Q: How difficult is it to sell my own house, without having to pay commissions?
A: If you ask anyone who has ever tried to sell their home themselves, they’ll tell you that from the moment the “For Sale by Owner” sign goes up, the phone begins to ring. Unfortunately, many of those calls are not from prospective buyers, but rather from real estate agents looking to obtain your listing. Obviously the idea of not having to pay commission to an agent is attractive to any seller. But because of the issues involved in the process, selling a home on your own can be challenging.
The key is to be prepared. If you’re not, your home could remain on the market longer than you expect because you are not attracting or getting offers from qualified buyers. This is where many homeowners become frustrated and give up. However, there are sellers who successfully accomplish selling their own homes. You can be one of them.
Here are 10 tips you should be aware of before you decide whether or not this is the right approach for you.
Price it Right
Correctly setting your asking price is critical. Home prices are determined by fluctuations in the marketplace, not by your emotional attachment or by what you feel your home is worth. In order to establish a realistic price, objectively compare the price, features and condition of all similar homes in your neighborhood that have sold in recent months. It is also important to be familiar with the terms of each sale. Terms are often as important as price in today’s market. Carefully budget your selling costs and prepare a net proceeds sheet to calculate an estimate of what you will take away from your home sale.
Prepare Your Home for Sale
The first impression is crucial. Make sure your home makes a positive statement by inspecting details and viewing it through the objective eyes of a buyer. Don’t gloss over needed repairs and fix-ups, as your prospective buyers won’t. Your job is to ensure that the home stands out favorably against the competition.
Prepare Yourself With All Necessary Documentation
Not surprisingly, there are many legal contracts and documents you must assemble, complete and understand. Some forms you will need for prospective buyers and for legal documentation are:
– Seller Disclosures
– Purchase Contract
– Mortgage Payoff
– Loan Application
– Natural Hazard Report
– Termite Inspection
– Deposit Receipt
– Property Profile
– Buyer’s Cost Sheet
– Closing & Settlement
– Home Inspection
– Preliminary Title Report
Market Your Home Effectively
Beyond the sign on your lawn, you should find effective ways to spread the word about your home. Local buyers can be reached through the newspaper, but this is only a small part of the market. Be sure you include buyers who are working with a Realtor®. Target as many top agents as possible in your market to see if your home matches the criteria of their buyers. Out-of-town buyers are also an important target and you should create a strategy to reach them as well.
Above all, you should be service-minded and make it easy for pre-qualified buyers to view your home. Ensure there is always someone available to answer the phone, pick up messages promptly and be ready to give qualified prospects a home tour as soon as possible.
Remain Objective During a Showing of Your Home
Keep emotion out of the sale of your home. The best way to do this during a showing is to physically remain in the background. And if a prospective buyer says something negative, it is better to counter-balance this point of view by illustrating the positives – rather than becoming defensive.
Pre-Qualify Your Prospects
Don’t waste time entertaining buyers who could never afford your home. Research their financial ability with respect to job security, salary, debts, liabilities and credit standing.
Negotiate Effectively and Knowledgeably
There are many details to resolve before a sale is considered final: price, terms, inspections, possession date, buyer concerns and objections. Make sure you fully understand the contract you have drawn up so you can explain details and ramifications to the buyer and make any necessary amendments.
The contract should be thoroughly examined by your real estate attorney. Some real estate brokers may be willing to help you do this. While this is going on, manage the buyer’s interest in your home so that it doesn’t wane during negotiations.
Know Your Buyer
During negotiations, you control the pace and set the duration. Try to determine what your buyer’s motivation is: Does he or she need to move quickly? Do they have enough money to pay your asking price? Knowing this will give you the advantage in the negotiation because you will know up front what you need to do to get what you want.
Don’t Move Out
Studies have shown it is more difficult to sell a home that is vacant. It looks forlorn, forgotten and simply unappealing. It could even cost you money. If you move, you’re also telling buyers that you have a new home and are motivated to sell fast which can, of course, gives them an advantage at the negotiating table.
Know Why You’re Selling and Keep it to Yourself
The flip side of “understanding your buyer” is to “understand yourself.” Your reasons for selling will affect everything from your list price to how much time and money you invest in getting the home ready for sale. Your motivation will help you determine what is more important to you: the money you walk away with, the length of time your property is on the market or both. Different goals will dictate different strategies. As someone who wants to sell without a real estate agent, it is likely that money is one of your primary considerations.
Whatever your reasons, however, it is important to keep them to yourself so you’re not at a disadvantage at the negotiation table. When asked, simply say your housing needs have changed.
The bottom line is that anyone can sell their own house as long as you are prepared and follow a successful marketing and negotiating strategy. From a statistical perspective, 95 percent of all home sales are handled by an agent. FSBO (for sale by owner) homes sit on the market longer and typically sell for 3 to 5 percent less than agent-handled transactions.
