For Sale by Owner Tips & Process Overview

One of the best ways to save money when selling your home is to sell it yourself. Although the task can be intimidating, if you are willing to both educate yourself and follow through by putting in the time and effort, you could save thousands of dollars during the process. Here are some tips, followed by a quick overview of the step involved as an intro to that “education” piece referenced above.

Attend a FSBO seminar

There are companies in every major metro area that offer local For Sale by Owner (FSBO) seminars and access to advertising that is positioned as an alternative to working with a real estate agent. While these companies can be helpful, in many cases they will initially provide you with information that you can easily find on the internet and/or give vague information on techniques to maximize your home selling profit by using their FSBO systems and advertising, and then will require additional payment before they provide you with access to these “highly effective” tools and strategies.

These seminars usually cost between $25 and $45 per person, and typically include a 30-60 minute presentation that will generally describe the process of selling your home on your own, without the help of their products and services. Then, the presentation will explain how their company can help you. With the advent of the internet, these seminars are outdated and no longer worthwhile. To save yourself time and money, read this article instead.By the time you’re done, you will know all the steps necessary to get your home sold as a FSBO, along with the useful tips & techniques to maximize your selling price.

Determine Market Value

Determining your homes real market value does not just mean looking at your neighborhood on Zillow or Trulia and viewing what other homes in your neighborhood are selling for. Determining real market value is multifaceted, and is vitally important to the selling process, especially for FSBO sellers, and so great care should be taken when performing this research. The market value of your home is based on all the details of your home including:

• curb appeal

• square footage (above grade and below grade have different values & are reported differently)

• layout & floor plan

• neighborhood & school district

• surrounding amenities

• age of your home

• condition of the home

• upgrades and renovations

• unlicensed improvements & additions

• recent nearby comparable home sales

• time of year – values change dramatically in some areas

• …and the list goes on.

Determining the true market value of your home is an important task, so it is recommended that you get this information from a professional.

There are two different real estate professionals that can help provide the information needed for this.

Local Real Estate Agents

Request a free listing presentation from a local real estate agent. Note: If you have already determined you will be selling your home without the assistance of a real estate agent, then I would recommend being respectful and not wasting an agent’s time & taking advantage of their resources. Agents are professionals who work hard and should be expected to work for free.

However, it is strongly recommended that you should start with an open mind in relation to listing your home with a real estate agent & receive listing presentation. Agents have a significant advantage when determining the market value of a home, as they have access to MLS sales data, local home value estimation is major part of their everyday job, and experience pays dividends. Also, when selling your house, real estate agents have local experience and insight that you (as a FSBO owner) will be lacking, and this could make the difference in selling for top dollar leveraging their knowledge, tools, networks, systems, and advertising vs. posting and getting no responses.

Local Appraisers

Another great option to determine your homes real value is to get a professional appraisal. Appraisals are used by banks when determining value for mortgage terms. A home appraisal will generally cost between $200 to $400. The output of this appriasal is a report that contains useful information on your home, including the current market value of your house and a minimum of three other comparable homes.

Get a Home Inspection

It is advised to get a home inspection before actually marketing your home for sale. A home inspection will cost between $200 to $450 based on the size of your home. A licensed home inspector will come into your home and will complete a thorough home inspection. The inspector will check and review everything in your home top to bottom; the electrical system, plumbing system, roof, HVAC, foundation, and even your crawlspace.

It is advantageous to get a home inspection so you are aware of and can address your home’s problem areas prior to putting your house on the market. Sometimes a home inspection will uncover a major issue such as moisture in your attic, or a cracked chimney or foundation which will either need to be addressed before the sale or disclosed to potential buyers. Be aware that once you know about an issue with your property, you will be required to discose this information to potential buyers. While ignorance isn’t bliss, knowing about the problems with your property and communicating this to potential buyers will not always fill you with joy, either. Address every issue you find if possible. This will ensure a clean home inspection when your buyer brings in their inspector to review the property.

If you are unable to afford to fix some major problems, then you may not be able to sell to your average buyer, as their banks will not provide mortgages for properties that are not in good condition. In this case, you may need to work with a local real estate investor who buys houses as-is. For more information on this option, check out the bottom of this article.

Set Your Selling Price

Set your asking price, taking hthe real market value and all costs associated with selling into consideration. Base your asking price on the condition of your home, the local market, and your timeline & motivation to sell. Also, do not forget to take into account the selling costs you will be responsible for, typically around 1.5% for closing fees, plus appraisal fees, real estate agent fees (3% more), and discounts negotiated from the asking price.

Why would you pay agent fees? Sellers pay agents, and buyers do not. Most buyers will be represented by a real estate agent. Typical real estate agent fees for the buyer are 3% of selling price, but this may depend on your area. Find out up front when talking with the agent what their expectations are, and determine if you are willing to pay that cost, or if you are going to refuse and lose the ability to work with by far the largest segment of available buyers.

Stage Your Home

There is an art to staging a home for sale to maximize the buyer’s offers, which is why it is its own profession. If you list your home with a good real estate agent they will help you coordinate this task. If you are for sale by owner then your main task will be to clean, declutter, and either have ayour hand at staging (not recommended) or contact and hire a staging company yourself, as an investment that can provide a significant return.

If you’re going to try to go it alone, use some of pro-tips available online such as paint all walls neutral tones, replace all light switches and wall outlets, replace all screens, wash all your windows and mirrors. Also, remove all family photos from the house. This helps potential home buyers see their family living in their home, not your family living in your home. Don’t forget to stage the exterior of your home and the front and back yard. Put new mulch in the flower beds, plant some vibrantly colored flowers, trim the bushes growing above the front windows, and paint the exterior and front door to give your home great curb appeal.

