When selling due to relocating or selling a home for financial reasons, the process can be a stressful one. Choosing how you’re going to sell dictates every other aspect of the process: from the preparation and your selling strategy, to what you’ll be financially responsible for. You’ll find that researching how to sell your home by owner isn’t as simple as just listing your property on the market. The learning curve can be pretty steep.
The three most common methods of selling your home include listing it with an agent, selling it to an investor, and selling it yourself. Either way, you are considering selling your own home — without a real estate agent — and you want to better understand the pros and cons of going solo.
What is FSBO?
FSBO is the acronym for “For Sale By Owner”. With a multitude of online tools at your disposal, FSBO is an option for those who want to take charge of the selling process and who don’t want to pay an agent commissions. Selling your home on your own may seem like a DIY project you’re ready to tackle and take control over. But the process is considered the longest and the most difficult method for a homeowner to tackle.
Owners know their homes well, but they often lack the marketing skills and legal knowledge of professional agents. It’s important to weigh the pros and cons to determine the best fit for your circumstances.
Sell Your Home by Owner – PROS
There are several advantages to selling your own home. Besides not paying an agent’s commission, you’ll have full control over the price, appointments for showings, and the marketing strategy.
You can set up private tours or open houses any time you wish, and you’ll avoid last-minute calls from realtors who want to bring buyers when you have dirty dishes and unmade beds. That gives you time to get fresh flowers or fluff the pillows before greeting guests.
Because you’ve lived in your home, you are familiar with its good features and can play them up when showing. A realistic listing price can attract buyers, and FSBO sellers have access to a larger marketing network than ever.
Sell Your Home by Owner – CONS
Even after commissions, the consensus is that homes sold by agents have higher prices than those sold by owner. According to research by Zillow, a national home marketplace, 36 percent of owners who tried to sell their own homes in 2017 eventually sell under market value after too much work.
In 2006, author Steven D. Levitt explored the “secret” side of the economic world. When he explored real estate, he found that hiring a real estate agent to sell a home didn’t always result in a higher price.
In 2008, a Stanford study, “How Much Value Do Real Estate Brokers Add? A Case Study,” confirmed Levitt’s claim but not without controversy. A study by academics of FSBO and non-FSBO homes in similar neighborhoods in Wisconsin found no difference in prices between homes listed by realtors and those that were not.
When you sell your home by owner, you can’t list it in the Multiple Listing Service (MLS), and you don’t have help with the legal documents. If you know and trust someone who wants to buy your home, however, you may be able to avoid one of the biggest of many pitfalls FSBO sellers face.
The National Association of Realtors says over half of all FSBO sales are made to people who the seller knows. In records of sales where sellers knew buyers, listings stayed on the market for seven days and sold for 100 percent of the asking price. However, not everyone is that lucky. A Northwestern University study found that that it takes on average 68 days longer to sell a house on an FSBO site versus the MLS or an agent.
While it’s true that having a realtor helps with pricing, marketing, and sales, some studies, at least, question how much it affects the price. A 2018 article in Realtor magazine says many FSBOs often sell to neighbors, friends, or families, and they sell for less than those represented by agents.
How to Sell Your Home by Owner in Seven Easy Steps
If you’re wondering how to sell your home by owner, you need to do your homework before you do anything else. We have seven tips to help you get it ready for the market, price it, and complete the legal process.
1. Set a fair market price.
It’s easy for homeowners to get attached to a home and overvalue it, but buyers want to pay a current fair market price. If you interview or talk to real estate agents before deciding, you’ll get a Comprehensive Market Analysis (CMA).
Because a realtor’s goal is to list and sell your house, that might bias the information you receive, but you’ll have a detailed report that explains what each house sold for and why. This will include factors like the number of square fee, improvements, and special features like swimming pools and professional landscaping.
Go to open houses in your neighborhood, and see how your home measures up in comparison. You can also check online resources.
Getting an estimate by a licensed appraiser who knows your neighborhood is the best way to get an unbiased price analysis. You’ll have to pay for it, but it’s good information to have when you‘re showing and selling the house.
