For Sale By Owner - How To Sell Your Home
Why Do A For Sale By Owner?
Doing a quick Google search it appears that the average priced home in the USA is between $150,000 to $250,000. While I know that is a big gap, but prices vary dramatically by region. But using these numbers as a gauge to sell a home through a Realtor will cost you $9,000 to $25,000 depending upon your area and the price of your home.
Most Realtors charge between 6% and 10% to sell a house. There are some distinct disadvantages to not using a Realtor such as "selling" -- many don't like this word and would just as soon have some one else doing this part of the job.
There's also the Multiple Listing Service (MLS). This is a computer network that allows all Realtor's in the area to know that your house is on the market. In essence, if there are 2,000 licensed agents in your town you immediately have 2,000 people trying to sell it. Those 2,000 agents are representing people who are in the market to buy.
If you were to talk to an agent they would tell you that protection is another benefit. I say hogwash! I know here in California there are about 25 pages of contracts you have to sign in order to sell your home. Probably 85% (or more) of the legal jargon is to protect the agent and the broker in the sell. You can easily sell your own home without any risk. In fact, the only real benefit of an agent is in the selling department. The agent doesn't really do any legal work required to transfer the ownership from you to the seller this is all handled through Title and Escrow and you don't need an agent to work with a Title Company.
So why would you want to do a FSBO (pronounced Fisbo and stands for "For Sale By Owner")? Basically the only logical reason is the money. Commissions are huge on real estate sells. What you have to determine is if you can obtain a buyer for less than the amount you would pay for a commission. In this Hub I am going to give you some tips on how to sell your own home and show you just how easy it is.
Mimic the Real Estate Agent
There are four very important things that a real estate agent will do for you:
- Show you how to give your property more curb appeal
- Properly price your home
- Advertise your home
- Arrange for financing and the close of the sale
All of these are very easy to do yourself. While writing this HUB I went to Google and searched, "give your home better curb appeal" I immediately found a page through Better Homes and Gardens that listed 20 ways to add curb appeal to your home. I'm not going to provide the link as links tend to change, but if you do the search you will find in the first 10 listing several pages with all the answers. This is really important!
It's important because a major portion of the decision to buy a home is when someone first drives up. Unless your someone like me who is looking for the "dog" of a house that just needs a little tweaking do some basic thinks can make the difference in how well your home shows. If you want to get top dollar and sell quicker you will have to do this whether you sell by yourself or with a Realtor.
How do you price a home? Most owners price their home based upon what they want to sell it for, what an uncle told them they should list it for, or the ever popular PFA method. Don't know what PFA stand for? It means, Plucked from Air! In other words there is no rhyme or reason to the asking price.
Your house has a marketable price. In fact the FMV (Fair Market Value) is derived from an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would pay for it. Therefore, pricing your home is critical. This is something that a Realtor knows how to do, but you can do it yourself.
First of all go to www.zillow.com and then type in your street address. Zillow will give you a zestimate or your home. Don't take this value as an absolute because it's not. There are other factors that play into, but it will give you an idea of what your home and homes in the area are worth.
Drive around the neighborhood and see if there are any other houses for sale. If so, see what they are priced at. If it is listed through an agent you know that they probably did a market analysis on the house and the price is probably a little higher than FMV unless the price is trying trying to just dump the property.
If there is a flier on the sign look at the price and the square footage of the house. If it is a 1,600 square foot home selling for $150,000 a little division will tell you that is $93.75 a square foot. If your property is 1,675 square feet then multiply that by the 93.75 to get $157, 031. At this price your house is priced the same based on square footage.
There might be some things you need to adjust for such as one having a pool, RV parking, corner lot, differences in the number of bathrooms, etc. But you will know what the "area" of pricing will be.
I look at a lot of FSBO homes. In fact, if I see one I will typically stop by because many times there is a great steal waiting to take place because the selling didn't do their homework. One of the first questions I always ask is how they determined the price. Their answer tells me how much homework they have done. Have a good, knowledgeable answer.
Ok, at the risk of getting every real estate agent mad at me you can also interview 3-4 agents for potentially listing your house. Tell them you are interviewing agents and ask them what they would charge you to sell the home and how much they would recommend pricing the house for it to sell within 45-60 days. You've just got a free market analysis.
This will also come in handy because my recommendation is to try and sell your home yourself. If you don't get a buyer after 30-60 days then list it. If you end up needing to list it you have already interviewed the people and should know who you are most comfortable with.
Next, you have to advertise your home. Unless you live on a very busy street no one will know that your home is for sale. By not listing with a Realtor you don't have the benefit of MLS. So you are going to have to do it. This will cost a few bucks, but it will be a lot cheaper then the price you will pay a Realtor.
There are many ways to do this:
- Find a real estate focused paper that accepts advertising
- Use free services like Craigslist
- Place fliers on bulletin boards in Credit Unions, grocery stores, and the like
- Place an ad in the local paper
- Place a For Sale sign on the nearest busy street with arrows directing traffic (you may need to get permission from property owners to place your signs.
- Put free fliers with pictures on your for sale sign
Now that you have everything ready for a prospective buyer what are you going to do if they say they want to buy it?
One thing that benefits a buyer when working with an agent is that the agent usually has a relationship with many lenders and helps the buyer obtain financing. Don't sweat it, these lenders primarily work off commission and they are willing to book a loan no matter where it comes from. Just be prepared in advance.
Get your handy dandy phone book out or open up your web browser and simply look for mortgage lenders. Call a couple tell them that you are doing a For Sale By Owner and that you would like to have a source where a buyer can turn to for financing then say the magic words, "Would you be willing to help me." Get their name and number and now in your advertising you can say, "Financing Available."
