For Sale by Owner
For Sale by Owner?
I'm getting ready to sell my home and plan to do it without a realtor to save valuable commission dollars (7% to be exact). In my research, I've contacted another realtor for their opinion on my market and value of the home (and been honest about my situation, explaining that if it doesn't go fast enough, they'll absolutely get my business). I've also contacted an attorney that deals in real estate issues.
As far as marketing my home, I don't have a lot of ideas except placing an ad in the local paper, placing an ad in the Chicago paper since I live in a resort area, and placing flyers up in grocery stores and libraries. I've got access to a scanner for photos and also a color printer for flyers. Any other ideas?
Luckily I'm not in a hurry to buy another home...I'm engaged to be married in 5 months and plan to rent temporarily until after the wedding when my husband and I can take our time looking at property deals for investment.
On the other hand, I do need to sell fairly quickly (within 3 months) as I plan to use some of the equity to pay for wedding expenses. The home is in good shape and I've done all the proper repairs to eliminate any arguments. I've also spruced up outside, planted flowers and tidied up so the curb appeal is at its best.
But all in all, I'm a bit nervous about the timing of it all, and was wondering if there was anyone out there that's been around this block a few times and can provide any advice/warnings /suggestions to a first-time for-sale-by-owner? Thanks in advance!!
We've Sold Three
I have sold three houses on my own - with varying speed (one at a moving sale before we even put up a sign, one the day after the sign went up, and a third after several months of trying) Here's what has worked for us:
- Spend some time developing a really good fact sheet about your house. Most people want to know something about your house including price, size, etc. before they call you. We bought a little plastic tube that attached to the "for sale by owner" side that we stuck in the front yard. Try to think of all of the neat features of your house. Include information about # of rooms, # of baths, age of appliances, roof, etc. if that will be a selling point. Also include things that might entice a buyer, but that might not be things you'd think of right off the bat. For example, two of our houses had "directly to front porch" mail delivery (a rarity in our area, most houses are required to have mailboxes by the street) so I included a line about no more "dashes to the mail box in the rain" Include lots of information, but keep it to one page and leave some white space - too much information will be overwhelming. Point out things like the fact that your house is in a great school district (if it is), proximity to parks, shopping, anything that you can think of that makes your house attractive.
- Put a "for sale by owner" sign in your yard (unless your city has some ordinance against). Be sure to write a phone number in large print so that it will be easy to read from the street. If you have room, you might include an e-mail address.
- You will probably have agents call you. Often they have a client that they want to show your house. I usually let them, but be sure to discuss commission arrangements up front - They are usually negotiable about their normal commission (often 1/2). When agents have shown my houses, I took the commission into account in the negotiation - I'm not going to "come down" off my ask price as much if an agent is involved, so it works out about the same.
- Set your price realistically. Look at other houses in the neighborhood and divorce yourself from your own sentimentality about your house. Also, if your house has been on the market for a while consider reducing price. If you are making house payments, you might be better off selling at a lower price (ESPECIALLY if you've already found the house that you plan to move to). Look at how much of your payment is going toward interest each month and figure that you basically lose that much for every month that your house sits on the market.
- If there are things about your house that really need to be updated or replaced, consider going ahead and making the changes. For example, my husband's (fiance's at the time) house had really ugly, worn vinyl flooring in the kitchen. He showed the house for a while like it was, and finally decided to replace it. It made all the difference and the house sold quickly after that (it just makes a difference in how people feel about the house) Obviously you don't want to invest thousands of dollars in fix ups (unless your house is in pretty bad shape) - take a good look around and decide what things will make the biggest difference. If your teen-aged son insisted on painting his room black - now might be a good time to go neutral!
- Finally, have a friend walk around your house with you to give suggestions for little touch-ups that you might make. If you're like me, you've lived with some things so long you don't even see them anymore. Someone else might be able to point out the little things that, while invisible to you, might be painfully obvious to a potential buyer.
If you're selling your home, make sure it looks as good as it possibly can. We are looking at homes right now, and I can't believe the way some of them look. Some people didn't even wash their walls before putting the house on the market, there are holes in the wall, and just plain cluttered.
Pack away (in a friend's garage maybe) things you don't need. Make the place look as spacious as possible. Clean, clean, clean!!! Have a very honest friend look at the house before it ever gets shown, and have them point out things you should do to get the house ready to sell.
