The for Sale by Owner Process Overview You Need
Are you considering putting your home on the market? In recent years, 89% of homeowners used a broker to sell their homes, rather than doing the for sale by owner process. But that doesn't mean that you have to!
Selling a home can be stressful. But when you sell your own home, you are in control of everything: the listing, marketing, and negotiations. If you want to learn how to do it, read on.
Why Consider the For Sale by Owner Process?
So, why should you sell your home by yourself and not use a broker? There are many reasons, starting with the broker's commission. Most brokers charge around 6% of the purchase price.
Because brokers work on commission, they may artificially inflate the price of your home. If it fails to attract buyers, your home could sit on the market for months, or even a year.
Depending on the value of your home, that commission could be a significant chunk of change that goes out of your pockets and into a broker's, instead. It's worth considering doing the work of a broker yourself and saving the money.
How to Sell Your Home
If you are ready to start the for sale by owner process (FSBO), read on. Here's a step-by-step list of what you need to do if you are thinking of selling your home.
Assess Your Home's Value
The first step is to figure out how much your home is worth. That means you will have to do a little research to find what comparable homes are selling for in your area.
If you want professional help, you can also hire an Appraiser. The cost of a few hundred dollars is well worth getting an appraisal done, especially if you've undervalued your home. It will be performed by a licensed professional who has experience determining the value of homes in your area.
Getting a Comparative Market Analysis (CMA) is another option. This is typically done by a local broker. They will compare home sales in the area to help assess what price you should list your home for.
Or you can use an iBuyer to get a market value estimate. It's as easy as entering your address on the site, and you can get the value of your home in seconds.
Have an Inspection Done
You may be thinking, but don't the potential buyers do an inspection? That's correct, but depending on the age and condition of your home, you may want to do your own first. That way you won't be taken by surprise.
Inspectors can help troubleshoot existing issues, and discover hidden problems that may impact the sale of your home. An ailing septic system, major roof repairs, and unwanted pests can all tank a deal, or lower the price on an offer. It's better to know in advance so you can make the necessary repairs before putting your home on the market, or price it accordingly.
Research Closing Costs
Even if you are not using a broker, there will still be costs associated with selling your home. For example, once you've found a buyer they will give a percentage of the sale price upfront as a down payment. It's recommended to hire a lawyer to handle to put this in escrow, (and some states require it).
Your lawyer can also assist with the title search and any challenges that arise from that. Legal fees can vary from state to state, so it's best to inquire before you start the sale process.
Get Your Documents Ready
Once upon a time, you bought a home and were given a title to it. Unfortunately, many homeowners have forgotten where they have put that important document by the time they are ready to sell. Be sure to locate that and any other relevant documents in preparation for the sale.
Determine What You Owe
Do you have a mortgage? Be sure to find out how much you still have left to pay, since that can influence how much you should list your home for. Another important thing to ask is if your mortgage comes with a pre-payment penalty.
Some lenders will charge a significant fee if you pay off the mortgage in the first three years of your loan. Sometimes this is based on a percentage of the amount owed, or on a few months' interest.
It's also a good idea to make sure that you don't have any liens on your house from outstanding payments to contractors or otherwise. These are all things that should be checked before you decide to sell.
Budget for Moving Expenses
Before you enjoy the thrill of putting your house on the market, have you considered how much it will cost to move? In the excitement of getting their home listed, many homeowners forget to think about what happens after the sale. Call and get estimates from movers, and don't overlook expenses like hiring a cleaning service or purchasing boxes.
Do Pre-Listing Prep
Now that you've done your financial homework, you can get down to the nitty-gritty. It's time to take a good, hard look at your home and see what needs to be done to make it looks its best. Clutter, excess yard waste, and incomplete renovations can all be major turn-offs for house-hunters.
It's a mistake to wait until the house is sold to start going through your possessions; clean, donate, and/or pack up as much of your personal belongings as possible. Remember, your taste in decor might not be everyone's cup of tea. De-personalizing the space will give the viewers more of a blank palette to imagine their own things there.
