It is tempting to bypass a real estate agent and complete a home purchase on your own,
especially in a hot real estate market. Typically, a realtor’s commission ranges from 5% to
3% of the final sale price of a home. That means you can lose thousands of dollars on the
commission alone.
You must handle everything yourself if you want to sell your house independently. ‘For sale
by owner’ is a lot of work and comes with risks. But, while you do all the heavy lifting by
yourself, you won’t have to pay anything to the listing agent.
This article will discuss how you can sell your house and how much you can save.
WHAT IS ‘FOR SALE BY OWNER?
A ‘For Sale by Owner,’ also known as FSBO, means that the homeowner has listed the
property by themselves. They didn’t hire a real estate agent or agency to do the deal.
Typically, sellers opt for this option to save thousands of dollars in commissions. They may
also choose this route if they already have a buyer and don’t need an agent to market their
home.
Whatever the reason, selling a home without an agent can be difficult. You need expertise
and knowledge of the process and paperwork required for a successful closing. In an FSBO
transaction, the seller must assume all responsibility and risk for closing the sale.
BENEFITS OF SELLING YOUR HOME YOURSELF
You should consider several factors when considering selling your home yourself. Here are
some advantages of listing your home as FSBO.
1. YOU DO NOT HAVE TO PAY COMMISSION FEES:
The best part of deciding to sell your house yourself is the savings. If you sell without a
realtor, you’ll save money on the realtor fee. 6 % of the final price of your home. In a home
sale, this means savings of several thousand dollars.
2. YOU HAVE MORE CONTROL OVER THE SALE:
You control every step of the selling process when you sell your home independently. This
includes setting the listing price, improving the house, and negotiating the sale with potential buyers. FSBO is an excellent option if you want to stay in control of the sale.
3. ACCESS TO INSIDER KNOWLEDGE:
You know your home and neighborhood better than anyone. You know firsthand what it feels like to live in the neighborhood and be part of the community. If you’re selling your home yourself, chances are you’ll get a better deal by sharing your insider knowledge with the buyer. You can easily convey to the buyer how good the neighborhood, community, and
home are.
4. FULL DEDICATION TO SELLING YOUR HOME:
When you’ve sole responsibility for selling the house, you can devote 100% of your time and effort to the sale. Most real estate agents juggle multiple clients and properties during the buying season. You can maintain your needs and sales as an FSBO seller.
DRAWBACKS OF SELLING YOUR HOME YOURSELF
Although you can save on commission, selling your home can take time and effort. Here are a few drawbacks of selling the house as FSBO.
1. YOU LACK REAL ESTATE EXPERTISE:
When selling a home for the first time, you’ll need help finding the right price and audience.
Legal terms and acronyms can be very overwhelming. So before you list your home as ‘For
Sale by Owner,’ you should research and get a lawyer’s help if needed.
2. IT CAN TAKE MORE TIME TO SELL:
When you hire a real estate agent and sign a contract, they usually have a specific deadline
to sell your home. This is a good thing because it puts pressure on the agent to work harder and get a reasonable price on the house. However, it can take time to understand the process and the market when selling on your own. This means FSBO isn’t the best option if you want to sell your home quickly.
HOW TO SELL YOUR HOUSE AS ‘FOR SALE BY OWNER?
Selling your home as an owner is a comparatively more complicated process than putting up a ‘For Sale’ board in your yard. Since you’ll be competing with professional real estate
agents, you must prepare well. Here is how you can sell your house as a ‘for sale by owner.’
1. GET YOUR HOME READY FOR SALE:
Even if you don’t use a real estate agent to sell, you must ensure the house is ready for
showing. The key to getting the best price for your home is to make it look as perfect as
possible. Here are some valuable tips to get your house ready for sale.
DECLUTTERING-
When you declutter your house, you help make it more spacious for potential buyers. First,
you need to help them envision their life in your home. You can remove personal items such as family photos or other things that make them feel like they’re in someone else’s home.
To show off your home’s storage potential, make your attic, basement, and closets as empty as possible. You should also clean your garage, as about 85% of homebuyers have a
garage space on their wish list.
REPAIRS-
You must present your house in perfect condition. That means you must go through every
nook and cranny of the house and list all the maintenance and repairs needed. You’ll get a
much better deal if your home is in perfect condition. This includes cracked tiles, peeling
paint, or broken garbage disposal. Also, you will get the best price if your buyers feel the
house is move-in ready.
If you need help to handle all the repairs yourself, you should get quotes from a few licensed contractors in your area. You should then decide on the most cost-effective quote.
STAGING-
You need buyers to see potential in every room when selling the house. Staging your house
is a good idea to make your home feel comfortable and spacious. If you’re staging the home by yourself, you can go online and look for decorating ideas that are neutral and suit your home.
You can also hire a professional stager to design a look for your home and lend you
furniture. However, they are costly. You will have to spend around $1600 on staging, which
includes the design consultation and furniture rental.
2. DETERMINE THE RIGHT LISTING PRICE:
When you sell your house, you must try to get as much money for it as possible. However,
as the owner, you risk either overselling or underselling the home. Since you don’t have the
market expertise of a real estate agent, you need to look to other sources to determine the
right price for your home.
A house priced too high would stay on the market for too long. As a result, you’ll lose money on utilities and taxes. On the other hand, if the price of a house is too low, you’ll lose your profit.
To determine the correct list price for your home, you should search the internet for prices in your area. You can also comprehensively analyze by driving around the neighborhood and examining homes and prices. You must set a fair price for your home listing as a
homeowner. You can use websites like Zillow to search for active prices that are fair for your home.