When a potential buyer comes along but they need financing you can tell them I can give you the card of someone who would be happy to work with you.
If you follow the four steps your are going to cover the majority of what a Realtor would be able to offer.
Make It Easy For The Buyer
You need to get inside the head of a potential buyer. Most people are nervous about interacting with other people, just get on an elevator.
Side note: I was at the hospital the other day visiting a friend and when I went to get on the elevator it was pretty full. I basically stepped in and stood with my back against the door. Everyone else was lined around the walls of the elevator and in the middle facing the door. Once the door closed I looked at everyone and said, "You're probably wondering why I've called you hear today." You should have seen the looks. Except for one lady who busted up laughing everyone else looked at me like I had cussed in church or something.
Back to my point. Most people that call or come to your door are nervous. They don't know how to talk to you about your house, so you want to make it real easy for them. Open up dialog with open ended questions after you have given them the guided tour.
- Are you looking for a three bedroom home?
- Is this the type of home you are interested in?
- What do you think about the price? I priced it based on..."
- What type of questions do you have after looking this home?
The worse thing that can happen is that they don't buy it, but you don't have them as a buyer yet anyway and even if they don't buy it they may tell you something that is of great value.
Let's say you ask, "Is this the type of home you are interested it." Then they reply, "Well, not really it is a little too dark and we like lots of light." Next time someone comes over make sure you've opened the windows and turned the lights on. In other words listen (don't get offended) to what they say and then calculate that into your presentation.
On the offended point. Have just get over it, not everyone likes the way you decorate or the house you live in. Personally, I would never buy the home my sister bought, but they love it. I say, "Rock on!" There is a house for everyone's taste don't take life so personally.
I've touched on advertising above, but there are some things that you should do when advertising. If you notice Realtor's and how they advertise. They put pictures of the house in the ad. People want to look and see if they are interested before they come and get interested.
With the quality of camera's in smart phones these days and cheap printing at Staples, Office Depot and the like there is no reason not to have a good quality photo of the best parts of your home in all advertising. If you don't know how to do it then look around the neighborhood for an eight year old they probably have all the technology down pat.
There are many also many For Sale By Owner websites where you can list your home for sale on. There are websites where you can give a virtual tour of the house. Get creative and make it easy for your prospective buyer.
Tips on Showing the Property
I always laugh when I see a for sale by owner sign with the words, "Shown by appointment only." I will walk up to the door and say something like, "I would like to get an appointment to see your home." I would say, 99.999% of the time I can walk in right then. Why would someone do this other than for their own convenience? But I am trying to sell something so it is about the other persons convenience that I should be concerned.
Here's what you need to know about showing your home:
- Make sure you don't show your home alone especially if you are a woman. There are lots of weirdo's out there. I was in Florida once and I, another man, and a woman walked up to a FSBO and asked if we could see it. It was a single elderly woman who answered the door. While our viewing the home was totally legitimate and I would never harm a person this woman was stupid for letting us in. In fact, she shouldn't have even opened the door. I'm 6' tall, 220lbs, with a shaved head. I can be intimidating. Be smart.
- Keep your house clean at all times while selling the home. It will take extra effort, but you don't know when someone will want to see it.
- When someone comes in open all the window coverings and turn on ALL the lights. I know this is going to against every green part of you and all common sense on saving money, but do it. Really the planet won't fall apart and it will only end up costing you about .10 cents more on your electric bill.
- Stay positive! Don't be talking about the neighbors stupid dog that likes to bark at 2:00 in the morning or the old lady across the street that knows everyone's business. Show the positive's and talk the positive's. You are trying to sell your home.
We all like perks, so what are you giving away? Some things are going to be required of you so give them away up front, it won't cost you anything. Where I live termites exist and love to eat homes.
If a person were buying my home and obtaining a loan, the lender would require a termite report. This is paid by the seller so why not just go ahead and give it to the person who seems interested. I will also be required to give a roof certifications.
Mr. House Buyer, I want you to be happy with your purchase and to know that you are buying a sound home so I will be paying for a roof certification and a termite report so that you know there are no existing problems.
I also recommend buying one of those Homeowner Insurance programs for you buyer. It makes you look like a nice person, but in reality protects you from the buyer coming back after you because the air conditioning went out 30 days after the sell closed.
Giving things away goes a long ways with buyers. Put this in your advertising so the buyer knows that you are a person who wants to work with a buyer.
Contracts, contracts, and more contracts
Okay, what about all the legal stuff?
Title companies are great at all that legal jargon. So, before you place your home for sale walk into any one of the number of Title Companies in your town and ask them what you will need to open Title on the home you are trying to sell. With that in hand all you need to say to your prospective buyer is that, "I have it arranged to use XYZ Title and in order to proceed on the sell we need..."
I have purchased a home without any contracts at all before. We agreed on price and terms and I then went to the Title Company gave them the sellers name, the property address, my name as the buyer and the terms. They drew up the agreement and took care of all the legal stuff. By the way, this is exactly what happens when you have a Realtor. They call up the Title Company give them the pertinent information and the Title Officer takes over. It's really not a big deal and will give confidence to the buyer when you tell them that they will make their deposit directly to the Title Company.
Personally, I think anyone selling property without special circumstances should at least try and sell it themselves before listing with a Realtor. Give it 30-60 days and if you are not getting anywhere then list it with one of the Realtors you interviewed.
It is really not a hard process at all. I have bought and sold a dozen or so properties and have many times done so without the benefit of a Realtor.