Thinking of selling your home yourself? Here is some information that will help sellers decide if trying For Sale By Owner (FSBO) or hiring a real estate agent is the best decision for their situation. According to the National Association of Realtors, only 8% of homes sold in 2015 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. According to NAR stats from 2013, 92% of buyers that purchased homes in 2013 used the internet in their search. What websites will your home be marketed on?
- Pricing Your Home. 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 2013, 88% 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 may 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?
- Showings. Normal showing times are daily from 8am to 8pm. 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 2009 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 our 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.
Need help finding a stager, photographer, contractor, lender, title company, etc? Check our Resources page!
2013 Stats for FSBOs:
Only 9% of homes sold were sold FSBO in 2013
40% of the homes sold FSBO sold to someone the seller knew
The average FSBO home sold for $184,000 compared to the average agent-sold home price of $230,000