For Sale By Owner, or FSBO, is becoming an increasingly popular way of getting the business of selling a house done – without paying hefty commission fees to a real estate agent. Here are six must-know tips to help you be a successful For Sale By Owner seller.

1. Know the real estate law in Missouri

You don’t need to know every in and out of real estate law. You do need to understand what your obligations as a seller of real estate property are. Check with the Missouri Real Esate Commission office to find out about:

mandatory disclosures
fair housing practices
necessary inspections
any documents that you must have handy (lead paint certificates, for instance)

2. Take advantage of the multiple listing service

The Multiple Listing Service, or MLS, is a service open to licensed real estate agents. Its purpose is to allow realtors to share information about listings with each other. When your house is listed with the MLS, it’ll get exposure to the people who get buyers out to see your house – other realtors. You can’t list your house with the Multiple Listing Service on your own, but many real estate agents are willing to work out a flat fee listing price, or a special contract with an FSBO owner that only pays them commission if they find the buyer for you.

3. Get a realistic appraisal or market analysis for your home

One of the places where a real estate agent is invaluable is in helping their clients set the right price for their house. If you’re selling your house on your own, you’ll need to do a little digging to find out what the market in your community is like. The single biggest mistake that FSBO sellers make is pricing their home too high. By getting an appraisal that takes the neighborhood values into account, you can avoid that trap and price your home to sell while still making as much profit as possible in the sale.

4. Do some research to see what’s selling in your community

This is probably one of the most overlooked bits of research you can do. Look beyond selling price when you check into recent sales and study what those homes have in common. Then take a look at homes that have been on the market for a while. You may be surprised to find what seems like a silly detail – for instance, that white houses nearly always sell faster than any others. Knowing what features attract buyers can help you plan any renovations with an eye to improving the chances of selling your home quickly.

5. Take some time to learn how to show a house

Showing a house isn’t quite as easy as it sounds. One of the hardest things to learn is how to open the door to buyers – and walk away. They’re not here to take the grand tour – they’re here to explore. Introduce yourself, show your buyers in – and let them know where they can find you if they have questions. Then step away and let them wander through the rooms on their own. Few buyers are comfortable opening closets or examining features if the current owner is hovering over their shoulder

6. Know your community

Be prepared with ready answers to questions about your neighborhood and the larger community. You should know the answers to questions like, “Do you know which school my children would attend?” and “Where is the nearest grocery store?” You should also take the time to prepare positive answers to questions like, “What are the neighbors like?”

Just keep in mind that knowledge is king. The more you know about the home selling process, the real estate market and your community, the better you’ll do in a For Sale By Owner sale.

Staging is about setting the stage for potential buyers, making it easy for them to imagine themselves living in your home. Whether you’re a for sale by owner, or using an agent, here are a few tips to do just that:

1. First Impressions Matter: You only get one chance to make a solid first impression, and those initial 10 seconds can make or break your sale. Look at your entryway. Is it clean and free of clutter? It is the first part of your home to greet your guests and gives them something to study as you amble up to open it, so you don’t want a door that is flawed in any way. It’s the small things that count, too, like new/clean light switch plates, and door knobs – things buyer will see and touch when they’re in your home.

2. Create Curb Appeal: Part of a buyer’s first impression will be judged by your landscaping and the outdoor maintenance of your property. Manicure the bushes, mow the lawn, plant pretty flowers. Work to create an impressive exterior, one that will draw buyers in!

3. Declutter: Get rid the clutter out of sight! – Anything that you don’t need, put away. Rent a storage space if you have to. Doing this will make the rooms appear larger and full of potential, ideal for helping the buyer imagine living in the home.

4. Keep it Clean: Clean your home from top to bottom. Everything should be spotless, like a show home. Get inside the cabinets and drawers, too. Potential buyers will open everything.

5. Keep it Smelling Fresh: A pleasant aroma will invite guests into your home and it might even distract them from any clutter you didn’t have time to clean up. On the day of a showing, try baking cookies letting the scent waft through the entire house. Don’t use lysol to cover up scents… it will be noticed!

6. Make Sure Your Colors are Neutral: If you repaint, choose neutral colors that could accommodate a variety of tastes. Remember, your preferences don’t matter here—this is about appealing to the largest number of potential buyers. Try to avoid bright whites, except on trim, in favor of warm creams and beiges.

7. Fix Ups: This should be obvious, but it is worth saying – if anything is broken, fix it or have it fixed! Buyers want homes that are move-in-ready, not homes that need work done. Have you been waiting to replace the broken window in the bathroom, or were you putting off cleaning or replacing the stained carpeting in the living areas? Do it now!

