For Sale By Owner (FSBO)*
Selling your house "by owner"--as opposed to listing it with a real estate agent--is not a new idea but it is a practice that has become increasingly popular in recent years. Many sellers test their market by owner then, if unsuccessful, list with a real estate agent. However, about one-third of all home sales are transacted "By Owner".
Sellers wanting to sell "by owner" must be prepared to do everything the real estate agent would normally do in the real estate transaction. Although selling a house may look easy, on closer examination it requires marketing techniques, salesmanship and a lot of time and patience. The following will help you decide if FSBO is right for you.
Consult your lawyer. Before you advertise or tell anyone that you are selling your house, consult experienced real estate attorney, Vicki M. Gonzalez. A real estate attorney can give you important insights as to what documents will be needed and how to proceed on your transaction. For example, a seller selling FSBO is required to provide the same disclosures regarding the condition of the property and follow the same fair housing laws as a professional realtor. A real estate attorney will ensure that you meet these requirements, as well as help you prepare the contract. Your attorney can also handle your closing and provide title insurance. Handling these details properly is critical to a smooth closing, and the attorney's fee is usually the lowest of all professionals in the real estate transaction.
Set a fair price. This is the number one factor that sells a house quickly or not at all. Know your real estate market. Check comparable properties on the market or recently sold. You can visit the websites of local realtors, or the National Association of Realtors at www.realtor.com. Take advantage of one or more local realtor's free market analysis offers. Make sure it is someone you trust and respect. This may be the person you will work with if your FSBO experience does not work out.
Develop a marketing plan. Buy a professional, attractive sign for your front lawn. Include your telephone number in numbers large and clear enough to read from the street. Place an ad in the local newspapers. Post flyers on public bulletin boards.
Prepare a brochure including selling features of the house. Include color photos, if possible. The brochure should include the features most realtors include on their listings such as school districts, taxes, assessments, room sizes and amenities that will be transferred with the property. These brochures may be handed out at open houses, or attached to your "For sale" sign using a mailbox type device created for this purpose.
Use the internet. There are several sites exclusively for FSBO transactions. Take a look at The Owner's Network (www.owners.com), the largest registry of FSBO homes in the country.
Be prepared to deal with buyer's Realtors. You are not listed with the MLS, so you are not required to pay a realtor's fee. However, if a realtor offers to show your house, or a buyer is accompanied with a realtor, be prepared to negotiate the realtor's fee in your deal. The buyer's realtor usually receives half the real estate fee on a MLS listing. You can negotiate with the buyer's realtor so both of you profit from the transaction.
Be knowledgeable about your deal. You are taking the place of a realtor. Be prepared to answer questions about the house, about the deal and about the contract. If you have any questions, contact Vicki Gonzalez at 847.823.9030 Ext: 220 or firstname.lastname@example.org for an outline of what you need to know and need to do so as to give the impression of knowledge and professionalism when dealing with potential buyers.
Vicki Gonzalez can assist you with services such as preparing a professional-looking contract, making the proper disclosures and drafting advertisements that project a professional image.
Remember that potential buyers will consider that you are not paying a realtor when negotiating a sales price. Make sure your buyer is aware that you have already considered that in your sales price.
Important factors to consider when deciding to sell By Owner:
- Comfort level:Will you feel comfortable dealing with the legal documents required? Will you be able to deal with the public on the phone and in person? Will you be able to detach your personal feelings about your home in order to negotiate with the buyer?
- Time: Proper marketing such as signage, brochures and/or flyers take time to create and distribute. Phone calls must be answered in a timely manner. Showings to buyers and appointments with inspectors and appraisers are time-consuming and usually take place during regular day-time work hours.
- Visibility: Are you able to post a "for sale" sign? Most condominium and townhouse associations forbid it. Is your street likely to have a lot of traffic? If not, is it near a busy intersection where you can place a sign? Is there another house for sale on your street so that potential buyers for that house will also see your sign?
- The Multiple Listing Service (MLS) that realtors use is the single most effective marketing tool for selling real estate.
Until recently, you had to list with a realtor to take advantage of this tool. Recently, however, there are services that will list your house on the MLS for a flat fee. If you take advantage of this service, you will be required to pay the buyer's agent's commission, usually about 3%.
Buying or selling a home is the single largest transaction you will enter into in your lifetime--proceed with caution and armed with good advice from Vicki Gonzalez, a professional real estate attorney. Call now at 847.823.9030 Ext: 220 and ask about our "For Sale By Owner" Do It Yourself Kit.
*"For Sale By Owner" is often confused with real estate marketing companies doing business under names confusingly similar to this generic term. Please see our article regarding "Real Estate Agents" for information regarding these marketing companies.