If you don’t want to do it yourself, you can hire someone to do a comparative market analysis (CMA).
3. HANG SIGNAGE AND MARKET YOUR HOME:
Once you’ve completed your home with all the improvements, now is the time to attract
buyers. The best way to start your marketing strategy is to hang a “For Sale” sign on your
front door. Most buyers seek out the neighborhood they’re interested in. The sign can also
attract neighbors and generate word-of-mouth referrals.
You can also use the Internet to reach potential home buyers. However, you need to market your home on the Internet. Here are a few ways to do that:
USING A PROFESSIONAL PHOTOGRAPHER-
Using attractive photos is the key to selling your home reasonably. Most buyers begin their
search for a home with an Internet search. Photos are among the top five features people
look for when searching for a home.
The best way to do this is to hire a professional photographer. He needs to take attractive
photos of your house and yard. You should choose a photographer who’s experienced with
real estate photos and knows how to do proper lighting.
WRITING AN EFFECTIVE LISTING DESCRIPTION-
While the photos attract buyers to your listing, they next look at the listing description. To get a description that sells, you need to add information that the buyer would only get from an owner or a local.
For example, you could include how friendly the neighbors are, mention a few schools or
restaurants in the area, and describe the seasonal views. You need to highlight the features
that buyers would find exciting.
LISTING YOUR HOME FOR SALE-
One of the most effective marketing strategies is to list your home for sale on the Internet.
You can use websites like Zillow or Trulia, where you can offer your house free as an owner.
You should read the terms and conditions that specify how many photos you can upload and how long the listing should be available.
You can also consider listing on an MLS (Multiple Listing Service) to attract more buyers to
your property. Several sites, including Zillow, pull listings from these sources, which can be a good marketing strategy. In addition, you can pay an apartment fee to the MLS company to list your home on your behalf. The fee can range from $99 to $500.
4. SCREEN CALLS FROM AGENTS AND ANALYZE THE OFFERS FROM BUYERS:
One of the worst aspects of handling an FSBO sale is the large number of daily calls you’ll
have to deal with. You will get calls from buyers and real estate agents trying to persuade
you to let them handle the sale of your home. You’ve to filter out the agents and buyers
who’re not serious about buying your house.
You can politely turn down realtors and screen your calls from not-so-serious buyers by
asking a few questions.
● Have they been pre-approved for financing if they plan to buy the home with a
mortgage?
● Will they be able to close the deal themselves?
● Will they transfer the sale contract to someone else for money as a wholesaler?
5. NEGOTIATE THE BEST PRICE WITH BUYERS:
Once you find a serious buyer, the time of negotiation begins. Usually, people hire a broker,
and you’ll negotiate the selling price with a professional broker. In addition to the selling
price, you’ll also need to consider other contingencies. These include the conditions under
which your buyer can renegotiate or withdraw from the sale.
When you sell your home, you may require your buyer to pay an ‘escrow fee.’ This is a
deposit that your buyer pays to you upfront to show that they’re serious about the deal. The date the sale closes is another negotiating point you need to focus on. It’s the date you
legally transfer the property to the buyer. When you commit to the terms of the sale, you should have at most three rounds of negotiations. This will keep the buyer interested in the property without making them feel you need more time to sell the house. You must put your emotions aside during the negotiations and offers.
WHAT PAPERWORK DO YOU NEED TO SELL YOUR HOUSE AS AN OWNER?
Selling your house requires a lot of paperwork. And if you are selling it as ‘for sale by owner,’ you will have to handle all the legal paperwork. The specific requirements can vary between one state and another. Here is a simple guide to the paperwork required for every state.
The essential document you would require is a written purchase and sale agreement. It
contains all the details of your deal. This includes the purchase price of the house, the
buyer’s financing details, and the appliances and fixtures included in the sale.
To ensure your paperwork is error-free, you can hire a real-estate attorney. Inaccuracies in
the paperwork can lead to financial repercussions. A real estate attorney costs you between
$500 and $1500.
HOW MUCH CAN YOU SAVE WITH FSBO?
If you limit your expenses as a seller, you can save thousands of dollars in commissions. But how realistic is that figure, and is the savings worth the risk?
You don’t need a realtor when selling your home to a friend or family member. You can
quickly sell it as the owner and only have to spend about $500 to complete the legal paperwork.
A typical realtor commission is between 5% and 6%. So if you sell your house for $300,000, you can easily save $18,000 in commissions. However, that’s only the case if your buyer doesn’t hire a realtor. On the other hand, if your buyer has an agent, you can save around $9,000 on a $300,000 sale.
However, you’ll have to spend a few thousand dollars on repairs, staging, and hiring an
attorney. So if you’re not in a hurry to sell your home and know real estate, you can easily
advertise your home as ‘for sale by owner.’ Selling it may take time and effort, but the
savings are worth it.
IS ‘FOR SALE BY OWNER’ A GOOD IDEA?
You should be confident selling your home as an owner. If you take enough time and
understand your property’s marketing and value, you can sell your house for an excellent
price. All your efforts and time would save you thousands of dollars in commissions, making the process worthwhile.
You can hire contractors for different stages if you trust yourself to do only some things. This is much better than hiring a single realtor and paying them a 3% commission. You can
employ a handyperson for repairs, a staging team to make your house look pretty for buyers, and a lawyer to take care of the legal paperwork. This makes your job easier and safer.