FSBO reasons

Buyers ten years ago had pretty much the same tradition when buying a home as they did 30 years ago. They figured out what they wanted in a new home and where to live, and then went straight to a real estate broker's office and gave them all the information. The agent then searched through the multiple listing service to find matches to their requirements and then make arrangements for the potential homebuyers to see the houses.

Buyers now have a plethora of different ways of going about finding their own home and not having to deal with a real estate agent on both sides of the transaction. With the increase in the popularity of the internet, as well as the increase in house searching resources on the web, most buyers can plug in a few pieces of search criteria and pull up houses in the area they want to purchase in within seconds. They could call an FSBO seller and set up an appointment when they want to see the house directly with no go-between, and if they like the house enough, and the price is fair, you have your sale.

The Internet has revolutionized the housing market. It takes little or no effort, and the sites are streamlined so you'll always get the information you need to land the house that you want right away. You're only limited with how fast it can go by your connection speed. The real estate boom indirectly marketed this trend by exposing how much easier it was to use the Internet without going through a broker to find FSBO sellers to get the best deals without paying a commission.

1. Paint

Cost: $60 for two gallons of Benjamin Moore interior paint - enough to paint the walls and ceiling of a 12-by-15 room.

A little paint or varnish can go a long way toward improving your home's value. One fresh coat (along with a little sanding and caulking) wipes out the scuffs, chips, cracks and other damage that clearly convey wear and tear. Make your first priority the front door, where everyone from visitors to potential buyers lingers. You're standing on the front porch and you have a good 15, 20 seconds just to look. Inside, don't forget to freshen up the baseboards, doors and ceilings after you tackle the walls.

Just remember to stick to neutral colors if you're thinking of selling sometime soon, advises Lupberger. Buyers might not share your appreciation for the eye-popping combo of Fireball Orange and Traffic Light Green in the living room.

2. Basic maintenance

Cost: $250 for a home inspection, including walk-through and report of suggested fixes.

"You have to be careful with remodeling because you can spend money in the wrong place and not get it all back," says Lyle Martin, co-founder of Assist-2-Sell, a Reno, Nev.-based real estate brokerage. A common mistake: making aesthetic upgrades while ignoring basic maintenance. New bathroom tiles mean nothing if the plumbing is faulty or the underlying wall has dry rot.

If you don't address these problems before putting your home on the market, it'll cost you. Buyers traditionally negotiate a $2 discount for every $1 in damage that turns up in a home inspection, according to home inspection service HouseMaster.

Aim to complete a few small maintenance projects each year, like fixing that creaky floorboard or replacing a cracked light switch plate, advises Martin. Not sure where to start? Hire a home inspector to point out which areas would be problematic were your home on the market.

3. Energy-efficiency upgrades

Cost: $500 to replace your old clothes washer with an Energy-Star certified Frigidaire washer (including a $50 utility-provided rebate and an estimated $50 in energy savings the first year).

Energy-efficiency projects such as installing Energy-Star windows or swapping for a high-efficiency boiler are one of the few upgrades that hold their value in a down market . Not only will such improvements cut your energy bills, but they'll also be more attractive to buyers who are hunting for more earth-friendly homes. Homeowners can show buyers their utility bills as documentation of the effects of those energy-efficiency improvements. With energy prices so high, it makes a big difference.

Look for incentives and rebates through your utility providers and state and local governments. And don't forget about federal tax credits. Both the House and Senate have given tentative approval to an extension of the energy-efficiency tax credits from the Energy Policy Act of 2005, which offered a credit of up to $500 for select projects completed in 2006 and 2007. The two-year extension could become law by summer.

4. Install New Fixtures

Cost: $86 for an American Standard faucet, 10 drawer pulls and 10 knobs.

Giving a room a more modern look requires little more than a screwdriver and some new fixtures. New hardware can completely freshen a house. Things that are outdated are things that buyers would turn their noses up at. As far as fixes go, it's dirt cheap. New drawer handles or knobs can be had for as little as $2 each. There are also plenty of options out there for personalizing your space. Home Depot lists almost 900 kitchen and bathroom faucets priced below $50. You might also try swapping out ceiling-mount light fixtures or doorknobs.

5. Landscaping

Cost: $200 for five each of dogwood, forsythia and red-flowering butterfly shrubs, plus $100 for enough mulch to cover 200 square feet of planting beds.

