Guide to Sell a Home by Owner
Selling your home yourself involves more than putting out a sign.
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For Sale By Owner (FSBO) is the term used for a home listed for sale by its owner, without the assistance of a broker. Most owners who choose this route do it to avoid broker fees. While it's certainly possible to save money, a single mistake can offset any savings, so it's important to do your homework before putting out that "for sale" sign.
Preparing Your Home for Sale
Take a careful look around your home and yard to identify anything that needs sprucing up or repair. Do the work before listing the house for sale, as properties that are clean, uncluttered and well maintained sell faster and for higher prices. The work you do should be in keeping with the value of your home. The new granite counter-top that's a must-have in a $500,000 home, for example, is overkill in a $150,000 home.
Money Matters: List Price and Commission
Market value is the price a reasonably informed consumer will pay for a home that's been on the market for a reasonable period of time. While only an appraisal can give an opinion of value, a real estate agent bases her price recommendation on a similar tool called a comparative market analysis (CMA). This analysis uses the sales prices of local closed sales to determine the optimum price of the similar home she is about to list for sale. The recommendation may be influenced by the list prices of expired listings (which presumably did not sell because they were priced too high) and active listings (the competition). There are tools that allow savvy sellers to approximate CMAs. Closed sales can be searched on two popular consumer real estate websites (see Resources). Although the information isn't always up-to-date, and it's less complete than the information multiple listing services (MLS) real estate agents use, it can serve as guide. It may be worth investing in an appraisal to help you determine a fair sale price, especially if your market is declining or is otherwise unstable. Your potential buyers almost certainly will be represented by buyers agents, many of whom are leery about working with unrepresented sellers with no professional experience in managing real estate transactions. Consider investing some of the money you're saving by not hiring a listing broker in the buyers agent commission to encourage agents to show your property.
Market Your Property
Real estate agents' primary marketing tool is the MLS. MLS is a cooperative system that allows brokers to share their listings so that other brokers can sell them. The consumer equivalent is the myriad of FSBO sites that help sellers market their own properties, both to potential buyers and to real estate agents (buyers agents often check FSBO sites when MLS listings don't meet their buyers' needs). Some of these companies are brokers that can, for a flat fee, list your home on your local MLS. There are free sites to list your ad (see Resources), although you'll have to repost your ad frequently so it doesn't get lost in the deluge of new ads that appear daily. Other ideas are to hold open houses, post fliers around your town, and mail or hand deliver announcement cards to your neighbors to let them know your house is going up for sale. If your community allows it, a "for sale" sign with your phone number is a must.
Showing Your Home
Showing requests often come with very little notice. The easier your home is to show, the easier it'll be to sell. If you can't be home to accommodate showings, keep a spare key in a lockbox so that buyers agents can show your home at their buyers' convenience.
Know What Forms You Need and Know How to Use Them
Consult an attorney or a do-it-yourself legal site like Nolo.com to obtain the forms you'll need to manage and close your sale. Make sure the forms are specific to your state and that you understand them, as a mistake on a legal document can expose you to serious liability. When in doubt, always ask an attorney.
Evaluating Offers
Offers aren't just about price. You'll also need to consider contingencies (conditions that must be met in order for the sale to close), down payment amount, the buyer's ability to obtain financing or pay cash, and the closing date and other deadlines.
Negotiations
There are two points at which negotiations are likely: during the offer/counter-offer process, and when the buyer makes repair requests based on the inspection reports. These also are the points at which sales often fall apart. Increase your chances of negotiating successfully by building off the things both sides agree on, and by asking for what you need rather than what you want. Resist the urge to consider your buyer an adversary. He isn't. You're partners working together toward a common goal: a successful closing that leaves both of you satisfied that you were treated fairly.
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About the Author
Daria Kelly Uhlig began writing professionally for websites in 2008. She is a licensed real-estate agent who specializes in resort real estate rentals in Ocean City, Md. Her real estate, business and finance articles have appeared on a number of sites, including Motley Fool, The Nest and more. Uhlig holds an associate degree in communications from Centenary College.
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