Homeowners in the US are a restless lot. Data out there shows that the average household moves every five to seven years. While the motivation to move may vary from one family to the other, all home sellers want to get the highest return on the sale of their homes. A homeowner might, therefore, decide to eliminate the typical 6% commission fee paid to real estate agents and sell the house without the assistance of a realtor either with an investor or on their own.
What is FSBO or for sale by owner?
This type of real estate sale is known as an FSBO or a “for sale by owner.” FSBO is the process of listing and selling your home without the assistance of a real estate agent. If you are planning to sell your house yourself, worry not, you’re in good company.
Thousands of homeowners sell their homes to save on the commission fee paid out to realtors. The commission percentage might look negligible compared to the more substantial sum left, but make no mistake about it, it is still a significant amount if you do the math.
Why? Though based on the final sale price of your property, the realtor’s commission is usually hived off your home’s equity. If, for instance, your home is worth $350,000, and your mortgage costs are $250,000, then you are supposed to make $100,000 off the sale.
If you, however, are going to give your realtor $21,000 of this amount, you will only have $79,000 at the end of the deal. This amount could further be eaten up by other seller related closing costs.
Can you sell your house without a realtor?
It is possible to sell your home without the assistance of a realtor. By eliminating the middleman, you could take charge of the property sale. It’s not a walk in the park, but data shows that over 34% and 36% of urban and millennial sellers, respectively, do succeed in their FSBO attempts.
It can, nonetheless, become a very overwhelming process if you are not sufficiently prepared for it. This is the reason why, according to Zillow, a real estate property firm, at least two-thirds of all property owners that try their hand at an FSBO fail and turn to realtors for help.
More data shows that home sellers that prefer to sell their homes also could get lower sales prices compared to agent-assisted home sales. You will need to invest a lot of time to make a for sale by owner work flawlessly. There also will be financial and legal tasks to deal with, which will require the assistance of a good lawyer.
How to sell your house for sale by owner?
Determine a fair market price for the property
Most FSBO sales often fail because the property sits for too long in the market. One of the most significant causes of this problem is an overpriced home. If you also value your property poorly, you could also end up selling it for less than what it is worth. You, therefore, must get the price of the property right before embarking on the sale process.
Online valuation sites owned by reputable real estate agents such as Trulia or Zillow.com will give you a free price estimate of your home. A price estimate could be off by a few thousand bucks, so have your property’s value appraised by a licensed appraiser or a real estate agent.
Prepare the property for the sale
Put yourself in the place of the buyer and take a walk around the house. What aspects of the house would you dislike if you were planning to purchase it? Is the curb appeal good enough? Is it the living space too cluttered with personal items? How clean are the nooks and crannies?
Each flaw in the property could cost your potential buyer thousands of dollars once the closing is done. They will hesitate to purchase if your home has too many of them.
Therefore, make minor repairs, declutter and give the walls a fresh coat of paint. Give the house a professional deep clean and swap your items for impersonal décor items such as decorative candles and area rugs.
Purchase a good yard sign and get to work. First, get a hold of your property’s quantitative information such as square footage or year built. If you have a good knowledge of photography, take good photos that have plenty of natural light in them. If you are not good at photography, hire the services of a professional. Bad images can ruin your chances of a good sale.
Next, design brochures or flyers using the data and images and ensure that your contact information is strategically placed. Pass these advertising materials to interested house buyers. It would be best if you also advertised the sale on popular home sale websites such as HomeFinder.com or MLS My Home.
Alternatively, post your advertisement on FSBO sites such as FSBO.com, real estate sites, or on social media. Take advantage of the weekends and host an open house for increased marketing exposure.
Negotiate and close the deal
The negotiations will start verbally but ignore offers that are too low or uncertain. Exercise patience and avoid the urge to lower your price for a quick sale. A buyer to be will need to submit to you a written offer. You should have a real estate contract prepared beforehand specific to your state. Let the closing take place in the office of a title company or an attorney as required by law.
The for sale by owner method of selling a house has its advantages and disadvantages. If you master it, you will save thousands of dollars over time. With a bit of diligence and patience, you too can master the art of the FSBO.