A good first impression is crucial. Your carefully groomed landscaping - or, in contrast, weed-overgrown jungle - is one of the first things a potential buyer notices. But enhancing curb appeal is also something every seller does. You'll score more points with a yard that was obviously fixed up long before you listed your property.

Savings can be had as well, as long as you plant wisely. Drought-resistant shrubs require less water, while perennials won't require repeat plant purchases in coming years. Leafy deciduous trees shade your home from the hot summer sun, and allow maximum heat transfer inside during cold winters.

* How long have you lived in the neighborhood?
* What do you like best about living here?
* What do you like least about the neighborhood?
* If you could change one thing about this street, what would it be?
* Do all the neighbors get along with each other?
* Have you ever noticed anything odd about this house or yours?
* How is the crime in this area - has anything happened around here?
* How quiet is the neighborhood? Are there nuisances?
* Do you know why the seller is selling this house?
* What has the owner of this house complained about to you?

You'll be surprised what the neighbors might tell you and what you could find out. It might save you from making a terrible buying mistake and moving into a neighborhood where you could be miserable down the road.

When selling your home, if circumstances warrant, make amends with the neighbors before putting that sign in the yard. Because buyers will talk to the neighbors before fully committing to buy.

Source: Fizber.com

Foreign investment in Florida is flourishing. While 18 percent of real estate agents nationwide reported brokering at least one home sales transaction with international clients in 2006, 65 percent of Floridian real estate agents reported having done so during the same time period, according to the National Association of Realtors (NAR) Profile of International Home Buying Activity.

"Florida is always being spoken of very highly in Europe. People love to be here. They come out for vacations two or three times a year," Laszlo Kovacs, CEO of Florida Investment Marketing Inc., said.

The largest percentage of international buyers in the state in 2005 came from the United Kingdom, according to the 2005 NAR Profile of International Home Buyers in Florida. British real estate buyers made up 33.3 percent of all international property transactions in the state, Western European countries made up 21.2 percent and Eastern European countries made up 3 percent.

So, why is Florida real estate so attractive to European buyers? The low value of the U.S. dollar, combined with Florida's generally affordable real estate values, means Europeans can often find amazing deals on second homes and investment properties.

As recently as 2002 the euro and the dollar were equal in value, but recently the dollar has plummeted to an exchange rate of $1.58/%u20AC1.00. A home in Orlando at the median price of $230,000 would only cost a European buyer %u20AC144,808. The discount is better still for investors from the United Kingdom; that same Orlando house would cost a British buyer merely £115,409.

The median price paid by foreign real estate investors for a single family home in Florida was $299,000, according to the NAR Profile of International Home Buyers in Florida. This amount is significantly higher than the median price of all single family homes sold in Florida, which was $196,200. 58 percent of international buyers used a mortgage to finance their purchase, while 36 percent paid with cash.

Kovacs, who works primarily with clients in Eastern Europe, said he has "absolutely" seen an increase in the number of Europeans seeking to buy real estate in Florida. "The currency exchange has been in their favor," he said. "It's easier for them to buy something over here. They love the credit system that we have over here. They love financing. And they just love, generally, to deal with the United States." He estimated that Florida Investment Marketing Inc. has conducted 150 real estate transactions in the past year with buyers from Romania, Czech Republic, Slovakia, Ukraine, Russia and Hungary. These European buyers are aware of the state of the U.S. housing market, he said, and realize that now is a good time to hold on totheir investment rather than try to resell it quickly. The majority purchased property either as a personal vacation home (38 percent) or as rental property for investment (37 percent), according to the NAR Profile of International Home Buyers in Florida.

Will increasing European investment have a positive effect on the Florida housing market? It's possible, but difficult to say. Although Florida's values continue to fall, the number of sales made in the state has actually increased every month this year, and this has many feeling optimistic, according to The South Florida Sun-Sentinel.

"I'm expecting a lot more European investors to come; a lot more second home buyers," Kovacs said.

Since Europeans are buying in greater numbers because of the deals available to them, this could potentially reinvigorate Florida's housing market with "imported" money and lend some forward momentum. But only time will tell for sure.

Source: Fizber.com

Family-oriented neighborhoods with the most affordable homes and the best schools may be hiding in places you've never heard of
Echelon, N.J.? Arapahoe, Neb.? Lackland, Tex.? You've probably never heard of most of the small towns that make up BusinessWeek.com's 2007 list of the Best Places to Raise Your Kids. And there's a reason: Tight-knit communities like to stay private.

