“For Sale By Owner” Tips
Marketing your home as a “FSBO”
Posting your property online is a great opportunity to get your listing in front of millions of people. 96% of buyers start their search online even before they choose an agent. Most FSBO websites allow you to write your own property description and upload photos, so you have plenty of space to market your home. However, it’s important to make your property description and photos as effective as possible. Here are valuable tips.
- Headline should be catchy to gain interest (“Like-New Condition,” “Priced to Sell Quickly,” “Area’s Best Schools,” etc.)
- Keep your copy to-the-point, avoiding overdone narrations filled with emotionally driven descriptions.
- Stick to the pertinent details such as number of rooms, square footage and tangible features.
- Highlight remodeled or updated areas that add to the value of the home.
- Be aware of the weather and daylight and try photographing your home at different times of day to see what light flatters it most.
- Remove exterior distractions such as cars in the driveway or children’s toys strewn about the lawn.
- Re-stage interior by removing unnecessary furniture, knickknacks and personal items.
- Clear up counter space in the kitchen and remove any items you store on top of your refrigerator.
- Make sure all other rooms are neat and uncluttered.
Quality of photos are extremely important, nothing will make a buyer cross you off the list quicker than bad photos.
You’ll want to draw people to your home – if even for a quick drive-by look – by posting directional signs at main intersections near your home. You’ll also want to place a detailed For Sale sign on your lawn. Buyers interested in a particular area will often make frequent visits to see what might be for sale, realizing that not all properties are widely listed. Signage is also important if you elect to have an open house.
Tips for creating a For Sale By Owner lawn sign:
- For Sale By Owner should be included on sign.
- Make sure your text is large enough to read from the street.
- Include your phone number.
- If possible, include flyer so potential buyers can have a takeaway.
Keep Your Home Ready
Since motivated buyers can move on to other properties quite quickly, it’s imperative that you make your home available for viewing as soon as possible when someone calls to schedule an appointment. This means you need to keep the home “staged” for showing pretty much around the clock. The ability to show it in optimal condition to as many interested parties as possible will certainly increase your chances of a successful sale.
The goal is to keep your home as clean as can be, indicating that the buyer could move in quickly and easily.
- Sweep front walkway and remove newspapers, bikes and toys.
- Trim back the shrubs.
- Clean windows and window coverings throughout.
- Make sure roof and gutters are clean and in good condition.
- Mow the lawn frequently and plant flowers.
- Keep pet areas clean.
- Clean the kitchen and bathroom.
- Vacuum regularly to keep carpets clean.
- Place fresh flowers in the main rooms.
- Put dishes away, unless setting a formal display for decoration.
- Make all beds and put all clothes away.
- Open the drapes and turn on lights for a brighter feel.
- Keep pet areas clean and odor-free.
- Minimize clutter throughout the home by putting away dishes, toys and family photographs (if you normally display a lot).
- Enhance the spaciousness of each room – remove some furniture if necessary.
- Put all jewelry and valuables in a safe place, especially if you hold an open house (see below)
Having An Open House
For agents, open houses are an ideal venue to market all homes they have on the market to a targeted audience of buyers ripe for the picking. But when you’re acting as your own agent, this scenario doesn’t apply. Additionally, some buyers have been known to shy away from open houses when the seller is present because it’s uncomfortable to freely walk through and comment on a home owned and, in many cases, lived in by the person present.
While open houses can amount to a lot of prep work and even more sitting around awaiting visitors, there is a possibility you can connect with a prospective buyer or two. If you choose to hold an open house, here are some tips to make it as successful as possible:
- Schedule an open house in the early afternoon on weekend days.
- Schedule an open house at the same time there are other open houses in the area.
- Strategically place signs leading people to your open house.
- Give visitors a chance to move through the home at their own pace
- Limit conversation to the welcome greeting and request for any questions to be answered before the prospective buyers leave.
Quick Tip: If you would like to do an open house, please call me and I will be happy to host the open house for you schedule permitting. This will give you the ability to have buyers view your home and still maintain the highest negotiating position by keeping separation between you and the buyer.