8. Create Clusters: Be willing to experiment with your furniture arrangements. Make sure that high-traffic areas are clear of excess furnishings to maximize space, and reposition sofas and chairs into cozy conversational groups. Arrange things to make the path for traffic flow obvious.

9. Details: Essentially, staging is about uniting various elements into one cohesive design. Think about details: An odd number of accessories is preferred, especially threes. Consider scale and placement when arranging knick-knacks, or try grouping them by color, texture or shape.

10. Turn on the lights: To make your home more inviting, increase the wattage in your lamps, and make sure your home is well-light when showings are scheduled.

Stage your home effectively, and you are on your way to a speedy and successful sale. Remember to focus on appealing to the largest pool of buyers and to do everything you can to put your home’s best foot forward!

Many buyers perceive this market as the greatest buyer’s market we’ve ever seen… and, I agree, buyers have a lot of negotiating power these days.  So, naturally, I’m seeing more and more buyers presenting extremely low offers. Some are able to work out a deal of the century… but, a lot are falling through. The problem is that many buyers today getting too caught in making a deal, and end up losing out on the home they really want over just a few thousand dollars.  So, what’s the best way to go about making an offer on the home that you’ve chosen to buy, and getting a deal? Here are the three methods that have been successful for my clients:

1. The best way to get the home you want is to make a full-price offer. If the home is in good condition and/or is well priced, there is no shame in offering full price. Before you make an offer, I will check on the most recent comparable sales of similar homes, the same ones that an appraiser would use.
If you need a contribution from the seller towards your closing costs, that amount can be added back to your offer price to add up to more than the asking price. The home would still need to appraise for that amount, however.

Before I submit an offer, I try to find out from the listing agent what the seller’s needs are, why they are selling, and what kind of terms they might agree to. If the home is vacant, they might want a quick closing. If they have a lot of furniture and stuff to move, they might agree to a longer closing period or even a lease-back. They might not want the hassle of moving a refrigerator, so my buyer might as well ask for it, if nothing else as a negotiable item – the more negotiable items, the better you typically you end up in negotiations. I want to maximize the chances of my client’s offer being accepted.

2. The second-best way to get the home you want is to make an offer at less than full price, including any contributions by the seller to your closing costs, but leave the door open for a counter-offer. If the home is in good condition and/or is already well priced, the seller will need time to consider your offer.
Whenever I submit an offer, I write a cover letter explaining that my buyer really likes the home and is qualified to buy it. I don’t say anything negative about the property or say the asking price is too high. I assume that my cover letter will be forwarded to the sellers. I attach an up-to-date letter from my client’s loan officer and/or a bank statement as proof of funds to close. I explain to my clients that the offer is a sales document, and I try to make it as “clean” and the terms as appealing as possible. I don’t impose deadlines or write redundant, unnecessary clauses into the Special Provisions. I include reasonable deadlines for obtaining disclosures, inspections, surveys, and loan approval. I make it clear to the listing agent that my clients are not trying to take the sellers to the cleaners, but are trying to stay in their budget. In St Louis and St Charles, an offer of 3% under the asking price is not considered unreasonable, unless the home is in perfect condition.

The risk you run with a lower offer is that another buyer may come in with a better offer while the seller is thinking yours over. With this method, you at least have a good chance of getting a counter-offer, even if the seller has received another offer. If not, you might get your lower offer accepted, but you may get some resistance down the road if you ask for an extension of the time to close or for non-major repairs to be done at the seller’s expense.

3. The third-best way to get the home you want is to lowball it. If the home is in good condition and/or is already well priced, your chances of getting the home are slim with this method. You run the very real risk of offending the seller, and they could counter back at full price.
It may be different in other states, but in Texas, the seller is not obliged to reply to an offer in a certain time period; in fact, they do not have to respond at all. Your offer can be accepted, rejected, countered, or ignored. If there are multiple offers, the seller can just pick the best one, or go back to all the buyers and ask for their highest and best offer. Then it’s basically an auction.

In general, the farther away you are from the seller’s asking price, the longer it takes to come to an agreement. And in the meantime, another buyer could be submitting an offer.

If you are trying to get the bargain of the year, it will probably not be this home. If you want a screaming deal, we need to go look at fixer-uppers, foreclosures, or other distress properties, which often (but not always) need a lot of work. Sellers are more likely to consider a lowball offer on a property that isn’t in good condition, unless it’s already well priced to take the need for repairs into account.
Consider this: each $1,000 adds about $5.37 a month to your mortgage payment at today’s interest rate of 5%. That’s $64.44 a year. Is it worth it to lowball the home and risk losing it for the price of a few burgers?

Having said that, if you still want to make a lowball offer on a home, I will write it up and do my best to get it under contract. My job as your buyer’s agent is to give you all the information I can, as well as my recommendations based on my experience and knowledge, and then to carry out your instructions.

