When you sell your home, getting top dollar at the closing table is often the highest priority. Because of that, some homeowners decide to sell their homes without using a real estate agent.
For sale by owner (FSBO) is when you sell your home without the use of a real estate agent. It requires a lot of more time and energy, but it might be worth it depending on the price tag of the home. When there are no real estate agents involved, then the sellers get to avoid paying the 6% commission at the end of the sale.
For example, a $500,000 would require $30,000 in commissions to sell it. When the numbers start getting that high, it can be a lot more attractive to go the DIY route and sell the home FSBO.
Commissions can ultimately reduce the amount of money you’ll receive at the closing table. Below are some steps that are involved in selling your house yourself.
Determine the sale price of the home
Setting the right price from the get go is the most crucial step. If you set the price too low, then you’ll receive more offers but ultimately walk away with less cash than you would have. If you price the house too high, then the house can sit on the market for months and get stale where cutting the price will be your only option.
There are a few ways to make sure that you price your home accurately.
Online valuation sites
There are many websites that you can use to get a very ballpark range of the price you could sell your home for. For example, companies like Zillow, Redfin, Trulia, and Realtor.com all have free features that give you an estimated selling range. Sometimes these sites are inaccurate and can be off my many thousands of dollars.
Get a comparative market analysis
Even if you don’t want to hire a real estate agent to do the transaction, they often will provide you a comparative market analysis free of charge in hopes of winning your business. You can use this information to your advantage as they can give you a better idea of what price you could sell the home for.
Hire a licensed appraiser
Hiring an appraiser is by far the most accurate way to estimate the value of your property. In addition, the appraisal will hold up when negotiating the sale price with potential buyers as it’s a strong basis of valuation. The downside of an appraisal is that they cost anywhere from $300 to $700 but they could net you more money in the long run.
Prepare the home for sale
Walk through your house and try to see it from the perspective of a potential buyer. Would they want to buy it at the price you have set and the current condition that it’s in?
You’ll start seeing negative aspects of your home which is good because buyers are very aware of anything that might be wrong with the home. And as they should be, since they are spending so much money on it.
It might be hard to be objective towards the home at first but this is definitely a critical element of your sale and is directly correlated with the price you will get. Unless it’s in perfect condition, consider making the following improvements.
- Minor repairs: Leaky faucets, loose door handles, windows that don’t work, or light switches that aren’t functioning.
- Touch-up paint: Go around the home and look for areas that need to be touched up. Or consider painting the entire home to give a newer feel.
- Declutter: Make your closets, basements, garages, and attics organized. Minimize the amount of furniture that is in the home as well. In addition to decluttering, make sure the home was cleaned by a professional and smells fresh.
- Curb appeal: Look at the yard and determine if it makes a good first impression on potential buyers.
Market the home for sale
You’ll need to get the word out that your home is for sale which is a bit difficult to do without a real estate agent. A real estate broker will have access to the multiple listing service (MLS), which is where the majority of homes are listed for sale. Below are some basic strategies to properly advertise your home.
- Have a nice yard sign: Every home for sale has a yard sign so you’ll need to do the same. Almost every office supply store sells these.
- Take good pictures: Good photos are key to marketing the home. Ensure the lighting is good, the home is in good condition, and that all ceiling fans are turned off before taking the photos. This will often be the first impression a buyer has so it’s a crucial step in the advertising process.
- Create flyers: With tools such as Canva, it’s easy to create nice looking flyers to give to people who are looking at your home. Make sure the flyer has attractive photos as well included.
- Advertise online: There are several ways to do this. Zillow has recently started allowing FSBO sellers to advertise their homes for sale online. In addition to Zillow there is also Homefinder.com and forsalebyowner.com.
Negotiating the sale
Since there is no real estate agent involved, you’ll have to negotiate with the buyers on your own. This could be tough because various situations can arise like inspection objections, low asking prices, or asking you to pay the closing costs.
Additionally, you’ll have to ensure the buyers are even qualified to purchase your home. Make sure you ask for a mortgage pre-approval letter as this will ensure you are not negotiating for no reason.
Once the initial negotiations take place, a buyer will need to submit a written offer in which it would be a good idea to have some of your state specific real estate contracts.
The contract must spell out every single detail pertaining to the home including the purchase price, closing concessions, items that need to be included in the sale, contingencies, closing dates, and location of closing.
Closing on the home is a legal situation that needs to be handled by a real estate attorney or a title agent. Once things get rolling with negotiations and an offer has been accepted, it’s a good idea to call the title company and get something scheduled.
They will provide you with procedures which might include certain documentation along the way. One of the biggest hurdles to get over is the buyer’s mortgage. There are a lot of conditions that must be met before the buyer can be approved for the mortgage.
While the for sale by owner route can be lucrative, sometimes it makes sense to hire a professional. The toss up is the amount of time and effort it takes to sell vs. the amount of money you’ll save.
Luckily there are flat-fee real estate companies that balance the two considerations out. A company like Trelora will sell your home for a flat-fee of $3,000, not 6%. Additionally, they will offer the same full service that a traditional agent does for a fraction of the cost