Guide to SELLING YOUR HOME ON YOUR OWNList your Home for Sale
Your home represents a major investment, financially and emotionally. It’s also likely your largest asset, so when it’s time to sell, you want to get the most out of your investment by receiving the highest price and best possible terms within the shortest amount of time. But when you use a real estate agent or broker, you may have to compromise on both.
After all, you’ve got a whole lot more riding on the outcome of your home sale than any agent ever will. That’s why it’s so important to be involved in each step of the selling process, from pricing your home to preparing it for potential buyers, making marketing decisions to negotiating the deal.
Plus, you’d like to step away from the closing table with thousands more dollars in your pocket.
That’s why millions of homeowners are making the decision to sell their own home. Though it may sound intimidating, doing it yourself -- also known as “For Sale by Owner” or FSBO -- is easier and more effective than you probably think. In fact, a small investment of time and effort on your part can pay off big.
Why FSBO?When you use a real estate agent to sell your home, he will generally claim a 6 percent commission from the selling price, leading to thousands of extra dollars in his wallet instead of yours. For instance, a home that sells for $200,000 costs you $12,000 in agent fees, and in today’s economy – and with today’s slim equity margins -- that 6 percent difference might just tip the balance between a profit and a loss.
And though saving thousands of dollars on your home sale is attractive enough, selling your home yourself offers other advantages. For example, because you’re not pouring commission fees into the pockets of your real estate agent, you’ll have the freedom to price your home where you want it and exercise more control over how quickly it sells and the offers you accept.
Other research reveals benefits of FSBO sales. A study from Stanford University found that using a real estate broker didn’t result in higher asking prices, while a Northwestern University study found that sellers who used online FSBO services enjoyed a significantly higher net sales price than those who paid broker commissions.
In addition, there’s the question of whose best interests that real estate agents actually have in mind. The economic gurus at Freakonomics noted that, though agents may claim to have interests that are aligned with sellers’ – i.e., getting the best price for a home – in actually, when agents sell their own homes, they tend to get higher prices than they do for their clients’, even when the homes are comparable.
Data shows that agents tend to hold out for higher prices, even if that means that their homes sit on the market for an average of 10 days longer, but that they tend to encourage their clients to take a “bird in the hand is better than a bird in the bush” point of view; in other words, they’re more likely to advise their clients to take the first offer that comes along rather than wait it out for a higher price. In this case, time actually equals money; if you don’t take that first offer, the agent has to invest their time in marketing your home, showing your home to potential buyers, essentially whittling down that commission.
So why waste thousands of dollars paying an agent to sell your home when you can easily do it yourself?
Instead, consider using this FSBO sale process:
Pricing Your HomeSetting the right price is essential when it comes to selling your own home. Set it too high, and your home is likely to linger on the market for months – or indefinitely. Set it too low, and you’ll lose out on profits. A bit of strategic research and some number crunching can help you set a realistic price within the context of current market conditions. For more information about setting that just-right price for your home, take a look at the Pricing chapter.
Next, research the selling prices of similar homes in your area that have sold over the past six months, as well as similar properties currently on the market. Potential buyers will be comparing your home to other “for sale” properties. You may even want to attend open houses in your neighborhood to gage potential buyers’ reactions – and scope out the competition.
If information about comparable home sales in your area isn’t available, you may want to obtain an appraisal from a licensed appraiser. Not only will a professional appraisal offer an objective value for your home, a high appraisal can serve as a valuable marketing and negotiating tool later.
With a bit of research, you can find an asking price that the market can bear -- and that you can live with.
Preparing to SellWhen you’re preparing your home for sale, look at the property through an objective lens – in other words, think neutral. While you might love bright orange carpet and think that your child’s penciled-in growth chart makes an adorable accent on the closet door, potential buyers might not see it that way. This is one situation where you don’t want your personality to shine through; rather, you want potential homebuyers to be able to easily picture themselves – and their possessions – living happily in your home.
The best way to accomplish this? Create a clutter-free environment with neutral decor that appeals to a broad population. So clear out those knick-knacks, cover that old wallpaper with a fresh coat of (tasteful beige) paint and put all the non-essentials in storage. Bonus: It’ll be easier to keep your house neat and clean when potential buyers stop by.
And speaking of clean, your home needs to be sparkling. Do that deep cleaning you’ve been putting off, ensuring that every surface is free from smudges and fingerprints, corners are cobweb-free, windowsills are dusted, closets are well-organized... you get the idea. Your goal is to elicit a “Wow, I love it!” when prospective buyers walk through the door.
Don’t forget the curb appeal. First impressions are all-important in real estate; if a potential buyer doesn’t like how the outside of your house looks, it doesn’t matter how many upgrades you’ve done on the inside. Mow the grass, cut back the shrubs, plant some flowers and create a welcoming exterior that will draw house hunters in.
If you’ve been procrastinating on fixing up those little things, now’s the time to get it done. Unless your home is in tip-top shape, if you want to get the best price you may have to do a bit of repairing or remodeling. A professional inspection will give you a realistic idea what these repairs and remodels will cost and help you decide if it’s worth the price.
It’s difficult to see your home through objective eyes, so enlist the help of friends or neighbors. Have them tour the house as if they were a potential buyer and ask for their honest reaction. It’s all too easy to overlook those little things that you\\\\\\\\\\\\\\\'re used to seeing every day, but they\\\\\\\\\\\\\\\'ll stand out like an elephant in the room to potential buyers. Remember, home buying is based on emotion rather than reason, and a well-maintained home with lots of curb appeal is more likely to inspire a positive emotional reaction – and get you an offer.