Market Your Property

Now that your home is in great condition and will impress the masses, it is time to spend some money and get the word out that you are selling your home. This is the stage where many FSBO sellers hit a brick wall. Marketing is the most important step in selling your home. If you have a home at a great price and no one knows about it, you will no offers. There are many ways you can market your home for sale. It is suggested to budget a minimum of 2% of your selling price for marketing. Some recommended marketing avenues include signs, classified adds, bulletin boards, community magazines, internet sites such as FSBO.com, yard signs, and home selling flyers. Be creative, and find ways to reach your target market – not just people looking for a home, but ones who either have or can gain access to the money to purchase a home quickly.

Show Your Home to Potential Buyers

This is the part many homeowners don’t like doing, or have trouble coordinating due to scheduling conflicts. After you have spent significant time and money preparing your home for sale, now you have to show your property to potential home buyers.

Taking phone calls, scheduling viewings, and answering the same questions over and over, talking with unmotivated potential buyers, and listening to complaints about your home are just some of the tasks you will be facing. This is also the true test for your previous work. If you set your selling price well and have good marketing your phone will ring.

Receive Offers

If you did a good job in preparing your property, setting your selling price, marketed effectively, and scheduled viewings, then you will reveive offers. If your buyer is represented by a real estate agent then you will not have to worry much about how the paperwork is completed, as agents have their own standard templates. The buyers’ real estate agent will ask where and when to deliver the offers to you, and you will receive them. You will need to read through each offer and understand the agreement & contract completely before being able to make a decision. Price is just one factor. There are various other terms that could impact the attractiveness of the offer. Common examples include flexible or fast closing timeframe, or cash buyers removing any dependency on banks, loans, or resale of their current property which oculd impact the success or timing of the sale.

If your buyer does not have a real estate agent you will have to help them put the offer together and walk them through the paperwork. It is recommended that you hire a local real estate attorney to help your through the process.

Counter-Offer or Accept

Depending on the offer you received from your potential buyer, you may choose to refuse, propose a counter-offer or accept their offer. In general, don’t refuse an offer, just let them know that you are firm on your price. This keeps the door open for them to raise their offer, as opposed to closing it on them. In a buyers’ market it is typical to accept offers 3% lower than your asking price, but you can check your local Realtor group website for details of the % of asking price received in your local market for the prior month to get a feel for what you should expect. Once a price is agreed upon, a contract is signed by both parties. You’re not there yet, but this is a good start. Remove your house from listing services, or change the status to “Pending” to avoid getting more offers and requests.

More Paperwork

Comply with all Federal, State, and local laws. Provide a completed Seller Disclosure Form and a Lead Base Paint Disclosure form for all transactions. Check with your local authorities to see if there are other requirements in your area you need to be aware of, and to comply with.

Title & Escrow

Contact your local title and escrow company and get your home scheduled to close. Have the title company check for liens on the title and organize the closing. Fees for title check and preparation and escrow will vary depending on the property’s location and your relationship with your title agent and title company.

Fix Buyer Requests

Once your buyer has completed their home inspection, they will assuredly have a few fixes they will ask to be completed before the close date. Because you previously completed a home inspection, there should be no big surprises that arise out of the buyers home inspection report.

Close & Receive Your Check

Due to the complicated nature of financing, coordinating the sale of a prior home, and buying a home, many times there are last-minute problems that arise just prior to or during a Closing. Frequently, this means that your buyer cannot get the financing that they were expecting, and therefore cannot purchase your home. Now, you will need to start the selling process all over again.

Or you could be one of the lucky few who have a smooth transaction from start to finish – it does happen. If the closing does proceed as planned you can expect to receive your proceeds from closing 1-3 business days after closing. Congratulations! You have just sold your home!

Here’s a look at the costs associated with selling a house listed at a $200,000 asking price.

Example Summary of Costs

1. Appraisal: $300-$400

2. Home Inspection : $200-$450

3. Fixing Inspection Issues : $500-$3000

4. Staging Home : $150-$1000

5. Marketing Property : 2% of asking price

6. Buyer Negotiated Discount : 3% of asking price

7. Buyer Realtor Fee : 3% of sale price

8. Real Estate Attorney’s fees:  $300-$400

9. Closing Cost: 1.5% of sale price

In review, for a $200,000 seller’s asking price, the typical cost to sell a home for sale by owner is $20,000 – $24,000 and this does not include compensation for the seller’s significant investment of time and effort. As you can see, selling your home on your own can be challenging, time consuming, and still incur substantial costs.

This is why real estate agents and professional home buyers exist. What’s a professional home buyer, you ask?  Good question. It’s an additional option available to you that you may wish to explore. Professional home buyers are real estate investors that focus on buying properties (often in ANY condition)

Selling to a Real Estate Investor – What are the benefits?

• When you sell your home to a real estate investor, they take care of the details.

• You don’t have to worry about the condition of your home (cleaning OR repair), they will buy AS-IS

• If you have unwanted stuff (like a lot of probate and inherited properties), they will dispose of it

• After contacting a local real estate investor it usually only takes 48 hours have a signed offer on your home

• If you really need to close fast because of your selling situation, some real estate investors can pay cash and close on your home within days.

• No dealing with non-motivated buyers

• No worrying about your buyer getting the financing required to close.

• No real estate agent fees to pay.