If you sell your home yourself, without the assistance of a real estate agent, you can save on commissions. However, make sure you know what you’re getting into first. Learn about what the process entails, whether it’s a good idea for your situation, and where to get help if you do decide to go it alone. Above all, get to know the market well enough that you don’t end up selling the home for less than it’s worth or list your home at a price where potential buyers will not even get in your door.
Are Real Estate Agents Required?
No law requires you to hire a real estate agent when you sell a house. The value of a real estate agent is primarily in handling the many details of the transaction and understanding the process from A to Z including the legal responsibilities of the seller. The closer you look, the more little tasks are revealed as crucial in preparing, marketing, and successfully selling your home. The most important tasks that a real estate agent will normally perform for you include:
- evaluating the local market and comparable home values
- suggesting an appropriate listing price
- advising you on how best to present your home, including providing referrals to painters, repair persons, and more
- helping coordinate preparation of disclosure and other needed forms and documents
- creating advertising materials, arranging for photographs, measuring square footage, and executing drawings and floor plans of your home
- placing ads on the Multiple Listing Service (MLS) and in other media, and sending out material to potentially interested buyers on the agent’s mailing list and presenting your property to the other agents in their office. (Hint – this is where most deals get done so it is to your advantage to use a realtor with a large firm for more exposure.)
- arranging for individual visits to the property — if you’re no longer living there, most likely by providing a lockbox for use by other realtors, and meeting with individuals who don’t yet have their own agent
- answering questions and providing documents such as disclosure packets to potentially interested buyers and their agents
- holding open houses, possibly including weekday open houses for other real estate brokers to visit and weekend open houses for the public (which itself involves many tasks, such as arranging for and putting out signs in advance, and providing food for the broker’s open houses, as is traditional in some areas)
- receiving offers to buy your house, whether via email/mail or in person if other agents wish to formally present their offers
- helping you evaluate the strength of each offer and strategize on issues like whether to accept or reject an offer outright or make a counteroffer, and whether to also look for or arrange a backup offer.
- negotiate with the buyer’s agent until the purchase contract is complete
- coordinate with the buyer’s agent throughout the escrow period, helping to make the house available for inspections and appraisals and make sure you’re doing your part to close the deal
- help you strategize over requests made while in escrow, such as for a reduction in purchase price due to repair issues revealed in the inspection, and negotiating such issues with the buyer’s agent
- attend the closing.
Sound like a lot? This is only a portion of the typical tasks involved in a real estate transaction that need to be addressed. Indeed, it can be a full-time, nights and weekends job in the days and weeks while your house is on the market. And, as any agent will tell you, it’s not all glamorous. Some have been known to get out a mop and give a house a last scrubbing before the open house (but don’t count on this!) or drag their own furniture over if it will make the house look better.
For Sale By Owner
Selling a house without an agent is called a FSBO (pronounced “fizzbo”) — For Sale By Owner. As you might have already guessed, people who try it usually develop some appreciation for how agents earn their commission. If you want to go it alone, be sure you have the time, energy, and ability to handle all the details. Before you dive in, you should also evaluate the market and your schedule. FSBOs are usually more feasible in sellers’ markets where there’s more competition for homes, or when you’re not in a hurry to sell.
What FSBO Sellers Need to Know About Real Estate Rules and Regulations
To sell your house by yourself, you must learn the legal rules that govern real estate transfers in North Carolina, such as who must sign the papers, who can conduct the actual transaction, and what to do if and when encumbrances are discovered that slow down the transfer of ownership. Try searching for information online, talking to friends with expertise (unless you already happen to be a lawyer or similarly informed professional), or hiring a lawyer for a few hours’ consultation. You also must find out if there are any state-mandated disclosures as to the physical condition of your house.
Let’s say you find a buyer who is willing to make an offer on your home. Who will write the contract? If the buyer is also unrepresented by a realtor, you should strongly consider hiring an attorney to draft the purchase and sale agreement. Drafting your own real estate contract, or relying on a contract template from the internet, may not be sufficient to adequately protect your interests. Even if the buyer is represented by an agent who drafts the contract, you will want to seek legal advice to insure that the contract is reviewed with the seller’s interests in mind.
