As sure as death and taxes, when you put up a "For Sale By Owner" sign on your lawn, your phone will start ringing off the hook. Except those calls aren't from prospective buyers - they're from prospective real estate agents, who are looking to scoop up your listing. And they're not wrong to reach out - while the idea of saving all that money by not having to pay a commission to a real estate agent, there are a ton of details and minutia that can pose big time challenges for those looking to sell their home on their own.
If you're going to take on the responsibility of selling your own home, you have to be prepared. Running the risk of coming into the process unprepared can lead you down the long road where your home sits on the market longer than you anticipated, for any number of reasons but most likely because you aren't attracting and getting offers from qualified buyers. Without the market knowledge and experience, it can get extremely frustrating for homeowners. But going in with a little foresight and understanding can
We've talked about being prepared for selling your own home - so what exactly do you need to know?
1. Price it Right
Correctly setting your asking price is critical. Setting your price too high can be as costly as setting it too low. Home prices are determined by fluctuations in the mar- ketplace not by your emotional attachment or by what you feel your home is worth. In order to establish a real- istic price for your home, objectively compare the price, features and condition of all similar homes in both your neighborhood and other similar ones which have sold in recent months. It is also important for you to be familiar with the terms of each potential sale. Terms are often as important as price in today's market. Carefully budget your selling costs and prepare a net proceeds sheet to calculate your best estimate of what you will take away from your home sale. Prospective buyers may also re- quest this kind of analysis of buying costs.
2. Prepare Your Home for Sale
First impression is crucial. Make sure your home makes a positive statement by carefully inspecting all details and viewing it through the objective eyes of a buyer. Don't gloss over needed repairs and fix-ups, as your prospective buyers won't. Your job is to ensure that your home stands out favorably from the competition.
3. Prepare Yourself With All Necessary Legal Documentation
Not surprisingly, there are many important legal con- tracts and documents which you must assemble, com- plete and understand. A partial checklist of forms that you will require for prospective buyers and for legal doc- umentation is as follows:
• Seller Disclosure
• Purchase Contract
• Mortgage Payoff
• Loan Application
• Deposit Receipt
• Property Profile Fact Sheet
• Buyer's Cost Sheet
• Closing & Settlement
• Personal Property
• Exclusion List
• Property Survey/Plot Plan
• Sellers Statement of Representation
4. Market Your Home Effectively
Beyond the sign you will put on your lawn, you should find effective ways to spread the word about your home. Local buyers can be reached through the newspaper, but this is only a small part of the market you are after. Be sure you include the many buyers who could already be working with a Realtor®. To locate them, target as many top agents as possible in your market to see if the criteria of their buyers matches that of your home's. Be- cause out-of town buyers are also an important target, you should create a strategy to reach these people as well. Above all, you should be very service minded and make it easy for pre-qualified buyers to view your home. Ensure there is always someone available to answer the phone, pick up messages promptly, and be ready to give qualified prospects a tour of your home as soon as possible.
5. Remain Objective During a Showing of Your Home
Keep emotion out of the sale of your home, and the best way to do this during a showing is to remain physically in the background. If a prospective buyer says something negative about your home, it is better to counter-bal- ance this point of view by illustrating the positives rather than becoming defensive.
6. Pre-Qualify Your Prospects
Don't waste your time entertaining buyers who could never afford your home. Research their financial steadi- ness with respect to job security, salary, debts, liabilities and credit standing.
7. Negotiate Effectively & Knowledgeably
There will be many details to resolve before a sale can be considered final: price, terms, inspections, posses- sion date, buyer concerns and objections. Make sure you fully understand the contract you have drawn up so you can in turn explain details and ramifications to the buyer and make any amendments to the sale that are necessary. The contract you use should be thoroughly examined by your real estate attorney. Some real estate brokers may be willing to help you do this. While this is going on, manage the buyer's interest in your home so that it doesn't wane during negotiations.
8. Know Your Buyer
Your objective during negotiations is to control the pace and set the duration. Try to determine what your buyer's motivation is. Does he or she need to move quickly? Do they have enough money to pay your asking price? Knowing this information will give you the advantage in the negotiation because you will know up front, what you will need to do in order to get what you want.
9. Don't Move Out Before You Sell
Studies have shown that it is more difficult to sell a home that is vacant. It looks forlorn, forgotten, simply not ap- pealing. It could even cost you money. If you move, you're also telling buyers that you have a new home and are motivated to sell fast which can, of course, give them an advantage at the negotiating table.
10. Know Why You're Selling and Keep it to Yourself
The flip side of "understanding your buyer" is to "under- stand yourself". Your reasons for selling will affect every- thing from your list price to how much time and money you will invest in getting your home ready for sale. Your motivation will help you determine what is more important to you: the money you walk away with, the length of time your property is on the market, or both. Different goals will dictate different strategies. As someone who wants to sell without a real estate agent in an effort to save the commission, it is likely that money is one of your primary considerations, (see below). Whatever your reasons, how- ever, it is very important to keep them to yourself so as not to place yourself at a disadvantage at the negotiation table. When asked, simply say your housing needs have changed.
HOW TO ASSESS YOUR NET GAIN
To analyze whether or not you will end up ahead by choosing to sell on your own, consider the fact that most buyers do use a real estate agent because it doesn't cost them any- thing for this service (i.e. the seller pays the agent's fee). Be cautious as buyers, investors and speculators who seek out For Sale by Owners are typically those in search of a bar- gain. The low-ball offers from these types of buyers will often net you much lower in the long run. What you will have to judge for yourself is the following:
1. Be as prepared as possible with your marketing, negotiations, evaluations, showings and all legalities.
2. Consider what it will cost you to effectively market your home and assemble all neces- sary materials from the "for sale" sign to any contracts?
3. What price will a buyer offer you as a For Sale by Owner minus the costs identified in point 2 above. Is this net price higher than the price an experienced agent could net for you minus his/her commission?