When we sold our last house, I even re-painted the garage floor to make it look as clean as I could. I don't know if the fact that we cleaned more than we ever did while just living there helped, but our house sold in less than a week, and we had a bidding war. We sold for $5,000 more than the asking price. Two of our neighbor's houses were still on the market for months after. People that looked at all three houses said that they didn't clean and prepare as well as we did. Our house looked like someplace they could just move into.
Constance C. B.
Have a "Plan B"
If things don't go as fast as you'd like, you already have the right idea: Have a "Plan B." Our attorney advised that we decide on a timetable for trying to sell our house ourselves, and decide on a date we would "pull the plug" and list with a realtor. Fortunately, that didn't become an issue. However, if you do get to the point of listing, I would suggest you try to negotiate a lower commission, since you have already done some of the marketing of your own home. It would be worth a try.
You will need to order (and usually pay for) the title insurance for your buyer, which you can do without a lawyer. Provided you have no liens to clear up other than your own mortgage which will be paid for out of the sale proceeds, you then need to provide a deed at the final closing. The lawyer may also be needed to draft the offer to purchase contract or review it on your behalf. In any event, don't cut corners here because it isn't worth it if something goes wrong.
Build a Web Page
I did an Internet search on homes for sale in my area. That's how I found sites that let you build a Web page about your house and offer it for sale on the Net. Take a look at the different sites before you start. One lets you post a photo for free. Another has a map where you can click on your exact location. I built two pages, and linked one to the other.
Dot the I's
My husband and I rehab old houses and resale them. It seems Patty that you're right on target in getting your house ready for sale. I might suggest, that when a buyer comes along, you have them sign an Agreement to Purchase and to give you a deposit ($300-$500, that is non-refundable if they do not purchase, but will be applied to the purchase price if they do). That keeps you from holding the property for them while they go through the loan process, only to find yourself a month later, with no buyer, and another month's worth of bills.. We've gone through that situation twice and now insist on a deposit. The agreement and deposit also motivate the buyer to be more creative and persistant in getting their loan. Note: You may also want to daily check the classifieds in your area to determine what properties are really selling for. (example: Your house may be worth $100,000, but if you want to sell it within 3 months, you may do better offering it at $95,000-buyers look at homes in increments of $5,000. Getting it below that $100,000 mark will add a larger market to your efforts) Good Luck to you!
Use the Library
We are in the process of selling our home ourselves and have found the most valuable resource to be the public library. There are a lot of books on selling your own home. Most detail everything from marketing techniques to how to prepare a fact sheet. There is one book in particular that I found very interesting. It's called "How to Sell Your Home in 5 Days." This book gives a very detailed account of how to prepare your home for quick sale. I won't go into detail about the method described, but it isn't as sensational as you might think. I recommend it to anyone who is thinking of selling thier own home.
Mary Ann A. in Anderson, Indiana
We recently sold our home by owner after having tried to sell it several times through a realtor in the past. We felt the realtors did very little to earn their commissions from what we had seen in the past. Since this was our first time selling a home, we decided to use the Buy Owner service so we would have their expertise if needed. Well, that turned out to be a big mistake... we paid $800 and that was supposed to be for the computer matching service and three months in their magazine. We did not get near the response we had hoped for, and at one point I found out they had been giving out our second number which was our modem line that didn't even have a phone attached to it!
After 3 months with Buy Owner and no prospects, we got fed up and decided to place an ad in the local paper. The first day the ad ran, we had more calls than we had in the past three months with Buy Owner! We had between 5-10 calls a day every day that the ad ran, and the calls continued for several days after running the ad.
We ended up selling the house through that ad and we moved less than two months later. We used a real estate lawyer for the transaction because we were financing a portion of the sale price. The cost of going through a lawyer was actually a little less than the title company that Buy Owner referred us to would have been. Our buyer was also a first time buyer, somewhat nervous, but the lawyer was very good about explaining everything to him. For what it's worth, Buy Owner never contacted us to see how the sale of our home was going. For all I know, they still have our home on file as not being sold.
Besides the ad, we also put flyers out in front of the house. This was great because a lot of times the people would just want to drive by before making an appointment to view the house. This way they could take the flyer home with them and it had all the pertinent information. Every time I showed the house, I would be sure to give each person a flyer to take home with them so they would have something to remember it by. Don't forget to include the local schools in your flyer... people with children will be interested in that. Also, if there are any parks nearby be sure to mention that.