A buyer has a right to a fair and complete understanding of the condition of the property they are interested in purchasing. While a buyer should always verify the property condition with a professional home inspection, they will expect the home seller to share the information they may have about the home with them. This is done through the Seller’s Disclosure Statement, a written document where the seller lists all pertinent issues that they know about the property. You should completely and truthfully fill in all that you know about your property. This is a place for factual information, not speculation. It takes just a few minutes to fill in. Keep a copy for yourself and present a copy to each prospective home seller as part of your contract paperwork.
Title Work and Survey
A seller will also be required to provide other property documents and records to the buyer (i.e. tax statements, HOA documents, etc). A FSBO seller should be certain to comply with the timeline designated to complete the title work, survey, and other items that may be requested by a seller. Failure to do so may result in a default under the contract, and the right of your buyer to walk away from the deal. FSBO sellers should carefully consider the legal ramifications of selling their home without the assistance of a Realtor. At a minimum, a real estate attorney should be hired to represent the seller during the entire process if not using a Realtor.
From Contract to Closing
Once the Contract has been fully agreed upon and written up, it needs to be reproduced in at least four (4) counterparts – one each for the buyer, seller, buyer’s lender, and the person holding the earnest money deposit. The buyer then is required to use his best faith effort to meet all of the conditions, such as financing and inspections. The mortgage loan process can take anywhere from one week to six weeks, depending on the property and the borrower, and it is possible that the buyer will not be able to qualify for the mortgage loan needed to close. Things that affect qualification are (but are not limited to) the actual credit report of the borrower, the value that an appraiser selected by the lender assigns to the property, and the available cash that a buyer has on hand to make up the difference between the purchase price and the loan amount.
During the due diligence period, the buyer will need to get all financing, inspections, and other closing details worked out, and the buyer and seller will need to resolve all issues arising from this due diligence. At some point between the contract signing and the closing date, the mortgage qualification process will be completed. If the buyer qualifies for the mortgage loan, a closing date will be set between buyer, lender and buyer’s closing attorney.
Closings in North Carolina are generally held at the office of a licensed attorney selected by the buyer and approved by the lender. In a FSBO sale, the seller and the buyer will appear at the office of the closing attorney on the closing date and sign all of the closing documents. The seller will be responsible for providing a warranty deed to the buyer and paying for North Carolina excise stamps and any other expenses which seller has agreed by contract to pay. Also, in order to close, the seller will need to be able to deliver to buyer “marketable title,” which means that a title search done by the closing attorney reveals that seller can deliver clear title to the buyer with “acceptable encumbrances” (such as restrictive covenants, general easements, etc.).
If the title search shows that the seller has an uncancelled mortgage, judgment, unpaid tax or other “unacceptable encumbrances” on the property, then the closing attorney will make arrangements with the seller, through closing, to pay off, satisfy or otherwise remove unacceptable encumbrances. Certain acceptable encumbrances, like taxes for the current year which are not yet payable, or mandatory assessments for a homeowners association, will be prorated between buyer and seller at closing, so that seller has paid seller’s share of the encumbrance, and buyer then assumes the encumbrance from the seller. All of these payoffs and adjustments will be reflected on a document known as the HUD-1 Settlement Statement. The HUD-1 will itemize all of the buyer’s and seller’s expenses and credits, and come down to the net funds required by buyer and the net funds payable to seller when closing is complete. Both the buyer and the seller sign off and agree to the HUD-1.
Once all of the documents are signed, then the closing attorney collects the closing funds from the buyer. The funds must be in the form of a bank wire, certified funds, cash, or other “cash-equivalent” funds as required by the North Carolina Good Funds Settlement Act. Once the closing attorney is satisfied that he has the correct amount and type of closing funds, and that all documents have been properly signed and notarized, the closing attorney will proceed to update title and record the documents at the county Register of Deeds (in the county where the property is situated). The closing attorney will not distribute the net sales proceeds to the seller until all of this is done. The FSBO seller will need to be sure to ask the closing attorney when seller can reasonably expect to receive seller’s net proceeds check.
