Selling a home "for sale by owner" (FSBO) can be a time-consuming challenge. It's not as difficult if the market is moving fast and inventory is snapped up as soon as it becomes available, but finding buyers otherwise can be tough without professional help. The FSBO process is strewn with tasks that you must complete correctly or the whole deal could fall apart.
The Effect on Profit
The National Association of Realtors (NAR) indicates that 47% of owners who choose to go the FSBO route do so because they think they'll pay a lot less in commissions and likewise see more of a profit. Unfortunately, it doesn't always work out that way.
NAR also reports that FSBOs represent only about 7% of all home sales and that each brings in about $65,000 less than comparable homes that are sold with the assistance of an agent.
What Can Go Wrong
Owners who sell by themselves often lack the expertise to accurately price a property to sell. You could end up selling for too little even in a strong market when all factors would seem to be on your side.
Then there's the matter of negotiation skills. The majority of homebuyers are represented by agents, and you could find yourself outmatched and outwitted against an experienced agent unless you, too, have strong negotiation skills.
The majority of FSBO owners end up throwing their hands in the air and listing with a Realtor after they embark on the process.
How to Price a Home for Sale by Owner
Pricing a house to sell is part intuition, part research, and part market timing. You could receive immediate offers if you price within the comparable sales. Ask a title company to send you comparable sales.
Don't fall victim to a seller's biggest mistake and not price your property correctly. The first two to three weeks on the market are crucial. That's when buyers' interest levels are the highest.
Preparing to Sell Your Home Without an Agent
Gone are the days of selling homes with unmade beds, dishes in the sink, and toys scattered throughout. Today's homes must be spotless and resemble model homes. Make it look like nobody lives there:
- Examine the home from a stranger's point of view before you begin to prepare your house for sale. Ask a friend to help—someone who might be more detached than you are. Ask them to walk through your house and note deficiencies and things that just feel wrong.
- Consider spending money on improvements. Fixing things that don't work and making repairs before selling can improve your profit, but don't go overboard. The single biggest downfall for sellers is spending a lot of money on repairs that will never be recouped.
- Don't underestimate the power of home staging. It can mean the difference between selling now for more money or not at all. At least get rid of the bulk of your furniture if you can't afford to hire a professional to handle this for you. Most sellers can live without half the stuff they've accumulated over the years.
- Pets in the house present their own set of challenges. It's harder to sell a home where pets live. It's difficult to show a property with a pet in residence. Always separate your pets from buyers during showings.
Marketing Your Home for Sale by Owner
Spend a big chunk on advertising. Figure out your target audience and get the message to them.
Many homebuyers look on the internet at homes for sale.
- Research house marketing tips, from how to do photographs, some print advertising, direct mail, flyers, and hosting tours. Educate yourself.
- All marketing should be geared toward making your phone ring and increasing traffic to your home. Remember, you aren't trying to sell the property online sight unseen. You're trying to get buyers inside.
- Avoid marketing mistakes by being flexible with showings and offering incentives to buyers.
- Consider your timing. Seasonal sales require unique approaches. Selling in spring is very different than selling in winter. April is considered to be the best month to put your house on the market in many parts of the country.
- Put a lockbox on your premises for easy access by agents when you're not home if you decide to offer a commission to selling agents.
- Learn how to hold an open house. Saturdays are just as popular as Sundays in some areas. But remember that not every property is suitable for an open house, regardless of what HGTV might lead you to believe. Homes in high traffic areas are excellent.
- Hire a good photographer to shoot a virtual tour. Consider drone photography as well and advertise the virtual tour link in your marketing materials.
- Consider targeting buyer's agents with your marketing, and offering additional compensation to lure a buyer's agent to show your home. Remember, most buyers have an agent.
What Happens When the Home Is Sold?
You're not finished when you accept on offer on your property and everyone signs on the appropriate dotted lines. Mistakes can still happen.
That sales price isn't necessarily carved in granite. Expect negotiations if the home inspection turns up problems. In fact, Dave Ramsey recommends that sellers pay for an inspection, too, even before they list their properties for sale. Forewarned is forearmed, and you'll especially want to know about big ticket repairs in advance so you can address them before they become an issue.
Virtually no sale closes without the buyer first getting a home inspection.
Arrive at closing with everything you might possibly need: photo ID, keys, warranty information, and appliance instruction booklets...and that's just the tip of the iceberg. Touch base with the escrow agent to find out if you'll have to provide any other documents that aren't already in their possession.
Lenders have been known to demand additional documents out of the blue at the last minute on the day of closing.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.