The buyer’s lender will ask for an appraisal before you sell. If you use it to price your house realistically from the start, your asking price will be in line with the lender’s estimate. This will prevent last-minute negotiations or an offer that falls through.
Using your analysis, decide how much your house is worth to you. Then consider listing it on the upper end of the scale to get the highest price, in the middle to be realistic, or low to attract attention and sell more quickly.
Your price should reflect the current market and timing. If the real estate market is booming and timing is right, you can ask more for your home.
2. Prepare your home for the market.
A buyer wants a house that’s in tiptop, move-in ready shape. Even if it needs small repairs or minor updating, you’re likely to get a lower offer if you don’t do the repairs, renovations, and upgrades before you show your house to potential buyers. Here’s a list of standard prep tasks:
Get rid of clutter:
Organize storage areas, and make sure everything from bathrooms and kitchens to the kids’ rooms and living area is sparkling clean. Little changes make a big difference.
Pressure wash the siding on the outside of the house, clean the windows, and clear buildup from the gutters.
Update your landscaping
Curb appeal is important as it usually is a potential buyers first impression of a property. Prune the shrubs, mow the lawn, kill the weeds, and plant colorful new flowers.
Spruce up your entryway with a freshly painted front door, and add a new welcome mat. Put a potted plant beside the entry, and clean the doorbell and hardware.
Flaking shutters, cracked tile, and broken windows discourage buyers and may keep them from stopping to ask questions or look at a home. If there are major repairs that are expensive yet critical like roofing or plumbing issues can be a dealbreaker unless fixed– or cause you to lower your asking price significantly.
Your potential homebuyers will have an easier time imagining living in your home when it’s been depersonalized. It’s a good idea to rent temporary storage for photos, knickknacks, and other personal items.
Store excess furniture
Cluttered rooms and bulky furniture can make a room feel claustrophobic. Clear out larger pieces and leave only a few essentials to make the rooms look bigger. It’s hard for buyers to imagine their own things if you have wall-to-wall furnishings.
Re-paint the interior
Neutral colors can make a house look larger and cleaner. Paint and hardware stores have a wide palate of grays and beiges to give your rooms a trendy look.
Get rid of bad odors
Offensive smells will always offend potential buyers– don’t cover them up with air fresheners. Deep cleaning carpets and repainting can help with some types of odors and you can use products like Damp Rid that remove moisture from the air and prevent humidity-related smells.
3. Hire a good photographer.
If you’ve prepared your home to sell, you’re going to need to present your hard work in the best light possible. Most buyers do their early shopping on the Internet. If your pictures aren’t outstanding, lookers will move on to another home.
You need bright, clean images from your entire house. Ask for at least two angles from every room– and more for larger ones like kitchens, living spaces, master bedrooms, and the outdoors.
Ignore the temptation to use your cell phone, and hire a professional. It may be the best money you spend in the entire process.
If it’s in your budget, consider hiring a drone photographer to capture a bird’s-eye view of the property to get angles not possible with traditional cameras. Drones can also get good close-ups that accent special features in hard to access areas.
4. Create an eye-catching listing.
Home buyers respond to listings that describe all the features of a home, and it shows you care. It never hurts to pay for a boosted listing that goes at the top of the website. If it’s buried in the other listings, you won’t get as many leads on the house.
Write a catchy headline for the listing, using words that describe the home and evoke emotional reactions. Use phrases like “oceanfront condo in sunny Belize” or “historic bungalow on tree-lined street” to make the buyer want to read more.
Describe the best features of the property in the first line, and convince the buyer it’s worth the money. Think first of words you wanted to put in the headline but didn’t have room for, such as “lakefront property” or “pool with hot tub.”
5. Know the process.
You need to understand how showings, negotiations, inspections, and other aspects of selling a house work. You also need to know how to manage the closing, title, and other legal processes. Learn how to save time by eliminating leads from buyers who can’t qualify for a loan.