If you are using an inkjet printer for your flyer and you plan to put them outside, you will need to get copies made because the inkjet ink will run if it gets damp. You can use your color copies to hand out, just don't use them outside. At first, we used a Pringles container attached to our sign for the flyers, but people didn't always put the lid back on and the flyer would blow away or get wet. Later I replaced that with a sturdy clear plastic envelope which turned out to be a little more durable. El Nino ended up taking that away too, but by that time we already had our buyer!
The one thing to be aware of selling on your own... it can be very emotional. Ours was not so much because of our attachment to the home, but because every time you think you have a buyer your hopes get up, and it usually doesn't work out. Besides the obvious money saving reasons for selling on your own, another advantage is that you will always know when someone will be coming to view your house. With a realtor and a lock-box you had to have your home sparkling at all times.
Patty, we sold two houses by simply advertising in the paper, placing an information box in our yard containing fliers with information about the house and a picture, and a sign in the yard (For Sale By Owner). Once we held our own "Open House." If you hold an "Open House" be sure to have someone in the house with you. Also, put on all the lights and have something simmering on the stove or cookies baking to make the house inviting when they walk in the door. Good luck with your house and with the marriage.
Know Your Buyer
Patty, I got married and had to sell my house to move to my new husband's home. I was 45 years old and made a lot of mistakes but I had never sold a home before so maybe you can learn from my experience. First of all, like you I worked very hard to make the house look nice without spending a ton. Fresh paint, steam cleaned carpets, lace curtains in the kitchen, etc. Then, I signed up with a real estate agent. I priced the house to sell and had a contract in ten days as well as three "back-up" contracts. I knew then the house had been priced too low but decided to stay on course when my insurance agent told me that coverage would cease within a certain time period unless I "occupied" the property. Well, the person with whom I contracted to sell the house to was going to try and qualify for a loan with her future husband but they broke up! She still wanted the house so one of her brothers offered to help but he couldn't qualify either. Finally, she found a new boyfriend and together they qualified! But, all this took months while I spent lots of time going "to and fro", spending the night on blankets without benefit of having a phone for security, etc. Anyway, my advise is: find out as much as you can about the people you are contracting with (It is your house and you have a right to know!) and don't do anything to void your insurance coverage.
Leverage the Realtor
This is a tip for anyone who is contemplating selling their current house and moving to a house in the same area. If you choose to use a realtor remember that commissions are negotiable and even a 1% reduction can save thousands on the sale of your home. Our leveraging strategy was to involve the realtor in finding our new home, thus a "finders fee" for the realtor would be at about 3 1/2% (split with the listing realtor). The sale would be contingent on the sale of our current home. Next, we sat down with the realtor and flat-out asked him "if" we listed with him to sell our home, would he do it for a 4% commission? It worked! Plus there was added motivation for the realtor to really sell our house as both deals were on the line for him.
For folks that are considering a For Sale By Owner for the first time, don't forget to have the potential buyer sign a First Right of Refusal form. Basically, the potential buyer would have a set amount of time to clear any contingencies to the offer (ie: selling another home). If after that time goes by, another offer comes along, the first offer typically has 72 hours to decide to waive the contingencies and continue with the offer or to pass it by. Otherwise you may be stuck waiting for the contingencies to clear for quite some time. It sure saved us on our last home-selling/buying venture.
For the person who is asking for help selling his/her house themselves (to save the realtor's commission), if you take a photo of your home to Price Club/Costco, you can order those photo cards (like you get at the holidays and such) for a neat and appealing advertising gimmick.
Take the Next Step
- If you haven't looked for a lower mortgage rate in the past year you could be wasting money each month. Use our simple tool that compares different lenders to see what your monthly mortgage payment could be. It's private, only takes a minute and could show you how to save thousands!
Also in Home
- 5 ways your house can make you go broke
- 5 simple and affordable luxuries for your home
- 12 ways to lower heating bills
- Will my insurance spike if I rent out my basement?
- Why pay extra toward mortgage principal?
- 5 tips to sell a home before buying another
- 6 ways to stock your "man cave" for under $500
- 6 home projects that don't pay for themselves
- Should I refinance my home equity line?