Selling your home can be a costly endeavor - Between commissions and closing costs, homeowners can end up paying another 10 percent or more of their home's sale price.
It's no wonder some savvy homeowners are turning to FSBO (pronounced "fizz-bow"), bypassing the middleman and selling their homes without a real estate agent, thus saving the standard six percent commission. On a $ 250,000 home, that's a savings of $ 15,000.
For sale by owner (FSBO) is when a homeowner prepares, lists and sells their home without the help of a professional realtor; Homeowners are in charge throughout the entire process, from deep cleaning and staging, to listing preparation, marketing, then submitting and negotiating offers.
FSBOs accounted for 11 percent of home sales in 2018, according to the National Association of Realtors. The typical FSBO home sold for $ 200,000 compared to $ 280,000 for agent-assisted homes, but experts point out that it is not because FSBOs are receiving lower-priced offers. Instead, they are likely to sell smaller, more affordable homes compared to homes sold by agents.
Homeowners who choose the FSBO style say that selling their homes without an agent saves them time and money, and that they are more familiar with their home and all of its selling functions.
But FSBO comes with a good chunk of work too, especially for homeowners unfamiliar with the real estate market and the complexities of marketing and closing. Like any DIY project, it takes a lot of time and effort from the owners - you are the project manager.
If you are thinking of selling your home through FSBO, here is everything you need to know.
How to Price Your Home
Getting the price right on your home is one of the most difficult tasks for FSBO sellers, according to the NAR. It found that 19 percent of FSBO salespeople considered this task the most difficult.
While realtors can understand the housing market much better than homeowners, FSBO sellers can make up for it by doing their homework before deciding how to properly price your home.
Real estate agents rely on a Comparative Market Analysis Report, or “offset,” which is a comprehensive look at how much similar homes have recently sold in your neighborhood. You can gather this information by looking at recent sales and listings in your area.
Recent sellers typically sold their homes for an average of 99 percent of the listing price, and 23 percent reported having lowered the sales price at least once, according to NAR estimates. FSBO sellers need to find that sweet spot. By setting a price too high, you can scare off buyers. But if it is too low, buyers may think something is wrong or that it is pushing for a bidding war.
Home sellers can also consult online home value estimators or automated valuation models to calculate how much their home is worth. This will be based on your zip code and your home specifications, such as square footage, number of bedrooms, and age.
Finally, the most accurate way to price your home is to appraise it. An appraiser should charge around $ 300 to $ 500, but will take a tour of your home, evaluate compensation reports, and look for similarly priced homes in the neighborhood and give you a fair and unbiased value appraisal.
When buyers make an offer, your mortgage lenders will still hire an appraiser to make sure the price is reasonable and your loan is a safe investment.
FSBO home sellers must be objective, just like a real estate agent, when pricing their home. While you may be caught up in nostalgia, shoppers are looking for a blank slate and a good deal.
Make Your Home Worth Selling
Another 13 percent of FSBO sellers said preparing and arranging the home for sale was another difficult task. Whether you hire an agent or not, the onus is on the owner to roll up their sleeves and thoroughly clean, repair, and organize their home.
The only difference is that agents can take a tour and recommend repainting, updating kitchen cabinets, or adding an exterior curb to your front yard. Homeowners can do the same by taking detailed notes on each room, zeroing out the improvements needed to renovate the home.
FSBO sellers are likely to search for listings online while shopping for a new home. If you do the same, you will know first-hand what attracts home buyers.
Take the time to give your home a deep cleaning and be sure to tidy it up. Also make repairs to leaky faucets and creaky doors.
If you resign from an agent, you can also pay for a pre-listing inspection. These home inspections are optional, but they provide invaluable insight into how your home will fare on a subsequent official inspection. Your appraiser can also spot problem areas that need to be fixed before listing them.
Hire Professionals for Photos and Staging
Again, whether you work with an agent or not, homeowners should hire professional photographers and set designers. This is a step that FSBO sellers shouldn't skimp on, and one that agents often encourage home sellers to take.
Prospective home buyers are looking at listings online before visiting homes or scheduling a private viewing. Fifty percent of home buyers found their new homes online, according to the NAR. That is why a polished and organized home with high quality photos are crucial.
Agents can have their photographers and set designers, but FSBO salespeople can request recommendations or check photographers' work and reviews online before hiring one.
Before your photoshoot, an organizer can elevate the look of your home with furniture, statement art, or mirrors to help make the space look like a potential buyer's dream home. Make sure you have stored your personal items so your home looks like a move-in-ready showroom. Your photographer will then take high-quality photos of each room and even stitch the images together to create a 360 virtual tour or video.
