For Sale by Owner: Don't Make These Big Mistakes

When your are selling For Sale By Owner or FSBO as it's called you can either save a small fortune and have a great experience or your can For Sale By Owner and save not as much as you hoped for and have a long and frustrating experience that you would not go through again. This For Sale By Owner (FSBO) article will make sure you don't make the biggest For Sale By Owner mistakes. I use my own For Sale By Owner experience as an example. Several years later I became a real estate agent and broker and learned when I sold For Sale By Owner, I did it right, and it felt right at the time.

1. Never put a For Sale By Owner sign in your yard or anywhere else. I'm a real estate broker. Homebuyer's agents may not admit it but they avoid FSBO properties like the plague. Why? Where they have control, most FSBO sellers offer a very small percentage commission to the buyer's agent far below the industry standard. They may even offer no commission or a small flat fee. Neither do they want to deal directly with the homeowner. They consider themselves professionals and are used to dealing with other professionals and they like doing business that way. If you put a For Sale By Owner sign up in your yard, the only people your likely to attract are drive-bys (if you have a visible location), and un-represented parties who saw your house on the Internet. When an agent calls to set up a showing, if they ask who you are do what I did. I said to them, "I'm the owner. I'm selling my house through Prello Realty but you'll be speaking with me". I never had a problem or had an agent balk with that response. Who is Prello Realty and how do you avoid using a For Sale By Owner sign?

2. Use a local realtor that offers an MLS flat fee listing as an option to full service. Why? Low cost and service with no hidden back-end fees or any surprises. I got a professional PrelloRealty For Sale yard sign with my telephone number on it and the calls rolled in. For $299.00 here's what I got from Prello Realty in Chicago. I got a Prello Realty MLS listing with 9 photos and my phone number for up to a year; Realtor.com "showcased" listing with 9 photos for up to a year; Chicago Tribune listing for up to a year; Daily Herald listing for up to a year; Homes.com listing for up to a year; and a listing on all the popular websites. I could create and print my own brochures for free at their website; I got all necessary Illinois (where I lived) disclosure forms and sales contracts; free unlimited listing changes (change the offering price, change pictures, change anything); and phone support via a live agent. Most important of all I got to set the commission fee to the buyer's agent who found me a buyer. I was selling a condo worth $170,000.00. I set the buyer's agent's commission at 2%, low but not ridiculously low

3. Use a lock box. Either the combination type or electronic type (using the electronic type guarantees that only licensed realtors will access your house). When a buyer calls a real estate agent about your home that real estate agent wants to strike while the iron is hot. They want to be able to show that home immediately if not sooner. That's why you use a lock box. They are available at hardware stores or through your realtor (about $40 - $100). A lock box allows them to access your house anytime. That's a good thing, and it looks professional. The way it works is the agent will call you and ask to come over. That's when you tell them about the lock box. There's an element of trust involved here, but I never had a problem.

4. Don't interfere with the showing. If a real estate agent is going to be bringing people to your home to show it they're going to want to speak freely about your place. They can't do that if your hovering over them or giving them a tour. There's nothing wrong with asking the agent if they want you around to answer questions about your home but don't stay home just to give a tour. Let the agent control this aspect.

5. Make sure you get a good sized non-refundable down payment in your hand with any tendered offer to buy. Theoretically, when a buyer and seller agree on a price the buyer puts up earnest money as a show of good faith. And again, theoretically, that money is supposed to go into an escrow account within 24 hours of an agreement. My first buyer tendered a verbal offer (no signed contract). I agree to the price. He then backed out 5 days after that. Think of it this way - you don't have an offer if it doesn't come in writing with earnest money. On the $170,000.00 condo I was selling I set the earnest money at $1,500.00. Do not spend the earnest money. If you don't accept the offer you'll have to return it. Make sure you keep copies of sales contracts on your kitchen table so that buyers can make written offers to you. Copies of your contract and all your required disclosures should be on your kitchen table. You can print out all of this at your realtor's website.

6. Paint the place. At a minimum get bids and paint the place or do it yourself. If your not into sprucing the place up for buyers, get over it and get into it. Your home should look the best it has ever looked inside and out when people come over. Soft music, yes. Candles, yes. A set dining room table, yes. Stage it like a dream home. You have to do it because your competitors will be doing it. I bought $200.00 worth of , well, nice junk, throw rugs, fake willows, and knic-nacs made of ticky-tac at Walmart for the condo. The place looked $15,000.00 better after I strategically placed every item and had the place painted for $800. Put some thought (Internet surfing time on staging a house) into it.

7. Price the home right to begin with. There's a saying in the real estate industry. If your house doesn't get an offer before 30 days are up or 3 buyers have been through it, then the house is over priced. How do you price your home right when your not a real estate agent? You don't. What you do is call three different real estate agents, tell them you are thinking of selling and ask them to do a market appraisal of your home. While they are there tell them that you are looking at other agents and also possibly selling the home yourself. They will take a few days and give you an appraisal on your home and explain it to you. They will also talk about why you should use them as a sales agent. They may possibly persuade you that using a full service agent is the best thing for you to do, so listen to what they have to say. They will also make suggestions on how to spruce your home up for showing. With your three appraisals you will have a very good idea of what price to offer your home at. My three agents wanted for commission, respectively 6%, 6% and 7%. My three appraisals were $155K, $170K and $185K. I set my offer price at $178K after doing some further research on other condos for sale in the area. I had an offer of $174K in four days (which I lost) and sold the place 6 days later for $170,000.00.

8. Don't make the closing more complicated than it has to be. Stated plainly, hire a real estate attorney to handle the close and represent you. If the buyer wants to do something like substitute his sales contract for yours or change terms, then you have an attorney to look after your interests? Where did I find my real estate attorney? In the local phone book of the Chicago suburb I was living in. The fee for his services was $300.00. I didn't even attend the closing. .

Do these things and your on your way to a very positive FSBO experience. Your house will move fast and you'll be satisfied you knew you got the max.