Working with national real estate researcher OnBoard in New York City, BW came up with a list of 50 places in the U.S. that offer kids-and their parents-the right combination of safety, community, and education. Whether you're expecting your first-born or preparing your kids for college, our list weighs the five criteria every parent should consider when choosing a new home: test scores, cost of living, recreational and cultural activities, number of schools, and risk of crime.

The results spanned the country: 11 places in Nebraska, 7 in both Illinois and Ohio; 6 in New York; 4 in Tennessee; 3 in Michigan; 2 apiece in Georgia, Kentucky, and Texas; and 1 each in Alabama, Mississippi, and Oregon. And on a semirural patch of land seven miles northwest of Cincinnati, we found the clear winner: Groesbeck, an unincorporated suburb that shares its government, law enforcement, and school system with the Colerain Township.

Groesbeck wasn't first in any of the five categories we judged, but a close look at the town and its people shows a community that provides a good measure of all the things a child needs to grow and prosper. It's not the largest suburb of Cincinnati (it's home to about 7,200 people) or the wealthiest (the median household income is $49,235, according to the most recent Census Bureau data). Pay Groesbeck a visit and you'll find one-floor ranch houses and multifamily condo units lining the streets, with the occasional patch of farmland dotted with cows, chickens, and bales of hay.

To gauge a community's education options, researcher OnBoard took into account the number of public and private schools in the vicinity and how well the reading and math test scores at those schools stacked up against the state average. Groesbeck's public school system offers parents a choice among three elementary schools, two middle schools, and one high school in the area-Colerain High School, whose Colerain Cardinals football team is currently vying for a championship. The town also neighbors one of the top private elementary schools in the state, St. James School, which was honored in 2007 for the fourth time by the No Child Left Behind Blue Ribbon Schools Program. To receive that award, a school must be in the top 10% of all schools in the state in both reading and math scores for the current year.

On our list, cost of living measures the area's average household expenditures compared with the national average in mortgages, rent, insurance, repairs, maintenance, apparel, education, entertainment, food and beverages, health, furniture, and transportation. Groesbeck ranks just 23rd in this category, but Colerain Township assistant administrator Frank Birkenhauer says "affordable housing, retail, and entertainment choices factor strongly into this being a great place for families."

Birkenhauer adds that Groesbeck has traditionally seen very few incidents of crime-another reason it tops our list. OnBoard identified places with the lowest crime rates by comparing the risk of rape, murder, assault, robbery, burglary, larceny, and vehicle theft with the national average risk.

But perhaps the most attractive feature of the small Ohio town for young parents is its proximity to a wide variety of recreational and cultural activities. There are two parks within a five-minute drive of the area, where kids can kayak on the Great Miami River, play on soccer and baseball fields, or take to the hiking trails. Being close to a major city like Cincinnati is a huge advantage, as a trip to the museum, aquarium, theme park, zoo, or sports venue is never more than a half-hour drive away.

There are new developments in and around Groesbeck, says local Realtor Tony Eckhardt of Huff Realty, a sign the town anticipates growth. But in a place where every face is familiar, he says, "People in Groesbeck tend to stay in Groesbeck."

Doubtless, many of the families in the other cities on our list feel the same way.

Source: Fizber.com

For most renters, the dream of home ownership remains strong. With the housing market becoming increasingly unstable; however, many would be homeowners are beginning to think they might want to wait before committing themselves to a mortgage payment.

There is certainly no doubt that a mortgage is a large responsibility; which is largely why so many renters remain unsure whether now is the right time for them to buy or not. Some home buyers tend to believe that if they do not buy right now they could be missing out on the appreciation that real estate tends to provide. They believe in the idea of investing their money in a home rather than throwing away rent money month after month. Other renters; however, point out that the increasing number of foreclosures indicates that many homeowners have overextended themselves financially.

The recent falling prices of homes across the nation are providing a new light on the subject. In addition, the rate of appreciation has remained well above average in the last few years. When considering whether now might be the right time to buy or whether you should wait out the market, it must be taken into consideration that owning still remains profitable even in the event prices remain the same or possibly even fall further.

If you are in doubt about the right steps to take it is important to remember that the general rule of thumb when making large purchases is to wait until you are sure the conditions are set to make a good deal. In some areas, housing prices have actually fallen substantially. Consider the amount of money you could actually save if you were to wait just a bit longer to buy a home.

