Tips on How to Sell Your House For Sale By Owner
Have you been wondering how to sell your house on your own? Here is some information that will help you decide if trying For Sale By Owner (FSBO) or hiring a real estate agent is the best decision for your situation. According to the National Association of Realtors, only 10% of homes sold a couple years ago were sold FSBO.
If you decide to go FSBO, there are some things you’ll need to think about up front:
- Preparing Your Home. Have you consulted with a professional stager about any changes your home may need to be appealing to buyers? Do you have a professional photographer ready to take your advertising photographs?
- Advertising. Will you be posting on a Multiple Listing Service (MLS) site or a FSBO website? Do you have posts or ads ready for social media? Do you have yard signs? Will you be hosting an open house? What is your marketing plan?
- Pricing Your Home. NAR tells us that 16% of FSBO sellers have a tough time pricing their home accurately. What data are you using to price your home? Appraisers and agents are looking at the location, condition and prices of similar homes that are currently under contract and those that have sold in the past 6 months. What is your home worth? Check here!
- Buyer Agents. Will you cooperate with a buyer’s agent to sell your home? According to NAR stats from 2022, 86% of buyers used a real estate agent to purchase their home. If a buyer purchases a home advertised in the MLS system, their commission is already guaranteed to be paid by the seller. Most of the eligible buyers for your home have signed an agreement with a buyer’s agent which says that if the seller is not paying the 3% buyer’s agent commission that the buyer will be responsible for compensating their agent.
- Pre-Qualifying Buyers. If you are showing your home to potential buyers who do not have an agent representing them, you’ll want to make sure that they are qualified to purchase a home before scheduling a showing. Do you have a lender that you can send potential buyers to for pre-approval? UpNest tells us that “Between 2020 and 2021, the number of mortgage denials increased significantly from 22 percent to 34 percent. This reflects the percentage of buyers who were denied a mortgage at least once during the application process.” This is definitely a risk you’ll have to take if selling by owner.
- Showings. Normal showing times are daily from 8 a.m. to 8 p.m. How will you allow buyers to view your home on the days and times that work best for them?
- Contracts. Have you spoken with a real estate attorney about the sales contract forms that you should use when you find a buyer? Do you know that sellers are required to disclose material facts (examples: the AC coil that failed in 2007 that you had repaired, the basement leak in 2019 and what steps you took to repair it, the insurance claim for the hail damage on your roof last spring, etc.) about their home to buyers?
- Title. Sellers in the Kansas City area typically provide an Owner’s Title Policy for their buyers. Have you spoken with title companies about their services and fees? Title companies or listing brokers usually hold a buyer’s earnest money during a transaction as well.
- Inspections. After you come to an initial agreement on price and terms with your buyer, the buyer has the opportunity to perform inspections on the home to check out the structural and mechanical aspects of the home. They will probably have a termite inspection done and they also may test the home for radon. The buyer may choose to renegotiate on price or repairs after performing inspections. Do you have contractors that can help you make repairs?
- Appraisals. Unless you find a cash buyer, the buyer’s lender will need to order an appraisal to make sure the home is worth the contract price (or the buyer may renegotiate the sales price or cancel out of the contract). If the buyer is getting an FHA or VA loan, the appraiser will also be looking for potential safety and structural concerns (examples may include loose railings, foundation cracks, outdated electrical systems, peeling paint, etc). If any issues are noted on the appraisal, the buyer won’t be able to purchase the home until the issues are repaired.
If you’re wanting to know how to sell your house FSBO, it may be because you’re thinking you’ll save money on commission costs without a realtor. However, the amount you’ll lose on a FSBO sale may outweigh your fee savings. (In 2021, “the typical FSBO home sold for $225,000 compared to $330,000 for agent-assisted home sales.” – NAR)
If you’re convinced FSBO is for you, and you need help finding a stager, photographer, contractor, lender, title company, etc., check our Resources page!