A little yard work can go a long way--so mow, weed, and tidy up the backyard. Make sure that the house doesn't have bad smells from pets, smoke, or otherwise. Finish any outstanding repairs, and eliminate any unsightly stains on the walls, ceiling, or carpets.
In the good old days, it might have been enough to simply put up a For Sale sign in your yard. And while it is important to do that, you could get better results by also doing some marketing.
What does that mean? Try social media sites, flyers, and classified ads in your local paper. There are also sites that can help you sell your home online fast, or match you with potential buyers.
If you really want to do it right, book a professional photographer to take photos of your home. You can also hire a home stager to help stage your home in the best possible way. Both of these can be a good investment in order to showcase and maximize the potential value of your home.
Create a Listing
Did you know that you can list your home on MLS, even if you don't have a broker? You can go to a real estate office and pay a small fee to have an agent list your home on the MLS. It will have your name and information and show up on sites that pull from the MLS.
A word of caution, though--even though you aren't using a broker, the buyer's agent still may want a fee of 3%. So be clear about this in your listing to avoid having to deal with that. Unfortunately, this may shrink the number of your potential applicants to those who are not using a broker.
One of the key steps in selling your home is the showing, of course! You can do this by making individual appointments, or having an open house. Most open houses are typically done on Sundays and are a great way for a large volume of potential buyers to see your home.
If you want to go pro, create little contact sheets or brochures with the information and photos of your home. This will help viewers remember it. And it's always a good idea to have friends or family to be there to assist during the open house.
If you want to set yourself up for success, advertise your open house at least one week in advance in the newspaper. If you are dealing with sites like Craigslist, you'll also need to post on the day of, since listings tend to get shuffled down on weekends. And be sure to put up clear signage on your street so house-hunters can find your home easily.
How do you know a good offer from a bad one? Even the most well-meaning buyer's offer can be a bust. You'll have to weigh all the conditions, like how quickly they want to close, how many contingencies they have--especially if one is that they need to sell their own home before purchasing yours.
But first, confirm if it is a cash offer or one that requires financing. It's always best to go with buyers that are pre-qualified for a mortgage. Many sellers have lost valuable time waiting for buyers to be qualified, only to have them back out of the deal.
Congrats, you've found a buyer! All of your hard work has paid off, and now you'll need to agree on a price. This may take a bit of back and forth, as the buyer makes an offer, and you potentially counter-offer.
This is usually done verbally, but once you have an agreement the buyer will need to submit a written offer. This should include the purchase price, any conditions or items included, and the date and location of the closing.
Get into Contract
Now that you and the buyer have decided on the sale price, it's time to draw up a contract. You can find free Residential Real Estate Purchase Agreements online, or contact your lawyer for assistance. Be sure to read all of the conditions in the contract carefully.
One of the key things to look for is when and how your buyer can get out of the contract. Most buyers will have "contingencies", which could be anything from obtaining financing to inspection results. Make sure you understand exactly what these conditions are in advance.
Another key point is the timeframe. Many buyers will ask for an out as little as 48 hours before the closing, which can leave some sellers in a bind. If a buyer defaults on the transaction, you might be able to keep the escrow money.
All of this must be considered carefully when you set the conditions of the contract. Otherwise, you could spend a lot of time and energy only to have the buyers walk away.
The closing is the finish line and the reward for all of your hard work. Because this is a legal matter, it will be handled by your lawyer or a title agent. They will give you a list of documents and explain the procedure.
An Easy Way to Sell Your Home
If the house sale by owner process looks like too much work, there is a faster and easier way to sell your home. You can always go with an online iBuyer, who will buy your home for cash in as little as 24 hours. It reduces the arduous task of selling to a simple and quick process that can be done for a small fee.
Ready to Sell Your Home?
Now that you've learned about the for sale by owner process, you can make an informed decision about how to sell your home. Whether you go with a broker, do it yourself, or sell your home online, there are options.
Want to learn what your home is worth? Start the process today and find the value of your home through our site. It's fast and simple, so consider selling your home with our service!