The Do's and Don'ts of For Sale by Owner

In a buyers market homeowners look for ways to save and make as much money as they can. Some choose to sell their home themselves as a way to save some money, after all it is one, or two less commissions they have to pay. However there are several things to consider when deciding to be a FSBO (For Sale By Owner) as they are known in the real estate industry.

When considering whether or not to sell your home without the help of a professional keep in mind the bottom line, your price. Many people think that they will save a ton of money selling their home themselves but the reality is that often times a real estate agent can actually make you money by being able to sell your house for more money and in less time. FSBO's often either under price their property, not understanding the true market value that they have, causing a quick sale, but for less profit than they could have had if they had professional advice, or overpricing their home which causes it to sit on the market and ultimately forcing the homeowner to reduce the price or take it off the market, which costs the seller time and money.

When setting a price look at your house compared to the other houses in the neighborhood, is it the nicest or the middle or the bottom? Look at your home objectively (which is harder than it sounds). A buyer and their agent is going to look at your house and compare it to others so what does your house have to offer that the others don't? Does it have upgrades? A better or bigger lot? Keep in mind that a buyers agent will know what the properties in the neighborhood have sold for...that is their job after all, so you need to be able to back up your price. Why does your house deserve to have a specific price?

When deciding to be a FSBO you also need to determine whether you will be willing to work with a buyers agent...and pay them! Most home buyers have an agent that helps them search for properties, if you are not willing to work with AND compensate a buyers agent you are excluding a lot of potential buyers. The reality is that if you don't compensate the buyers agent the buyer has to...if you feel that you will have so many buyers you can offend and turn off many, go right ahead, but this is a deal breaker for many buyers no matter how much they like your property.

DO YOUR HOMEWORK! In many states whether you are a FSBO or not you are required to have certain documentation. In North Carolina all sellers are required to give buyers a property disclosure. This is a LAW and failure to give the disclosure can cause the sale to fall apart. Do you have a termite bond? Is it transferable? Do you live in a flood zone? What are your local schools? What are your annual taxes and monthly bills for the house? Do you know where your property lines are? Do you have a survey to prove where your property lines are?

You also might want to consider getting an inspection before you put your home on the market. This allows you to know what problems need to be fixed, and can be a marketing tool. Yes, you will have to pay for it but it can head off a lot of problems. There are two places where a real estate contract falls apart; 1. initial negotiations, and 2. inspection and resulting negotiations. Having your own inspection can save you time in the end.

Also decide if you are willing to pay for a home warranty. These warranties are a huge plus and are a great marketing tool. A buyers agent more often than not will ask you to pay for one, depending on where you are and what kind you get they are a few hundred dollars but offer a lot of piece of mind to the buyers, you only have to pay for a year of coverage.

When dealing with negotiations involving a buyers agent in most cases you CAN NOT change the wording of the contract! It can be against the law since it is a legal document. As a seller unless you are negotiating owner financing don't change or request that changes be made to the buyers financing...ex. 100% versus 90%. Keep in mind that your house in most situations MUST APPRAISE for at least the selling price! If your property doesn't appraise for the selling price you as a seller have two options. 1. You can lower your price so that the property will appraise and the buyer will be able to get financing. 2. You can choose not to lower your price, run the risk of the deal falling apart and forcing the buyer to make up the difference between the appraisal (which is the most the buyer could get from the bank in the form of a loan) and the sale price, as a down payment. You would also be wise to get a lawyer involved to protect your interests...even if you have agreed to work with a buyers agent that is exactly what they are! A buyers agent looks out for their client, the buyer, not you!

You also need to consider how you will market and advertise your home? Many discount brokers will offer to put your home on your local multiple listing service for a fee and then you do all the work. Find out exactly what they are offering in their price if you choose to go this way.

When selling your house yourself you have to be available to show your home any time a potential buyer is able to see it. Can you work with them to find a time that suits you both, yes, but many times buyers only have a certain time or day they can see it, especially if they are from out of town. Some buyers feel uncomfortable when the owner of the property is there and as an owner you can also give hints to the buyer and their agent that you might not want them to know. If you are anxious, or nervous, or accidentally say something you can put yourself into a poor bargaining position.

Determine before you put your home on the market how long you will try to sell your home yourself. HAVE A PLAN! What happens if your house is on the market for a month or two or three? Decide in what increments you will lower your price and at what point you will consider having a professional take the listing.

You need to ask yourself, Do I really want to sell my house, or is this a test run? Be prepared.