With all the DIY programs on television, many sellers are considering for sale by owner transactions more frequently. If you list a property without the help of an agent it is commonly known as a “For Sale By Owner,” or FSBO listing. For most, these type sales are primarily intended to cut out of the middleman, namely a real estate agent. The thought is to avoid paying the associated real estate commission fees and make more money more easily. In many cases this isn’t always how things turn out.
Despite what DIY shows implicate, selling a “for sale by owner” property is no easy task. It takes time, patience, and hard work to be successful. The seller must understand what a house that will sell should look like. Staging a house properly sometimes can be a large factor if ads attract buyers. With this said the cost of ads come into play when you review costs to you as a seller. Independent sellers will need to pay fees for ads to appear on popular buyer searched websites. Placing your home on only one site limits your exposure so it is important to place several ads to get your property noticed. Pictures that highlight the value of your home are important, so care must be taken to get the views of what is trending in sales. Good clear pictures are important since most ad sites have a limited number of pictures that can be used without requiring more charges for additional pictures above the limit. Most buyers use an agent and most agents use the MLS system to connect buyers and sellers. As a for sale by owner this is not an option for you if you are not using an agent. However, there are some websites now available that will offer you a “flat rate” to place your property in the local MLS system. Usually the fees can exceed $1000 and ONLY include placement in the MLS for a short period with waiver by the seller of any liability from the entity that placed your house in the MLS system.
The correct price of your home is another factor that can make or break your for sale by owner process. If the price is too high, very few will be interested in looking at your home. For sale by owners also already have some stigmas that buyers are leery of. It is not uncommon for buyers to automatically think “bargain sale” or “distressed property” when they see a for sale by owner sign or ad. Therefore you must make sure your pricing is accurate to create interest! Many websites give estimated values of homes based on homes sold that are similar to your neighborhood houses. It is important to remember that these estimates are based usually on the house being in average or very good condition. They do not give you a price based on an individual review of your home and what it has to offer. Paying for an appraisal is your best option to get an actual good price to list as a for sale by owner. Appraisals generally vary in cost based on the size of your home. Expect the cost of an appraisal to be $500+ with todays trends for this service.
A seller must realize that just like themselves, a buyer will not buy something without first being able to see the item for sale. Items that have mechanical features in them need to be tested to make sure all is operable so the buyer can justify paying the price you are asking. What this means for you as a for sale by owner is you will have to make time to show your home each time someone wishes to view and examine it. You will have to deal with every call that simply wants more information about your listing. Many buyers are “window shoppers” which means you will need to learn how to distinguish these from qualified buyers to avoid large consumptions of your time.
Finding a qualified buyer on your for sale by owner transaction is very stressful. You will have to find out if the potential buyer can actually afford to buy the house for the amount you are asking. This can be a very difficult tasks as most people do not feel comfortable sharing personal financial details with someone they do not know well. Hence every buyer that wishes to view your home most likely isn’t necessarily going to qualify. What that means is you will have lots of people that want you to discount your price based on what they have to spend even if it isn’t the price you are asking.
When you get an offer from a qualified buyer YOU must understand the real estate laws and the sale process of real estate in your state. Before processing a transaction it is a good idea to have your attorney to review the terms of the offer before you accept them if you don’t fully understand the contract terms being offered. Attorney consults are charged by the hour at various rates so shopping around is a good idea before choosing an attorney. A buyer most likely will have an advantage in that they have hired an agent to write up a legal contract with terms that protect their interest. Also, you can count on the buyer requesting payment of 3% of the selling price to help them with the cost of a professional agent to assist them with the purchase. If a buyer doesn’t have an agent they may still request the seller to pay for an attorney to review their ideas for an offer and prepare a legal offer that has their interest in place.
In some cases, a buyer that takes interest in a for sale by owner expects the owner to complete all the legal documentation for the negotiations of the sale. This happens mainly because the buyer, if not experienced, will assume since you chose to sell as a for sale by owner you must have a working knowledge of real estate transactions. They will also expect you to accept the terms of their lender through out the process. They most likely expect you to handle the documents needed by the selected attorney to close the sale. The liabilities of errors and any illegal actions in the process in most cases fall back on the for sale by owner seller. This is especially true when it comes to consumer rights of a buyer. Infractions, and any illegal actions whether intentional or in error, can end up in the thousands to correct. Make sure you consult with an attorney if you feel you lack contract writing skills to protect yourself. Simply put you could end up with a lawsuit if you aren’t fully competent to process the sale of your home.
So where does that leave you as a for sale by owner seller? In truth the answer really comes down to you as a homeowner. How much do you understand in a real estate transaction process. How much scheduling options and funds do you have available to handle the selling process? Are you willing to put up with the stresses that come with negotiations and consumers seeking to get the most for their money? For many, the convenience of using a real estate agent at the cost of a commission rolled into the selling price may be worth it. To others who are skilled in the real estate trade, a for sale by owner listing may be just as beneficial as using an agent and save a little money. Still can’t decide if a for sale by owner transaction is best for you?
See my related article: “The Benefits of a Listing Agent Selling Your Home” by Clicking Here
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