If you’re thinking of buying St Louis or St Charles real estate, feel free to call or email Worth Clark Realty any time with any real estate questions, at all.

Mortgage pricing is complex, particularly for the average home buyer who only deals with it once every 5-7 years. One of the most complex fees when obtaining a mortgage is something called Yield Spread Premium (YSP), which is easily missed or misunderstood by a home buyer. Put simply, YSP is the amount of money that a lender pays to a mortgage broker for loans that are made at an interest rate above the Par Rate. What is the Par Rate? The Par Rate is the interest rate being offered by a lender that offers zero YSP. Mortgage brokers can make money directly from fees charged to borrowers, but they can also be paid for their services via YSP directly from the lender. Often your mortgage broker is compensated in both ways. YSP also offers a mechanism for borrowers short on cash to finance some of their closing costs by paying a higher interest rate in the process.

Probably the easiest way to understand what Yield Spread Premium is all about is to look at a fictitious sample of a lender’s wholesale rate sheet. In this example, the Par Rate is 5.0%. If your mortgage broker originates a loan at 5.0%, no YSP is paid. If you pay a slightly higher interest rate, say 5.25%, there is a YSP credit of 0.733% of the loan amount available that can be used to compensate the broker or to pay your closing costs. For a $400,000 loan, this translates into a credit of $2932. The inverse is also true. If you pay an additional 1.35% of the loan amount, you can “buy down” your rate to a below-par rate of 4.75%. All mortgage are priced this way, though most times these rate sheets are not seen by consumers.

How can Yield Spread Premium be used by home buyers?

There are three ways that YSP can be used in a transaction.

1. Buyer pays a higher interest rate so that their mortgage broker receives YSP as compensation on the “back end” of the transaction.
2. Buyer pays a higher interest rate so that YSP can be used to pay for closing costs.
3. Buyer “pays points” at closing to reduce the interest rate on their loan.

How do I know if I am paying YSP as part of my loan?

Mortgage brokers are required to disclose the payment of YSP on both your Good Faith Estimate and and your HUD-1 closing statement. Banks and other direct lenders do not have to disclose YSP at all. There is considerable controversy over this discrepancy, and many in the industry want the disclosure laws to be the same across both types of lenders. (We agree and believe that both should have to disclose YSP.) However, for now, only mortgage brokers are required to make this disclosure. There is a major flaw in the current disclosure laws that allow the YSP to be disclosed as a range on your Good Faith Estimate. I have seen Good Faith Estimates say that “YSP may be paid to your mortgage broker between 0%-4% of your loan amount.” Clearly that is a huge range and varies from a reasonable deal to a total rip-off. In this case, you won’t see the final YSP until closing, which can lead to abuse of this practice by unethical mortgage brokers.

Should I even be paying YSP at all? Why can’t I just get my loan at the Par Rate?

This is an excellent question. YSP can serve a legitimate purpose in loan transactions by helping borrowers to reduce their cash out of pocket for loan fees or mortgage broker compensation. However, it is a practice that is too frequently abused from the experiences I have had with some lenders. On more than one occasion with our buyers and on personal transactions, I have had mortgage brokers sneak in a big YSP payment to themselves on the closing statement. Sometimes this equates to thousands of dollars and a borrower who is paying a higher interest rate than they needed to. It is easy to hide from unsuspecting buyers since it is not part of the direct fees being charged to them on the closing statement. Don’t be fooled if a mortgage broker tells you that “You are not paying that amount. I get it directly from the lender.” You ARE paying that amount to your mortgage broker via a higher interest rate.

How do I ensure that I am not being taken advantage of through YSP payments to my mortgage broker?

The best way to ensure that you are not taken advantage of is to be diligent and ask questions. An ethical mortgage broker should be able to answer these questions directly when asked.

1. How am I paying for your mortgage services and what is the total amount that you charge for helping me with my loan? Do you charge an upfront origination fee or other processing fees? Are you also being paid on the back-end by the lender? If so, what YSP amount will you be making?
2. Am I able to get the Par Rate on my loan? If so, what fees will you charge me.
3. If your broker shows a “range” of YSP payments on the Good Faith Estimate, ask them to clarify and give you an exact amount. There is no reason they cannot be more specific with this number, though it can change up until you lock your rate. 
4. At the point you locked my interest rate, what was the Par Rate? Ask to see that day’s rate sheet if needed.

A good mortgage broker does a lot of work when helping you get a loan and they deserve to be compensated. However, borrowers should work with brokers who are upfront and ethical about how they charge for their services, both in direct fees and indirect YSP payments. If a mortgage broker claims that they charge only 1% for their services, they should not be tacking on another 2% via YSP payments. The correct answer in this case is that “I charge 3% of the loan amount for my services. 1% is paid by you at closing and the other 2% is paid to me by the lender as a Yield Spread Premium.”

