Homes for Sale by Owner – Five Reasons to Do It Yourself

Have you ever considered selling your home for sale by owner or FSBO? You can do it if you have the right knowledge and skill set. Many homeowners believe that to maximize their profit on a home sale, they should sell it themselves. At first glance, the home selling process seems simple. Why should a homeowner pay 6-7% to a real estate professional for something they could do themselves? Pretty straightforward, right?

 

Take for a moment if you have ever had an opportunity to ask someone who has tried selling their home by owner. They will most likely tell you that the phone starts ringing almost as soon as the sign goes up in the front yard. Unfortunately, the majority of those calls are not from potential buyers, but rather from Realtors wanting to list your home. Frankly, the idea of not paying the commission is attractive to any home seller. However because of all the issues and pitfalls that can and do occur, selling a home on your own can present many unexpected problems.

For the adventurous at heart if you choose to go it alone, here are a few things you may encounter on the road to selling on your own:

Lackluster negotiating skills.For Sale By Owner properties usually attract bargain hunters, speculators, and “tire kickers”. Most FSBO buyers are merely curious, but some are real buyers looking for a steal. Right or wrong, many of these opportunists believe homeowners are uninformed about the marketplace. They can often be tough negotiators and submit lowball offers on FSBO’s because they think they have an advantage in dealing with an amateur homeowner. As the seller, you are selling on your own to save the commission. Even serious buyers will almost always deduct thousands off your list price plus another six percent discount due to lack of Realtor involvement.
Complete strangers in your home.”Stranger danger!” This is what we teach our children yet at the thought of saving the Realtor compensation, our sense of reasoning can become clouded. Ask yourself a few important questions: what do you know about the potential buyers coming into your home? Have they been pre-screened and pre-qualified by a lender? Do you know how much they can afford? Even more importantly, do you know if they have a criminal history? Are they sincerely interested really in seeing the home? Keep in mind, by inviting complete strangers into the home, unsuspecting homeowners place themselves and their children in harm’s way all to save a few bucks. Theft of valuables, robbery, home invasion, or worse — murder — have occurred in these situations. Most Realtors are trained professionals know who their buyers are, their true motivations, and whether or not they can afford to purchase your home before they arrive on your doorstep.
Potential liability.Many home sales have been lost due to incomplete paperwork, contract misinterpretations, property surveys and encumbrances, survey affidavits, title policies, third party financing, HOA bylaws and restrictions, lack of inspections, appraisal issues, or not meeting the state’s disclosure laws, and the list goes on. Ask yourself how you plan to handle a dispute with the buyer if one arises. What is your Plan B if the home doesn’t close? Even worse than a failed home sale, many lawsuits have occurred in For Sale By Owner transactions after closing due to non-disclosure of existing or previous latent defects. Are you completely informed of all the steps necessary to stay out of court? Before you venture into unknown territory, make sure you understand all the details essential to successfully completing a real estate sales transaction.
Lost free time, nights and weekends.Complete accessibility is one of the key components to selling your home profitably and competently. You must be available to answer the phone calls, answer questions, and provide property tours at any given time. Many homes have stayed on the market much longer than necessary because of an owner’s unwillingness or inability to show the property when potential buyers wanted to see it. Recognize that a given number of hours each day are vital to selling your home.
Lack of enhanced marketing skills.Unless you are an incredibly skilled marketing specialist, most earnest buyers will never know your home is up for sale. Statistics show that approximately 92% of buyers buy a home that was presented to them by a real estate agent. While sometimes not initially, individuals searching for homes almost always end up working with a qualified Realtor. The process is much easier for the buyers because the agent does all the legwork, the service costs them nothing, and the contract is negotiated in their behalf by their real estate professional. The key to a successful FSBO transaction is to be fully prepared, knowledgeable of the contracts, and understand the pitfalls. Some FSBO’s discovered that the lost money as a result of poor decisions outweighed the commission.

Stop Dreaming and Sell Your House Now

Any home will sell, given enough time. How much time do you have?

One of the most frustrating things about selling a home, condo, townhouse during a slow market is trying to price it so that it sells in the amount of time the owner wants to sell it in.

You don’t want price your property so high that it doesn’t sell.

Of course you don’t want to price it so low that you unknowingly give money away to your buyer.

We buy houses in Hartford

This is a fine line that a property seller ends up walking.

Here is what I suggest a home seller do to find the best sales price for their home given the amount of time that they have to sell:

o Get Three CMA’s:

Call three real estate agents that have at least two years of real estate sales experience. Tell them you are thinking of selling your property and want to get a CMA (CMA: Comparative Market Analysis). A CMA will be a written estimate of the value of your property based on recently sold properties that are similar to yours. Be sure and let the agents know that you are talking to other real estate agents.

Between the three values you should be able to get a fairly good idea of what your home might sell for.

Heads Up:

There may be other homes in your neighbor that are for sale. Don’t confuse their asking prices for actual home values. Home sellers can ask any price for their home. Values are figured strictly by what similar homes have sold for.

Heads Up:

It is fairly likely that one of the agents may have set the CMA value considerably higher than the other two. This may be due to negligence on their part, but it is more likely that they are “buying the listing”. They set the CMA price high in an effort to get you to list with them. Later they will pressure you to lower your price to where it should have been in the first place. Of course by now they have wasted your time while you waited for your over-priced home to sell. I have seen this over and over again. This is a common ploy. Don’t get taken by this deception.

o How long will it take to sell?

When you have figured out what seems to be a good asking price for your home, you will have a good idea which agent you would like to use to help get your home sold.

Ask your agent how long other homes like yours have taken to sell. Let’s imagine that the average “days on the market” (Days on the market: number of days a home takes to sell after it is put up for sale) is 120 days. If you are not in a hurry this may sound just right to you.

What if you need or want to sell faster than our 120 day example? Let’s say you have a new job that starts in 90 days in a new city. It usually takes 30 days to “close the sale” (close the sale: sign the final documents transferring title to the buyer), after your home “goes under contract” (goes under contract: you have a buyer that wants to buy, has signed a sales contract with you, and is in the process of getting a loan). You realize that you need to find your buyer in no more than 60 days after you put it up for sale.

You are going to have to ask your agent to give you an idea of where to price your home so that it sells (goes under contract) in 90 days. Hopefully they can come up with a fairly good idea of the 90 day sales price.

What I might do, if I were your agent, is to figure out what the highest selling price you could ask, so that you could sell your home in one day. Then figure out the seven days selling price, a 30 days selling price, and then a 90 days selling price.

For example:

o Let’s say the 120 day sales price for your home is $275,000.

o Then given one day to sell your home, you might be able to get $200,000 (30% below market value).

o Given a week you could probably sell your home for $225,000 (20% below market value).

o 30 days sales price: $240,000 (15% below market).

o And finally, 60 days sales price: $255,000 (8% below market value).

o Priced at $255,000, your home will look like a bargain to a home buyer, and you are more likely to get a faster sale.

In a slow market you have to be willing to lower your asking price, maybe more than once in order to get your home sold in a timely manner. Be prepared mentally for this possibility and your home selling process will be smoother and faster.