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Is It OK To Go FSBO?

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Posted On: 03/25/2009

Q: I would like to sell my home by myself. There are many Web sites that offer packages to assist homeowners in selling. Do you have any information on which company is most successful or has a better reputation for helping homeowners?

A: Long ago I was fairly comfortable with the idea of self-selling; however, during the past decade my view has changed.

To understand the reason for my evolving perspective just consider that in 1975 I bought a property and the purchase contract ran two pages. The sale of the same property in 2005 required 33 pages of documentation. In effect, a real-estate sale in many jurisdictions has become so complicated that one can no longer complete a sale with a few signs and a standardized form agreement.

In addition, most markets have recently seen significant price declines -- in large measure because of the massive and growing inventory of foreclosed homes, an inventory that pushes down home prices. In such an environment owners with one property to sell are at a disadvantage because brokers have a wide inventory of purchase options for buyers.

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Determining which company is “most successful” in real estate is difficult. The problem is that all properties, buyers and sellers are different, so the fact that one home sells quickly does not mean the same will be true with the next property using the same broker or the same marketing strategy. Technically, real estate is a “non-homogenic” commodity where each property and transaction is entirely unique.

As to working with companies online or off that assist home sellers, you need to ask some questions:

• Is the company a source of marketing materials such as signs and flyers, or is it actually a real-estate brokerage that will act as your agent in the marketplace? If it is a real-estate brokerage, what form of listing must you sign? How long will the listing last?

• What services are being provided? For instance, does the company complete all paperwork for you? Help you prepare for inspections and closing? Answer all questions? Hold open houses? Advertise in the local newspaper?

• Will your property be listed in the local MLS? Will you have to pay an additional fee if your broker finds a buyer? What about another broker?

• Can you contact past clients in your area to ask about the services provided?

If for some reason you still want to be a self-seller with no assistance from any broker in any form then at least work with a local real-estate attorney to get the paperwork right and protect your interests.

Q: What happens if I miss a single mortgage payment? Will that impact my credit standing?

A: While lenders do not expect perfect credit they do expect bills to be paid. In the case of a single late or missed mortgage payment there are several issues to consider:

First, most likely you will owe a late fee to the lender – fees and charges are often a lucrative source of lender profits. If you have a $1,500 monthly payment and the late fee is 5 percent then you're out $75 – money better spent on just about anything else.

If you have had a consistently good payment record then call the lender and ask if they would waive the fee. Why? It can't hurt, and if you have a good reason for being late you might be surprised by the lender's response.

Second, since you didn't make your payment, will the lender want to foreclose? This is no joke. A single missed payment can be grounds for foreclosure. Most lenders will simply be happy to get the payment and the late fee, but predatory lenders might well seek to foreclose or to increase your interest costs.

Third, how late is late? Payments must be at least 30 days overdue to be listed on a credit report. Thus a payment that is a few days late may set off various problems but still not appear on a credit report.

Fourth, a reported missed payment can surely impact your credit score – but is this a practical credit problem? In other words, if you're not looking for a new mortgage, car loan or other form of debt then your credit score will have time to recover. However, the reaction of credit-card lenders may be different. Using the “universal default” concept, they can raise your rates if you default on any debt – a practice that must end by July 1, 2010.

The bottom line: Don't fool with mortgage payments. Always make them on time and in full.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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