Negotiating the Offer
Negotiations may involve an exchange of offers and counteroffers before you settle on a price. Know exactly how much money you’re willing to take. Be ready for unexpected events, such as being asked to pay the closing costs for the buyer.
After you agree on the basics, usually verbally, the buyer will submit a written offer. Be prepared by printing documents for real estate contracts for the state where you are selling the home, which you can find with an internet search.
The contract must include every detail of the sale. This should include the purchase price, items included in the sale, any concessions agreed to, and the date and location of the closing.
Any contingencies, such as requiring a home inspection or pesticide treatment, must be included in the written contract. It’s also essential to get a copy of the buyer’s lender approval within days after accepting the offer.
The Closing Process
The closing usually takes place in a title company or attorney’s office, depending on the rules in your state. Both the seller and buyer must agree on the location of the closing.
The closing itself is a formal process handled by a title agent or closing attorney. They will provide the final details. The closing agent handles most of the work and may request additional documents. You’ll need to supply those as quickly as possible.
While you’re waiting, stay in touch with the buyer and the closing agent. This will help keep the process moving smoothly and quickly. Problems with the buyer’s mortgage approval may pop up, and the loan can be withdrawn if requirements aren’t met.
6. Hire the right help.
Having a good photographer is important. But you also need a few other other people to see you through the process of selling your own house.
A good real estate attorney and title company are indispensable, and you should find both before dealing with prospective buyers. Take a tip from the pros, and search for an attorney-owned title company that can do both legal procedures and closings.
It’s best to hire an attorney or closing agent early in the process to prevent mistakes during negotiations. You may also want to hire contractors, such as roofing, A/C, structural, plumbing, and electrical companies, to make necessary repairs or improvements before the buyer gets an inspection.
Buyers and lenders get suspicious when they encounter unforeseen problems before closing. Start by checking with the Better Business Bureau, and look for someone who has a reputation for being honest and experienced.
7. Don’t Rule Out Other Options
Learning how to sell your home by owner isn’t easy. The traditional process can be stressful. There are showings, repairs, offers that fall through, and months of uncertainty. It involves numerous skills that you don’t use every day and that the pros have acquired over years of experience.
If six months go by and you haven’t sold your home, it may be time to consider other options. The two other most common methods of selling are with a real estate agent or selling fast with a cash investor.
Listing with an agent
This the most popular way to sell and what is considered traditional… but it also the most expensive for you out of pocket. It is also considered the way to get the highest dollar for your home.
The sale includes an agent for the buyer and an agent for the seller, each of which earns around 6 percent of the transaction on average. The seller is responsible for covering the closing fees, holding fees, and repairs to get the home in tiptop shape.
One of the biggest advantages of hiring a real estate agent is having someone who understands the fine print of legal documents and knows how to navigate the path between the offer and the closing. If you don’t want a listing agent, consider hiring a real estate attorney for a onetime fee to review your contracts before you sign them.
Selling to a cash investor
What if you don’t want to pay 6% of the sale to real estate agents or sell the home yourself? Selling to a cash-paying investment company provides quick cash and a speedy solution. For homeowners in financial distress, need to relocate immediately, or for those who have homes that need extensive repairs, this process eliminates long waits and a lot of stress-headaches.
Investors pay for all closing costs, repairs, and other fees; and they move quickly. Because they buy homes to “flip,” resell, or rent out after they fix them up, reputable home investors appeal to homeowners who prefer speed over the highest possible market price.
Re-thinking how to sell your home by owner?
There are some perks of selling your house FSBO. You may pocket a little extra cash and you may get to retain more control. But chances are, you may end up in over your head.
Don’t don’t be afraid to reach out for help or other ways to sell if the FSBO route doesn’t seem like the best fit. The bottom is to do your homework and make sure you’re making the best decision for your unique situation.
We’re here to dispel the notion that selling a house to a property investor is a scary thing. If a transaction doesn’t make sense for both of us, we’re not going to try to move forward with it. Contact us today for a same-day, no-obligation offer!