Choosing the exact right time to buy a home is certainly not easy. Of course, most buyers would love to choose the perfect home at exactly the right time. The high demand in recent years has unfortunately created a situation in which many buyers find themselves involved in bidding wars. Currently; however, buyers do have a wider range of choices than in the past few years and home sellers are now ready to negotiate deals they never would have thought about just a few short years ago.

In the end, the decision to buy a home now or continue to rent and wait out the market a bit longer is a personal decision which should be dictated only by your financial situation and your desire to own a home. When making your decision; however, do keep the following in mind:

Always take the time to actually run the numbers. You can find a variety of financial calculators online that can assist you in determining whether buying or renting is the best move for you. Factors which can play a role include tax deductions so always make sure you review your taxes carefully.

In addition, make sure you are thinking in terms of both long term and short term. While many home buyers imagine they will remain in their home for years to come, the truth of the matter is that something unexpected can always arise which may require you to relocate.

Think about not just the tangible aspects of owning a home but also intangibles as well. While it is never a good idea to let your emotions rule the decision of buying a home or continuing to rent, emotions cannot be denied either.

So, is it better to rent or buy a home now? Well, remember that unless you are being evicted from your current residence for some reason there is no reason to make a snap decision and rush into anything. You have plenty of time to decide whether it is best for you to continue renting or go ahead and take the plunge to buy a home. Ideally, it is best to wait until you are completely comfortable with the idea of buying a home before you actually begin the process.

Source: Fizber.com

It's one of the biggest bets you can place on another person: You hire a real estate agent to sell your home.
She sizes up its charms, snaps some pictures, sets the price, writes a seductive ad, shows the house aggressively, negotiates the offers, and sees the deal through to the end. Sure, it's a lot of work, but she's getting a nice cut. On the sale of a $300,000 house, you'll typically pay a 6 percent agent fee of $18,000. That's a lot of money. But you tell yourself that you never could have sold the house for $300,000 on your own. The agent knew how to - what's that phrase she used? - "maximize the house's value." She got you top dollar, right?

A real estate agent is every bit the expert. She is better informed than you about your home's worth, the state of the housing market, even the buyer's frame of mind. You depend on her for this information.

As the world has grown more specialized, countless such experts have made themselves similarly indispensable. Doctors, lawyers, contractors, auto mechanics: They all enjoy informational advantage. And they use that advantage to help you.

Right?

Information can be a beacon, or information can be a cudgel; it depends on who wields it and how. In any transaction, it's common for one party to have better information than the other. In the parlance of economists, this is information asymmetry. There's value in asymmetry; it's the reason why someone, such as a consumer, will pay someone else, an expert, for his knowledge.

Of course, sometimes an expert might manipulate his advantage for his own benefit. If your doctor suggests that you have an angioplasty - even though current research suggests that angioplasty often does little to prevent heart attacks - your first thought won't likely be that the doctor is using his informational advantage to make a few thousand dollars for himself or his buddy. But as David Hillis, an interventional cardiologist at the University of Texas Southwestern Medical Center in Dallas, explained to The New York Times, a doctor may have the same economic incentives as a car salesman or a funeral director or a mutual fund manager: "If you're an invasive cardiologist and Joe Smith, the local internist, is sending you patients, and if you tell them they don't need the procedure, pretty soon Joe Smith doesn't send patients anymore."

Or consider these findings of a 1996 medical study: Obstetricians in areas with declining birthrates are much more likely to perform cesarean section deliveries than obstetricians in growing areas - suggesting that when business is tough, doctors may try to ring up more expensive procedures.

The Internet, of course, is all about smoothing over these asymmetries; in one industry after another, from life insurance to used cars, the Web has eliminated the expert's upper hand by giving once-exclusive information to the online masses. But some industries have been slow to change - real estate among them.

The best way to observe information asymmetry at work is to measure how an expert treats you versus how he performs the same service for himself. Real estate provides the perfect opportunity, since housing sales are a matter of public record, and real estate agents often do sell their own homes. Recent data covering the sale of nearly 100,000 houses in suburban Chicago show that more than 3,000 of those houses were owned by agents.

Before plunging into the data, a question: What is the agent's incentive when selling her own home? Simple: to make the best deal possible. Presumably, this is also her incentive when selling your home; after all, her commission is based on the sale price. And so your incentive and the agent's incentive would seem to be nicely aligned. But commissions aren't as simple as they seem. First of all, a 6 percent commission is typically split between the seller's agent and the buyer's. Each agent then kicks back half of her take to her agency. Which means that only 1.5 percent of the purchase price goes directly into your agent's pocket.

