehow make you feel better?
I think what he says is true. You need to see “blood in the streets” before something (stocks, commodities, real estate, etc) becomes a great deal. It’s hard to pick the bottom though.
We as a country have become a bunch of “heavy eaters” (aka consumers). We don’t produce anything. If we were to compare ourselves to an athlete, we’d be 400 lbs overweight not even able to stand up and work. In fitness too, no “pain”, no gain.
Greenspan, the fed and all the bubbles they have created have really gutted this economy. The facade is starting to peel off. A lot of recent articles are finally starting to show the true cost of all this easy money. UAE purchasing ports, Wageless recovery, greater separation between rich and poor. Read an article today about the Thailand pickup tariffs. I was amazed that we have any tariffs anymore. The UAW is pissed because if this 25% tariff is lifted, and certainly Thailand is a much more friendly government than China, there goes the only competitve (profitable) product GM and Ford produce.
In the meantime (in the other universe of the housing bubble), we have roaches scrambling around selling real estate, selling mortgage products (to unlock the wealth in your house), or flipping to try to make easy money.
Yes it would make me feel much better (seeing the pain) for one. I want the speculators from California and Vegas that drove the market up in the Phoenix area to stick their tails between their legs and whimper after crashing with their speculative real estate gambling. Then maybe that nice house I wanted to buy 18 months ago and live in (that has almost doubled in price) will return back to reasonable price levels. Real buyers (owner occupied, staying put, living and working in the area) and previous owners that didn’t try to manipulate things out of greed should be o.k. I don’t want them to bleed, just all the speculators. It’s sickening to see the homes with resale signs in their dirt yards scattered around new developments that don’t have a bit of landscaping and have never been lived in. F@ck them, they played a risky game and now it is time to pay the piper!
Sutton & Sutton …. ‘They tell me they see an increase in sales at the end of February,’
Dang, wish I had one of those crystal balls! It must be Sutton & Sutton’s most valuable asset, worth ga-zillions of dollars. If I had one I’d skip the hassle of real estate and just use it to pick lottery winners.
For the buyer a FSBO deal should involve some haggling over the price, but this won’t work in a high demand market with Chinese money that has been the norm for the past six to eight years. Also, many people are of the low self esteem variety, and they prefer to have a realtor. I prefer a FSBO or even better, a new home deal from a desparate developer.
To use a realtor you have low self esteem. Dude lay off the ghanja.
SunsetBeachGuy should memorize your last statement though.
“I prefer a FSBO or even better, a new home deal from a desparate developer.”
The thoughts of a pure bottomfeeder (I mean that as a compliment btw)