No buyer wants an uncomfortable confrontation with the owner of a house for sale. Therefore, when a buyer or their agent asks to negotiate on aspects of the sale, it is important for the home owner to project a calm, relaxed mood and respond to negotiation requests politely. This reduces the risk of blowing a potential sale. The items below are just some of the negotiations that will take place in a real estate transaction that you will need to be prepared for.
Common Elements of a Negotiation
- The purchase price
- The amount of the deposit, Due Diligence and Earnest Money
- Who holds the deposit
- Financing information
- Closing Date
- Due Diligence Requests and Contract Amendments
- Repairs, credits and allowances
- Who pays for what (inspections, appraisals, repairs, attorney fees, etc.)
- What is included in the sale (personal property such as appliances, curtains, etc.)
- Other conditions of the sale (buyers must first sell their current home, maximum mortgage note %, property inspections, etc.)
- Rental fees if seller continues to occupy the home after the closing
- Appraisal issues that do not meet the contract price
- Time allotments for inspections (due diligence) etc…
- Home Warranties (who pays, what provider, what coverage)
By both parties being willing to negotiate and documenting what has been agreed upon, FSBO dealings will go more smoothly, with irritations kept to a minimum. The transaction process will be a win/win situation for both the buyer and the seller.
Pricing Your Home Correctly
Questions to consider
- Is the local market rising, falling or staying even? Markets can change quickly for a variety of reasons. It is important for you to know what has sold in your neighborhood both recently and in the past for comparison and market trend analysis.
- Is my opinion of value based on actual neighborhood sale prices? Don’t be fooled into thinking you can ask for a price just because another house is listed at a certain price. Comparative Market Analysis is based on what has “sold” in your neighborhood. Only 6% of homes sell for asking price.
- How many homes in the area are competing against mine right now? Inventory is a key factor in what a house will ultimately sell for. The more inventory on the market, the less your home could sell for. Pay special attention to “new construction” in your area. This can cause a major reduction in value to your home.
- How does my price compare? Study the homes on market in your area. Go to open houses if possible to see how your home compares in condition and value.
- Have any neighborhood homes been on the market too long? If YES, Why? Study these homes if there are any in your neighborhood so that you can try to avoid the same pitfalls. Note: The #1 reason houses stay on the market too long is from being overpriced.
- Is my home consistent with homes in the surrounding area? Buyers look for neighborhoods as well as homes. Is your home overbuilt for the neighborhood? I recently had a seller that wanted $300,000 for their home in a neighborhood where all other sales for the past 5 years in that neighborhood were in the $100k’s. Put yourself in the buyer’s shoes when it comes to your home. A buyer that has a budget of $300,000 is not going to buy something in a neighborhood with all other homes half the price of that home. Would you?
- Should I and when should I do a price reduction? If you price your home correctly in the beginning, you should not have to do a price reduction, however the litmus test for a price reduction is when you are not getting showings and inquiries on the home. The main cause of buyers passing over your home is price. Be careful however because with a “for sale by owner” property it’s not always easy to know whether the lack of showings is because of price or if it is because of a bad marketing plan or the fact that many agents will not show FSBO properties. Try to research and determine what the true cause of minimal activity actually is.
- Is my original purchase price or my financial needs influencing my asking price? Again pay attention to the market trends in your area. Depending on when you purchased your home, unfortunately it may have gone down in value. None of us can predict the future but if you have to sell remember buyers are planning to pay “market value.” Also be aware that no matter what price you agree to, chances are your buyer will have to get a mortgage on the house and it will have to appraise for that value or you may be back at the negotiating table and your buyer could walk.
- Am I willing to price it right and stand firm? Sellers are often under the illusion that they have to price the home at a price higher than what they would accept for a contract. This all depends on your ability to negotiate. Keep in mind you may open more doors to potential buyers by pricing the home correctly and standing firm that your house is priced at “market value.” Remember buyers are typically searching in a price range. For example if you are willing to accept $249,000 for your home but you price it at $270,000, your potential buyer is probably searching online or with their buyer’s agent for homes in the 200-250k range and they may never see your home because it did not show up on their search.
