Selling the Property Yourself

One of the greatest joys in life is the purchase of your first home. It can be seen as a sign of maturity and the pinnacle of adulthood. And, as we all know, life changes and there may come a time when that same house you were so proud of buying, for whatever reason has to be sold.

Selling a home is the proverbial 'other side of the coin.' You learned from the home-buying experience, and you now need to use that and other information to help you sell your property. There was a time when a person who wanted to sell their home would simply hire a real estate agent – just like they did when it was time to buy. Now, however, there's another option – for-sale-by-owner, or FSBO, selling.

Selling a home alone has its own unique challenges. Sellers who lack the motivation to push through the entire process can end up with a home that has no buyers. Of course, market fluctuations have a lot to do with how quickly a property moves during either the buying or selling phases. But the suggestions discussed here will work regardless of prevailing market trends – so long as you stay motivated to sell your home.

More and more people are opting to eliminate the middle man and sell their homes by themselves. In fact, this movement has become so large that there are websites devoted to listings of "For Sale by Owner" properties and offering resources for marketing such properties. However, before using this method to sell your home, be sure to thoroughly consider all of its positive and negative points.

FSBO selling Pros

When someone engages an agent to sell their home, they enter into a contractual agreement. Part of that agreement is to pay a commission for the opportunity to use the agent's services and expertise in selling the home. The commission can typically be anywhere from five- to seven percent of the final sale price of the home. With the For-Sale-by-Owner method, a seller can cut out the middle man and save a significant chunk of that money. The general guidelines set up by realtors and other real estate experts can be managed by a motivated seller doing it on their own. The focus for the seller is to market the property in every way imaginable.

Needless to say, the best time to take advantage of the FSBO method is during a seller's market. During these conditions, there are not enough homes to supply all of the available buyers. The seller can pretty much write his or her own ticket when it comes to setting a fair market price for their home. The seller can get the buyer to pay for inspections and appraisals on the property, and perhaps other expenses that might normally be the seller's responsibility in a more balanced market. The money saved by not hiring a real estate agent goes directly into the seller's pocket, along with any other perks conceded by the buyer.

FSBO selling Cons

Be assured, however, that it's a challenge to sell a home in any market. When you represent yourself, the challenge is a bit tougher. Sellers that use the FSBO option invariably start out optimistically, but they often lack the fundamental knowledge needed to sell their home effectively. The real estate game is one that has a lot of rules. Laws are constantly changing with regard to closing procedures and property disclosures. Failing to abide by even one regulation can have a buyer breathing down your neck in a court of law. No one wants that turn of events when all they were seeking in the first place was a fair price for their home.

A motivated seller can try to learn the ins and outs of the real estate business, but that takes time. The most crucial period of time for a newly-listed home is its first few weeks on the market. After a home has been listed for a while, buyers' interest begins to wane, especially if the market favors the buyer.

Furthermore, sellers who represent themselves are likely to commit common sellers' mistakes, the most common of which is misjudging the value of their home. Home values are not just a matter of the county tax assessor's figure marked on a document. Market trends, location, and time of year all factor prominently into the final-sale-price equation. A home in a nice neighborhood, near good schools, and kept immaculately could sell for below-market value during the winter months in a buyer's market. Therefore, overpricing a home can be a slow death. The house will gain interest in the beginning, but buyers will see other similar properties that are selling for a lower price. Instead of pursuing an offer with the higher-priced seller, they'll look for more moderate pricing. The fate of the overpriced home? It stays on the market much longer than the seller would like, and possibly can afford.

Sellers using the FSBO strategy also lack the industry contacts that make the process easier for an agent. The job of getting a home from listing to closing is not accomplished by one person; it takes a team. Those team members include attorneys, inspectors and lenders, among others. You could spend a significant amount of time interviewing these people to find the right candidates to work with. If you end up with a bad inspector or appraiser, you might your deal falling through before closing.

There's also a lot of extra responsibility involved in selling a home yourself. For example, you'll need to set up escrow accounts. The escrow company that will represent the parties in the sale is charged with holding onto certain documents and funds until such time as conditions are satisfied for those items to be released. Additionally, you'll be in charge of your own marketing strategy. Failure to market a home in the proper way will result in outright failure to sell your home or selling it for less than you expected.

Going on, the seller and the buyer negotiate the purchase contract of a FSBO property. One wrong move and the deal can collapse – perhaps because of something the seller didn't do that should have been done. Of course, buyers who themselves are not represented by an agent may level the playing field, but the seller can still make costly mistakes. When the buyer is represented by an agent, the seller must negotiate with them instead of the buyer. This can be an intimidating situation for the novice seller since the agent has a distinct advantage in both knowledge and experience. You may find yourself handing over more to the buyer in the deal than you'd hoped.

Things to do

Even in the toughest market, there are things you can do to promote the effective sale of your home. It takes more effort and time, but these tips will help to put you on the road to your final goal, getting a fair price for your property in a reasonable amount of time.

It all begins and ends with the home. That "lived in' look won't do when it comes to showing your house to potential buyers. You'll need to make some changes if you want anyone to be impressed with your cozy dwelling. And you've got to start somewhere, so why not get rid of the clutter? Take an honest look at those piles of papers, boxes of toys, and bags of unused clothing. Don't just hide them in the closet. Most people, when examining a house for possible purchase, look to see how much closet space there is. Boxing everything up and storing it in the garage is not a good idea, either. Hold a yard sale to get rid of all that stuff or donate it to charity. Or, temporarily rent storage space to hold what you decide to keep so that it's not around for visitors to accidentally find.