If you can’t get a straight answer on the fees that you are paying, it is wise to seek an alternative mortgage broker. A trusted real estate agent can help you review your Good Faith Estimate and closing statement to watch for potential mortgage issues.

Home inventories are up, and the average days on market for a home for sale in in the St Louis and St Charles MO real estate market is now over 90 days.   There’s no doubt that today’s market is favoring buyers. Buyers have more choices and are able to be picky, so selling a property now requires more effort and more patience.

Here are 10 quick tips to keep in mind if you’re selling a home in today’s market:

1. First impressions matter – The single biggest marketing event for a property is when it first comes on the market. You will receive the highest number of website views and in-person showings during the first few weeks that a property is on the market, so make it shine! Make sure the exterior appearance and yard is neat and tidy. The interior should be well-organized, free of clutter and clean, clean, clean. Strongly consider staging, particularly if your home is vacant. Home stagers also can help to rearrange and de-clutter your home if you are still living there. Seek the advice of your real estate agent on the appearance of your home. Swallow your pride and allow them to be critical. They see homes every day and know what helps to sell a home more quickly.
2. Price it to sell – Everyone wants to sell their home quickly, but to achieve this in today’s market, you must price your home accurately. A home should be priced based on a recent market analysis on homes that have sold in your neighborhood. Comparable sales should never be older than six months and you should always give the most weight to homes that have actually sold. Don’t try to “test the market” with a higher price, which will simply increase your time on market. Be honest and analytical in your approach, and don’t set your price based on the proceeds you would like to receive at the end of the process.
3. Go and see your competitors – There is no better way to gauge your competition and to set your price than to see similar homes for sale near you. At a minimum, your agent should see competitors in person, but it is even better if you can go along. Pick an afternoon and ask your agent to take you through 5 or so homes that you think are competitors. Take notes and make direct comparisons to your own home.
4. Acknowledge your property’s weaknesses – All real estate is unique and every property has certain weaknesses. Some homes have more obvious weaknesses that need to be addressed with your price. Whether it is an ugly view, a noisy location, messy neighbors, or an odd floor plan, buyers have choices and will simply pass on such a property unless the weakness is reflected by a lower price.
5. Patience is a virtue – Marketing a home takes time. This is often one of the toughest things to go through as a seller, but you should mentally prepare yourself that it could take awhile. The time from listing until you receive an offer is often measured in months, not days. This is normal, and consider yourself lucky if you have an offer in hand during the first month.
6. Share your situation with your agent – Much like a lawyer, a professional agent cannot fully help you if you don’t share your situation with them. If family or financial situations require an urgent sale, make sure your agent knows that. Agents will likely recommend a different pricing approach for someone who needs to sell immediately versus someone who can afford to wait a few months.
7. Be willing to change the price – If no one is showing your property or if you have had no offers after a long time on the market, you need to lower your price. Price is the single largest motivator to change the behavior of buyers, and no amount of advertising or open houses will be as effective as a lower price. Make your price decrease a substantial, meaningful amount and be sure to give them time to take hold in the market (4-6 weeks, typically).
8. Negotiate all offers you receive – A buyer’s market will bring out lowball offers, which sometimes feel insulting. Don’t be offended and don’t bet deterred. Everyone wants to buy for a lower price and buyers feel empowered right now. Inevitably buyers are willing to come up in price, sometimes far enough to make it acceptable to the seller. The only way to find out is to continue the negotiation with formal written counter-offers.
9. Maintain your home during the listing – Your home may be on the market for a number of months. Keep the yard maintained and make sure that the interior is neat and clean at all times. If a property is vacant, enlist the help of your real estate agent to keep an eye on the condition of the home when they visit for showings. Consider hiring a yard service or maid service to keep things in top condition.
10. Insist on feedback from showings – Your listing agent will receive a list of agents who have shown your home to buyers. Make sure that your agent has a plan to gather feedback from those showings. There is no better gauge of what the market thinks of your property than feedback from a group of active buyers and agents in your neighborhood.

Worth Clark Realty is a full service real estaet broker offering professional assistance with buying, selling, or renting St Louis and St Charles MO Real Estate.

Your house has not sold, and now you find yourself in a situation where you have to find a renter. In a tough real estate market, many sellers are facing this same scenario. Some sellers are underwater and owe more than they can sell their home for, or sometimes the housing inventory is just too high and you can’t sustain a lengthy time on market. Becoming a landlord offers a solution that helps your monthly cash flow and postpones the sale of your home until the housing market has improved. To the first time landlord, dealing with tenants and leases is unfamiliar territory. Here are some quick tips to help you when becoming a landlord.