- Are the benefits of moving important enough to price my home at market value? We hear it all the time “I don’t have to sell” and that’s fine but why are you selling? What is your motivation. If you have plans for where you want to be or a financial goal you want to achieve then weigh the options of the cost of selling it quicker by pricing at “market value” vs. holding out for a higher price. For example if you have a $2000 mortgage payment every month and it takes you 6 months longer sell or figure out you either need to price the home at market value or decide you need to hire an agent to get the home sold…you just lost $12,000 in 6 months. Calculate the cost of time-on-market. You can capture more money by selling yourself, but it will likely take longer. Add up the monthly cost of continuing to own your house. That will include the mortgage, property taxes, utilities, fees and seasonal maintenance costs. That is how much equity you lose each month by sticking with a too-high price. Chances are it won’t take long to run down your equity. Price your house to sell swiftly and you won’t erode your equity.
Benifits of Proper Pricing
- FASTER SALE: The proper price gets a faster sale, which means you save on mortgage payments, real estate taxes, insurance, and other carrying costs.
- LESS INCONVENIENCE: As you may know, it takes a lot of time and energy to prepare your home for showings, keep the property clean, make arrangements for children and pets, and generally alter your lifestyle. Proper pricing shortens market time.
- INCREASED SALESPERSON RESPONSE: When salespeople are excited about a property and its price, they make special efforts to contact all their potential buyers and show the property whenever possible.
- EXPOSURE TO MORE PROSPECTS: Pricing at market value will open your home up to more people who can afford it.
- BETTER RESPONSE FROM ADVERTISING: Buyer inquiry calls are more readily converted into showing appointments when the price is not a deterrent.
- HIGHER OFFERS: When a property is priced right, buyers are much less likely to make a low offer, for fear of losing out on a great value.
- MORE MONEY: When a property is priced right, the excitement of the market produces a higher sales price in less time. You NET more due to the higher sales price and lower carrying costs.
Drawbacks of Overpricing
- REDUCES ACTIVITY: Agents won’t show the property if they feel it is priced too high.
- LOWER ADVERTISING RESPONSE: Buyer excitement will be with other properties that offer better value.
- LOSS OF INTERESTED BUYERS: The property will seem inferior in amenities to other properties in the same price range that are correctly priced.
- ATTRACTS THE WRONG PROSPECTS: Serious buyers will feel that they should be getting more for their money.
- HELPS THE COMPETITION: The high price makes the others look like a good deal.
- ELIMINATES OFFERS: Since a fair priced offer will be lower than asking price and may insult the seller, many buyers will just move on to another property.
- CAUSES APPRAISAL PROBLEMS: Appraisers must base their value on what comparable properties have sold for.
- LOWER NET PROCEEDS: Most of the time an overpriced property will eventually end up selling for less than if it had been properly priced to begin with, not to mention the extra carrying costs.
- What you paid for your property does not affect its value.
- The amount of money you need to get out of the sale of your property does not affect its value.
- What you think it should be worth has no effect on value.
- What another real estate agent says your property is worth does not affect its value.
- An appraisal does not always indicate what your property is worth on the open market.
The value of your property is determined by what a ready willing and able buyer will pay for it in the open market, which will be based upon the value of other recent closed sales.
PRICE is the #1 most important factor in the sale of your home.
- The consequences of making the wrong decision are painful. If you price your home too low, you will literally give away thousands of dollars that could have been in your pocket.
- Price it too high, and your home will sit unsold for months, developing the reputation of a problem property (everyone will think that there is something wrong with it).
- Failure to understand market conditions and properly price your home can cost you thousands of dollars and cause your home not to sell… fouling up all of your plans.
- Setting the proper asking price for your home is the single biggest factor that will determine the success or failure of your home sale.
Note: I Won’t Let This Happen To You! Utilizing the latest computer technology and our in depth knowledge of the market, we will analyze current market conditions in combination with your personal time requirements to identify the correct price range for your home.You can’t afford any “guesswork” in this critical step!