For sale by owner: What to know if you sell your home yourself
By Harvey S. Jacobs,
Selling your home without a real estate agent is not for everyone. But for those who have the time, skills and emotional strength, doing so can save tens of thousands of dollars in brokerage commissions.
There are three distinct phases in all home sales: presale, contract negotiation and settlement. All three phases must be successfully navigated for you to market, sell and settle on the sale of your home. Over the next three columns, I will examine each phase and provide tips from real estate professionals on how you can maximize your success as a “for sale by owner,” or FSBO, seller. You can then be the ultimate judge of whether professionals are worth the price.
The presale phase covers the market analysis, fix-up, marketing and showing of your home. It begins with identifying all comparable homes that are on the market and their list prices and terms. You should then identify all comparable homes that have sold in the past six to nine months. Note their list prices, their sale prices, the days they remained on the market, their number of bedrooms and baths, any special features and any seller concessions given to buyers.
Armed with that data, you will be in a position to attempt to properly price your home. According to the National Association of Realtors 2011 profile of home buyers and sellers, 10 percent of all homes are sold by owners. Twelve percent of those FSBO sellers cited getting the right price as the hardest task in selling it themselves. This pricing difficulty is evidenced by the fact that the typical FSBO sale price, according to the NAR, was only 69.76 percent of those real estate agent-assisted home sales.
Most real estate agents will gladly provide you with a comparative market analysis in the hope that when you get tired of the process of selling it yourself, you will call them to pick up the listing.
“If your home has few showings and no offers after a few weeks on the market, most likely it is overpriced,” said Lisa Abrams, an agent with Re/Max Realty Services in Bethesda. “To sell FSBO, you will have to continually monitor the new listings, prices and sales of all homes in your neighborhood. If you need a quick sale, be prepared to drop your price.”
Your next step is to critically examine your home to identify any cosmetic or substantive repairs needed to make it competitive. Virtually all real estate professionals will advise you to clean, de-clutter and make inexpensive improvements such as new landscaping, painting, carpeting and perhaps even some new appliances.
For the “hoarder” or just those who find it difficult to part with years of possessions, there are professional services such as www.clutterbusters.com that, for about $85 an hour, will help you make your home more salable.
To really make an impact, professional designers or stagers can be engaged to turn your home into a showplace. These design experts essentially redecorate your home using a mix of your possessions and rented decorative items. These professionals are not cheap but are often well worth their fees in higher selling prices or quicker sales.
“Staging can cost several thousand dollars but generates 169 percent average return on investment,” said Jenny Chung, a real estate agent and staging professional with Evers & Co. in Bethesda. “Staged homes also sell faster, averaging only 29 days on market versus 145 days on market for non-staged homes.”
Since most home buyers begin their search online, you must use the Web to market your home. Obvious choices are www.craigslist.org and www.fsbo.com. Professional photography, after de-cluttering and staging, is also essential. Traditional marketing strategies include: placing a large, professionally printed “For Sale” sign out front, sending direct mailings to the neighborhood letting people know your home is on the market and hosting open houses on weekends.
Be prepared to keep your home immaculate and be available to show it to prospective buyers pretty much anytime.
If you elect to cooperate with buyers’ agents, it may cost you some commissions, but you can then use a lockbox (available at any hardware store), which allows buyers’ agents to show the home at their convenience and without your presence.
Most buyers are uncomfortable touring a home when the owner is present. This inhibition often translates into a reluctance to make an offer. Since there may be no real estate agents involved to encourage buyers, it is up to you to follow up with everyone who visits and don’t forget to ask for the sale.
If you have followed all the steps and your home has still not garnered a qualified offer, it may be time to think out of the box.
“A few ideas for standing out of the crowd could include: holding a drawing — everyone visiting your open house is entered into a drawing for a big-screen TV,” said Robert Weinberg, chief strategist of the MarketBuilding Team in Rancho Bernardo, Calif. The money “you’ll spend is a pittance compared to the thousands being saved on real estate commissions.”
Weinberg said owners of an exclusive coop apartment building on New York’s Sutton Place had trouble selling the $6 million penthouse suite — so they threw in a Rolls Royce as part of the deal. The property sold, even though the buyers turned up their noses at the low-end Rolls and asked that the price of the car be deducted from the penthouse.
“The most important thing is getting publicity. Of course, promotional tricks won’t always work, but they may give you a leg up in making buyers aware of your property,” he said.
Next: Required FSBO disclosures and getting a ratified contract.
Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. He is an active real estate investor, developer, landlord and lender. This column is not legal advice and should not be acted upon without obtaining legal counsel. Jacobs can be reached at firstname.lastname@example.org.