So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500. Still not bad, you say. But what if the house was worth more than $300,000? What if, with a little more effort and patience, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. Yet the agent's additional share - her personal 1.5 percent - is a mere $150. So maybe your incentives aren't aligned after all. Is the agent willing to put out all that extra time and energy for just $150?

There's one way to find out: measure the difference between the sales data for houses that belong to real estate agents themselves and the houses they sold on behalf of clients. Using the information from those 100,000 Chicago homes, and controlling for any number of variables - location, age and quality of the house, aesthetics, and so on - it turns out an agent keeps her own home on the market an average of 10 days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she pushes you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer - $150 - is too puny an incentive to encourage her to do otherwise. So her job is to convince you that a $300,000 offer is in fact very good, even generous, and one that only a fool would refuse.

This can be tricky. The agent doesn't want to come right out and call you a fool. So she merely implies it - perhaps by telling you about the bigger, nicer, newer house down the block that has sat unsold for six months. This is the agent's main weapon: the conversion of information into fear. Consider this true story, related by John Donohue, a law professor who in 2001 was teaching at Stanford University: "I was just about to buy a house on the Stanford campus, and the seller's agent kept telling me what a good deal I was getting because the market was about to zoom. As soon as I signed the purchase contract, he asked me if I would need an agent to sell my previous Stanford house. I told him that I would probably try to sell without an agent, and he replied, 'John, that might work under normal conditions, but with the market tanking now, you really need the help of a broker.'" In five minutes a zooming market tanked. Such are the marvels that can be conjured by an agent in search of the next deal.

So a big part of a real estate agent's job is to persuade the homeowner to sell for less than he would like while at the same time letting potential buyers know that a house can be bought for less than its listing price. To be sure, there are more subtle means of conveying this information than blatantly telling the buyer to bid low. The Chicago study also reveals how agents exert influence through the listings they write. A phrase like "well maintained," for instance, is full of meaning to an agent - the house is old but not quite falling down. A savvy buyer will know this (or find out once he sees the place), but to the retiree who is selling the house, "well maintained" might sound like a compliment, which is just what the agent intends.

An analysis of the language used in real estate ads shows that certain words are powerfully correlated with the final sale price of a house. This doesn't necessarily mean that labeling a house "well maintained" causes it to sell for less than an equivalent house. It does, however, indicate that when an agent labels a house "well maintained," she is subtly encouraging a buyer to bid low.

So consider the terms in the box on the previous page: A "fantastic" house is surely fantastic enough to warrant a high price, right? What about a "charming" and "spacious" home in a "great neighborhood!"? No, no, no, no, and no.

In fact, the terms that correlate with a higher sales price are physical descriptions of the home itself: granite, Corian, and maple. As information goes, such terms are specific and straightforward - and therefore pretty useful. If you like granite, you might like the house; but even if you don't, "granite" certainly doesn't connote a fixer-upper. Nor does "gourmet" or "state-of-the-art," both of which seem to tell a buyer that a house is, on some level, fantastic.

"Fantastic," meanwhile, is a dangerously ambiguous adjective, as is "charming." These words, it turns out, are real estate agent code for a house that doesn't have many specific attributes worth describing. "Spacious" homes, meanwhile, are often decrepit or impractical. "Great neighborhood" signals to a buyer that, well, this house isn't very nice but others nearby may be. And an exclamation point in a real estate ad is bad news for sure, a bid to paper over real shortcomings with false enthusiasm.

If you study an ad for a real estate agent's own home, meanwhile, you see that she emphasizes descriptive terms (especially "new," "granite," "maple," and "move-in condition") and avoids empty adjectives (including "wonderful," "immaculate," and the telltale "!"). She patiently waits for the best buyer to come along. She might tell this buyer about a house nearby that just sold for $25,000 above the asking price, or another house that is the subject of a bidding war. She is careful to exercise every advantage of the information asymmetry she enjoys.

But even the agent's advantage has been eroded by the Internet. After all, anyone can now get online and gather information about sales trends and housing inventory and mortgage-rate tremors. And recent sales data is starting to show the results. Agents still get a higher price for their own homes than for comparable homes owned by their clients - but since the proliferation of real estate Web sites, the gap between the two prices has shrunk by a third. The information has been set loose.

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