How to List and Market Your Home Without an Agent
Marketing and listing your home is another critical step when following the FSBO path.
While listing can be easy for real estate agents, FSBO sellers will need to study listings to see how they are structured, how to list your home's specifications, and what features need attention.
Realtors prepare listings for their clients and then share the listing on MLS, the multi-listing database. FSBO sellers will need to ask a real estate agent to include your listing with professional photos for you at a cost between $ 300 and $ 500. That is still much cheaper than paying an agent's real estate commissions. Homeowners can also share their ad on FSBO websites, including ForSaleByOwner.com and HomeLister.
Real estate agents often embark on a marketing strategy, from promoting their ad to potential home buyers, running a social media campaign, or even buying old newspaper ads and sending out neighborhood flyers.
You can also create a marketing strategy: NAR says 31 percent of FSBO salespeople used a yard sign, 24 percent held an open house, 20 percent used the MLS website, and 13 percent bought classified ads online. Another 20 percent went online, spreading the word about their home for sale to friends, co-workers, relatives and neighbors, 11 percent shared their list on Facebook, Twitter, and Instagram, and four percent sent flyers. by mail. A combination of these tactics can help you market your home to potential buyers. You never know who might be interested.
If FSBO sellers have the time and skills, they can even create a website for your home, including professional photos and videos, along with your specs, design, and contact information. Resources like Wix or WordPress can help users create a polished website for a reasonable cost.
Showing your Home
FSBO sellers need to be flexible when setting up tours and showing their home. Having enough time to dedicate to all aspects of the sale accounted for five percent of the difficulties for FSBO sellers, according to the NAR. Another seven percent said selling their property within the planned time frame was another hurdle.
Typically, real estate agents answer phone calls and emails about their client list, schedule appointments, and then come to your home to guide you through the property. When you are the seller of FSBO, all of these responsibilities fall on you.
You are also the expert in your home, so you know how to show your best attributes and you can answer any questions about your property. He also knows the neighborhood, so he can quickly answer questions about services and give directions.
Agents have their network to show you their home. They may be less inclined to show their FSBO listing to clients because there is no guaranteed commission. You can try to alleviate this hurdle by offering a two to three percent commission to the buyer's agent to help make your listing more visible. It's still less than what you would have paid if you had hired an agent.
Once the offers start rolling in, it's your job as an FSBO salesperson to navigate the negotiation process and pick the best offer on the table.
Real estate agents are a godsend during this stage because they understand the minute details involved and can negotiate on your behalf to secure a better price. But homeowners can get the job done if they understand what an offer entails, including closing and move-in dates, contingencies, and the home inspection report.
FSBO sellers should know that the highest bid is not always the best option. Some offers may have qualifications. Perhaps a buyer will only buy the home if their current home is sold first, or if they qualify for a loan. Agents usually help you see the strength of each offer, but you can also examine the fine print.
Don't shy away from negotiating as a FBSO seller - buyers sometimes test the waters to see how receptive you are to lowering the asking price. You can always make a counter offer. Experts suggest that FSBO sellers face lower losses because buyers know that sellers are doing the work themselves to avoid paying fees.
FSBO sellers can also protect their backs by including a "kick-out clause" in the deal. This allows sellers to keep showing their home and accept another offer if it comes without as many warnings.
Prepare for Paperwork
One of the final but most arduous steps for FSBO sellers and agent-dependent homeowners alike is preparing for the closing and completing the paperwork.
FSBO vendors must pay close attention to federal and state laws. You will need to assemble an original sales contract with the purchase price, title, proof of ownership, homeowners insurance, mortgage, and financing documents. You may need your tax records, your appraisal, and any receipts for major home renovations and warranties.
There are several ways FSBO sellers can navigate through the paperwork. For starters, there are cheap online services and real estate attorneys who help with contract drafting. Some websites may charge you around $ 500 for a state real estate buying guide.
Another option is to hire an agent or attorney to act as transaction brokers, which means they make sure everything runs legally. You can check with real estate offices to see if their staff has an experienced transaction agent who can help you.
Without the professional help of an agent or attorney, the onus is on FSBO vendors to ensure they are drafting contracts correctly. If this step is not followed, the sellers could end up with a potential lawsuit or the buyers could walk away from the deal without any repercussions.
When FSBO Makes Sense
Now that you've taken a step-by-step look at what FSBO entails, you can decide if you have the time, resources, and patience to sell your home without an agent.
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