Once you've dealt with all the clutter, it's time for spring cleaning of the entire place – from top to bottom. But, don't neglect the yard. As potential buyers get out of their cars you don't want them to see clumps of brown grass and dead flowers all over the place. The yard is an extension of your home. It needs as much time and attention as the inside of the house. After all, the vast majority of buyers want the total package, and they aren't looking for a fixer-upper. Hire a comprehensive lawn service if the yard has been neglected for some time or has serious problems.

Making repairs to your property is also a part of getting it 'show-ready.' Choose which repairs you will make. Major structural problems should be dealt with or they will become points of negotiation by the buyer in an effort to lower your selling price. Flaking paint and other cosmetic touches are inexpensive and will enhance the look and feel of your home.

Advertising options

Use the money that you saved on the agent's commission fee to beef up your advertising. If people don't know that your house is for sale, they won't come to see it. Marketing is the biggest responsibility of the do-it-yourself home seller. Start with the obvious. Put up a noticeable sign in the yard. This lets people know that your home is on the market. It's also a signal to potential buyers that you're ready for visitors, so make sure that the house is ready to be seen before inviting potential buyers in.

Many home buyers today look to the Internet when searching for properties. The Internet provides a quick way to establish parameters that meet one's particular specifications. In a few clicks, the buyer can see listings of the homes for sale within his or her price range and desired area. You as a seller can take advantage of this trend to get greater exposure for your property.

Online listings typically include much more information than the traditional newspaper ad, so make use of all of it. There's also room for pictures to be uploaded. Take five to ten flattering shots of the exterior and any special features inside the home. If you have the money, hire a virtual tour company to create a 360-degree view of your home for the web listing.

You needn't disregard the newspaper, however; it's still a good place to advertise locally. Although circulation is down in favor of Internet-accessed news, many people will still usually buy the Sunday newspaper, especially for the coupons and ad sections. Include a color picture in your to enhance your description and set your ad apart from the others. And try not to use too many abbreviations in your text; people tend to think they're reading shorthand and will give up if it gets too cryptic.

Showing your home

Without a realtor, this part of the process is also up to you. If you're an outgoing sort, this is a chance to hobnob with potential buyers. If you're not very outgoing, well, put on your best "Welcome to me home!" face. You can showcase your home by appointment only or as an open house. In the beginning you might consider an open house or two – works best when buyer interest is high.

One thing to be careful of, however, is talking too much about your home. Buyers will begin to think the home is 'too good to be true' if that's all they hear you talk about. As you show the home, answer questions about the features if asked, but talk more about the amenities surrounding the neighborhood than the house specifically. Remember, location is a big, big selling point. Put out the sign advertising the showing at least half an hour before the start time. Advertise too early and you'll get people knocking on your door before you're ready. They'll say they were in the neighborhood so they just decided to stop by.

Be sure to post a sign-in sheet near the front door. As guests arrive, have them sign their name and wait for the tour. A family member stationed at the table can ensure that each visitor complies. One downside you'll have to deal with when showing your home is that there will be people who'll show up just to see the house but aren't really serious about buying. Unfortunately, nothing's perfect. And as a precaution during your preparation, remove all valuable items from plain sight and out of the rooms that you'll allow your visitors to see.

When the show is over and everyone's gone, use the sign-in sheet to follow up with the attendees within 24 to 48 hours. Tell them that it's a courtesy call to solicit feedback for the home or the show. To make it easier, have a list of questions typed out and fill in the answers on a separate sheet of paper for each person.

Negotiating the Purchase Contract

As a For Sale by Owner property, the seller must negotiate the contract with the buyer or their agent, if the buyer has representation. Buyers will submit offers to you for your consideration. Check with a local realty company to see if there is a special form on which to submit offers (some locales may by custom use a particular one). Expect that some buyers will try to lowball you, especially in a buyer's market. Don't just reject their offer outright, even if it is ridiculous. You can always submit a counter offer to the buyer. He or she could just be testing the waters to get the ball rolling and counter you again with a legitimate offer for the property. Again, consider all offers that you receive. Remember, this is the negotiation phase, where you really get down to business. For the offers that really interest you, ask the buyer to submit an earnest money deposit to show his or her intent.

Before negotiating with anyone, however, hire an inspector to look over the house and land. You'll want to know if there are any major problem areas before entering into actual negotiations. Any known structural problems must by law be disclosed to the buyer, who might hire his or her own inspector to check out the home. In some areas, a pest control report may also be required. All repairs that are needed do not have to be completed before the home sells. Major damage should, of course, be attended to but small things can be disclosed and negotiated as a part of the purchase price.

Home warranty plans guarantee certain appliances and other structures in the home by covering their cost of repair or replacement. Most often included are the kitchen appliances, ducts, electrical wiring, and heating and air conditioning units. As the seller, you can purchase a one-year plan for the buyer that includes coverage for these and other items.

The important thing to remember is not to be intimidated during negotiations by the buyer or their agent. You might consider hiring your own agent that offers hourly rates for services for such as contact negotiation and closing. Since you've done all of the other work, this is a small price to pay for their expertise at such a crucial stage of the process.