Marketing StrategyOnce you’ve set a price and whipped your home into ship-shape, it’s time to determine your marketing strategy. Start with the basics, like yard signs that feature QR codes, allowing potential buyers to instantly access information about your home including:
• Walk-through videos
• Details about the property
• Secure contact information, routed through a call center
Your goal is to make it easy for house hunters to get information about your property and to contact you.
Now it’s time to get online. Today’s home buyers don’t always rely on real estate agents alone. Rather, tech-savvy customers are doing the seeking themselves online. Sites such as Trulia, Zillow, Craigslist and others will get your property listing in front of millions of potential buyers. For sale by owner marketing sites like NoMoreAgent.com also provide services that broadcast your listing to third-party real estate sites; this provides your property with that all-important added exposure and even provides codes for a nicely-formatted flyer that you can use in your Craigslist and other online ads.
Then there’s the MLS or Multiple Listing Service, a huge online repository of information about properties for sale. Home buyers – and their real estate agents and brokers – use MLS to access data, including photos, home details such square footage, features and upgrades, video walkthroughs and even past sale data. Listing your home on MLS will exponentially increase its exposure to thousands more potential buyers and, in many instances, your property listing will be broadcast to dozens of real estate sites.
Keep in mind that deciding to list your property on your local MLS will, in most cases, obligate you to pay between 1 percent and 3 percent to a buyer agent who brings a buyer for your property. An MLS listing will likely bring about a faster sale, however, as it greatly increases your home’s exposure to potential buyers and buyer agents. Avoid the 3 percent fee and use an online service that offers MLS posting for a flat fee. That way, you won’t be required to sign a full listing agreement and be obligated to pay the additional fees to a listing agent when your home closes.
And don’t forget that more than 56 percent of people worldwide are active social media users. Sites like Twitter and Facebook represent huge potential exposure for your listing. Most online for sale by owner (FSBO) marketing services like NoMoreAgent.com feature share buttons on your online listing to spread the word about your property.
Word of mouth is another essential tool. Call, email or text everyone you know – friends, family, co-workers, acquaintances – and let them know that you’re selling your home. Ask them to pass the word along to increase your marketing reach.
Hold an open house so potential buyers – and local real estate agents – can view your home. Create an information sheet to hand out; include details and color photos of your home, as well as contact information. While hosting the open house, act as an enthusiastic champion for your home and the neighborhood. After all, no one knows your home as well as you do!
Negotiate the OffersWhen you receive an offer on your home, usually from a buyer or through his/her attorney, it’s time for a review with your own legal counsel. Real estate lawyers will help you to:
• Protect your interests
• Evaluate offers
• Draw up contracts and other paperwork
• Act as escrow agents
• Guide you during negotiations
• Advise you on specific local and state regulations
Generally, buyers and sellers have a three-day window to accept, amend or cancel an offer. Take the time to thoroughly review each clause, contingency and term, even if the offer has the purchase price that you’re hoping for. Your attorney will help you avoid loopholes and contingencies that favor the buyer’s interests.
It’s essential to assess the buyer’s financial qualifications. Look for mortgage pre-approval status and note the loan amount that the buyer seeks. Is the buyer’s down payment less than 10 percent? Is the purchase price larger than the nearest comparable sale? All of these factors can cause financing – and the sale -- to fall through.
If the purchase price isn’t acceptable (and keep in mind that the buyer’s first offer is rarely the highest price they’re willing to pay), leave your emotions at the door and don’t be offended; simply take a deep breath and prepare a counter-offer. Be prepared to negotiate and run all offers through your legal counsel. When you’ve accepted an offer, it’s inspection time.
InspectionsMost real estate contracts allow the potential buyer to inspect your property. A general inspection should be carried out by a licensed professional. The inspector will examine your home and point out any problems in a written report. In most cases, the seller is responsible to make any major repairs to:
• Septic systems
• Electrical systems
• Heating and air conditioning
• Appliances that remain with the home
In addition, some state regulations require homes to be certified as termite-free before a sale can close. If you’re worried how your inspection will turn out, hire your own inspector first and make repairs before putting your home on the market.
Once the inspection is complete, it’s time for the buyer to get his mortgage in order -- and that means an appraiser is on her way.
AppraisalThe buyer’s mortgage lender will order an appraisal of your home to ensure that the buyer isn’t borrowing more than the home is worth. Sometimes the buyer is also required to order a survey of property boundaries. In most cases, there will also be a title search to ensure that there aren’t any existing liens, encumbrances or claims against the property.
With these tasks successfully completed, the mortgage lender will issue a commitment that lists the steps you need to take to complete the sale. Review the commitment with your attorney.
At this point, contact your mortgage lender to say you’ll be paying off your mortgage through the impending sale of your home.
ClosingClosing generally takes place four to six weeks after the buyer and the seller sign a sales agreement. You may close with a title company or with an attorney, depending on the state.
Before closing day, the buyer will do a property “walk through” to ensure that the home is in the proper condition and that all agreed-to repairs have been completed. If issues arise, the sale can still go through, but funds will be held in escrow until the problems are fixed.
After a successful walk-through, you’ll hand over funds, your loan will be paid off, a free and clear title will be insured, and you’ll transfer the deed of ownership to the buyer. You’ll receive the purchase price within two days of closing. Congratulations – you’ve sold your home!
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