Homeowners have the option to sell their homes without professional real estate representation. However, the National Association of Realtors (NAR) reported only eight percent of real estate transactions in 2018 and 2019 were “For Sale By Owner” (FSBO). Common reasons for choosing to execute a real estate transaction as “for sale by owner” (FSBO) are to pay no commissions or to sell a home fast. If you do choose to represent yourself, follow these steps to sell your home.
1 Determine fair market value (FMV)
Price your home to attract qualified home buyers. Overpriced homes deter people from scheduling a home tour or making an offer. Buyers will think you are unwilling to negotiate if your price is out of line with similar homes on the market.
Many real estate professionals will meet with you to discuss your home’s value with no obligation to list with them. Real estate agents are the best resources to find fair market value because they have access to neighborhood comparable reports and insights on current market trends. Another option for a professional opinion is to pay for a home appraisal from a certified, independent appraiser.
To truly do-it-yourself, find a database like ValleyMLS to access to research recent sales and current listings of homes with similar features. Use this information to arrive at a fair market value estimate. Keep in mind the list and sale prices you see don’t always paint the whole picture of why that home has that price.
Be aware, NAR’s 2019 Profile of Home Buyers and Sellers report found FSBO transactions had a median sale price of $80,000 less than agent-assisted sales.
2 Preparing your home for sale
Owners seeking top dollar for their home need to prepare it to sell. Walk through your home as if you are a discerning buyer and make a note of any defects. Consider having a professional home inspection. The report will identify any issues you can fix to increase its buyer appeal.
Take care to fix system problems like clogged drains or malfunctioning dishwashers. Just remember, real estate is highly visual. A fresh coat of neutral paint goes a long way to boosting a home’s appeal. So can new landscaping, cleaned windows, and removing clutter from the house.
3 Seek legal counsel
Find a real estate attorney you trust to assist with the real estate transaction. In Alabama, you are required to use a real estate attorney for all transactions. For Sale By Owners are not exempt.
We recommend Craig Paulus Esq. Owner of Paulus Title, LLC. They are a trusted partner and we regularly refer our clients to them for real estate legal services.
4 Market the home
Some owners think, “I’ll FSBO because I can sell my home for free!” Remember, “For Sale By Owner” means you are responsible for the marketing strategy. Be prepared to spend out-of-pocket to list the home on popular websites or for MLS access, for social media advertising, creating fliers and brochures, and scheduling home showings.
Being available to show the home at any time is key to finding a buyer. Keep the home in showing shape every day, and your calendar clear for the potential of quick turn-around showings.
5 How to protect yourself when selling a house
Balance your need to welcome people into the home with protecting yourself and your assets. Before the home is available for showings, hide or remove your valuables, medication, and firearms. Ask to see a pre-qualification letter before allowing someone to see the home. Ask a buyer’s real estate agent for their card or check the IDs of visitors. Write down the names and contact information of all visitors. Let someone not present in the home know when you have a scheduled showing. Keep your phone on your person at all times in case of an emergency.
6 Negotiate the sale
Negotiate the terms of the deal with the potential buyer. This is the most difficult and risky part of the transaction. As the homeowner, you are emotionally invested in the property. That can impact everything from your ability to compromise to the tone of voice used when talking with prospective buyers. You’ll also be negotiating on more than the sale price. Look at all the terms: the closing date, inspections, and contingencies.
Consult with your real estate attorney during the process. The attorney will charge to review the purchase and sale agreement, but it’s essential to have an experienced eye look at all the fine print before signing any documents.
Depending on your agreement with the buyer, you or the buyer will designate an escrow agent to hold the earnest money deposit and the contract. Title companies can act as escrow agents. The escrow agent will order title, property tax information, and other relevant paperwork.
7 Home inspection
Home inspections are a common area for deals to fall apart. Inspections offer the buyer a chance to know exactly what it is they are purchasing. The inspector’s report can lead the buyer to ask for repairs or monetary concessions at closing. If you can’t compromise with the buyer about the repairs or the concession, depending on the signed agreement the buyer may have the right to walk away from the purchase and receive their earnest money back.
8 Close the transaction
Once all terms of the purchase and sale agreement have been met, move to close the transaction. Schedule a meeting with the buyer, their agent, and the escrow agent. Bring a checkbook, relevant paperwork such as the property title or deed, and photo ID. Sign the paperwork. The escrow agent will release funds and the documents after the closing.
You can sell FSBO. Whether you want to sell your home for cash or want to pay out-of-pocket as little as possible in, make sure you are fully educated about what it will take to successfully close a FSBO transaction. Amanda Howard Sotheby’s International Realty is happy to provide information about the real estate transaction process to guide you in your decision-making.
Click the link for information about our services and to download our,
Free Home Sellers Guide.