Drawback of For Sale By Owner Arrangement in Real Estate
Real estate for sale by owner is one option resorted to when the homeowner wants to save on money. This would mean that he will do the act of selling himself instead of relying on sales agents.
When you suddenly find yourself wanting to sell your home, having found that nice quaint house outside the state, you have to act fast. You need to dispose your present home immediately, so you can make the down payment on that charming house out of state.
Doing the math, you found out, that you can save some money by selling the house yourself, and would no longer need real estate agents that charge you from 5 to 6% commission. If you have enough selling savvy on how to do real estate deals, then go for it.
If not, then you will have to learn the intricacies of the trade, before you even entertain thoughts of doing a "For Sale by Owner" strategy yourself..
Drawbacks of For Sale by Owner Method
- Lack of Expertise in Real Estate Selling
You, as the homeowner may not have the expertise in real estate selling. You need to have enough horse sense to know the type of property that is up in the market today, and how it compares to what you are selling.
You must also know trends in property markets - whether it is on the uptrend or downtrend. You need to have skills on how to make your property more attractive to prospective buyers. There may be need to shell out a few dollars, so you can do: minor repairs, re-painting, landscaping, and some other changes to increase property values.
Doing the selling by yourself may be a hit and miss proposition; but if you do your homework well through careful planning, you may be able to save some precious dollars by doing the work on your own.
Will selling your house be better done "DIY" style?
- Inadequate Selling Strategy
Selling real estate is a lot of hard work. You place your home in property listings to make it nearer its targeted markets. There is a need for you to do the leg work daily and post flyers in common billboard areas for better public views.
The point here is you need to let a lot of people know that you are selling the property. Selling may be done via the internet, local dailies, or through street signs, that directs prospective buyers to your site.
In selling, you do not only place ads, but you follow up on sales leads that you can identify through queries that have been made. As the seller who is also acting as his own agent, you can come up with your own strategies on how to sell your home in the most efficient way and at the least cost to you.
- Target Markets
Selling to target markets would be a hard thing to do, if you do not know where these markets are. You may not have the tools of the trade of professional brokers, like listings of investors interested in buying real properties in your area and other trade secrets; but you can do something about it.
What you can do is put as many advertisements as you can - in trade journals, property listings online or in the local newspapers, billboards or signage, and flyers that you can put in public places like supermarkets. The more people who know you are selling, the higher are the chances of you making a sale. This is one aspect that sometimes makes a For Sale By Owner, a difficult act to do.
- Design of Selling Tools and Portfolio
As seller and self proclaimed sales agent, you need flyers that would be attractive enough to catch the attention of prospective buyers. The design should be done in eye-catching colors, with pictures of the home shown at its best angles.
The description and pictures must answer all potential queries that may be asked - directional map, amenities of the house, the type of neighborhood, surrounding business areas, site visit schedule, and the contact person.
The flyers also include: the area of the house, lot area, number of rooms, and the sales price for the property. This same portfolio should also be found online, with links properly indicated, so prospective buyers can take a further look.
You need special skills to plan and design the selling tools by yourself; and would prove to be a handicap if you don't have the aptitude to do it. Hence, there is a need to do research so you can effectively compete with other sellers whose properties are also on the same market as yours.
Options for Real Estate Selling
For Sale By Owner
For Sale By Licensed Agent
For Sale By Unlicensed Agent
You're the ideal agent
May be unreliable
You're in charge
Knows the industry
May be unreliable
Why pay commission?
Value for money
May be unreliable
- Financing Tie-Ups
Real estate selling would involve some form of assistance to make it easy for the buyer to close the sale. This assistance can be in the form of tie-ups with financing companies or banks; that the buyer may seek, if he intends to buy your property.
This could sweeten the deal, and help you close the sales agreement at the soonest time. To do this, you must be well versed with mortgage agreements and legal documentation, so you can enlighten the buyer on the different financing schemes that are available to him.
Your being well versed in this area can be a big advantage to closing the sale. Your inability to do so, could run to your disfavor. Nevertheless, if you need to save money by not hiring real estate agents to do this, there is a need for you to learn a working knowledge of home financing before you think of doing a For Sale by Owner strategy.
- Lying and Stretching The Truth
No one likes to be lied to, especially when one is to part with his hard earned money. There is such a thing as making a sale; but closing a deal based on deceit is always perceived to be in bad taste.
You should be able to sell your property based on the honest assessment of what is good and faulty about it. Not being in the business of real estate, can make you vulnerable to cross the line of deceit just to be able to sell.
- Not Being Aware Of The Competition
As a seller, you should know the type of properties that are being sold in your area. Knowing the competition, would make you adept at answering questions that may be asked by prospective buyers later on.
If you are not in the real estate business, you may not know how your property compares with that of the others. This is a risk that you have to take when you sell your property on your own; and that is, your inability to adequately assess your house as compared with the others.
However, in depth research on the type of real estate that are sold in your area, can help fill in the gaps along these lines.
Selling would involve talking to people whom you have not met before. As the one selling your home, you should exude confidence that you know what you are talking about.
You should be able to impress on people that you are an expert in the field of selling real property. There is need to have adequate knowledge about real estate methodologies and techniques, before embarking on the act of selling by yourself.
Real Estate for Sale by Owner Checklist
- Price of home - compare to similar in the market; get a property valuation report, consider hiring an appraiser, keep a listing of features that your house have, analyze all documents, and set your asking price;
- Market the home - create a listing with online portals, write a professional looking listing advertisement, put for sale sign in the front yard, de-clutter, stage your home, interior and exterior photos, post listing on social networking sites
- Paperwork and Closing - make sure buyers are pre-approved, download forms and contracts, hire a real estate attorney, cooperate with home inspectors and appraisers, have an attorney assist you with contracts, and agree on a closing date.
Tips on Selling House by Homeowner
- Offered Price To Prospective Buyers
You should know what the fair market value of your home is, during point of sale negotiations. The sales price should correspond to the prevailing market price within the industry. If the economy is down, real estate prices would tend to go down.
If it is on the uptrend, a bonanza on real estate prices can be expected by sellers due to increase number of interested buyers. Again, if you are not well versed on industry trends, this can prove to be a big disadvantage; and may offset whatever gain that you may have in terms of savings in agent's fees.
A lot of homeowners would want to save on agent's fees and do the selling themselves. If the owners have the time and the will power to track down buyers; and do the nitty gritty of real estate negotiations, then this scenario is doable.
As a sales agent of your own property, you should exude the aura of an expert who has the skill to sell properties. Trying to save on agent's fees, would mean that you have to take the burden of learning the ropes of real estate selling, for you to be effective.