For sale by owner is a home selling approach that can either be a bonus or a headache. You've probably heard the old saying that a lawyer who represents himself has a fool for a client, and without proper preparation, the same can be said about the homeowner who serves as her own real estate agent. Saving the dollars you would spend on an agent's commission may sound appealing, but selling homes without an agent still has its costs, and its risks.
In the present inventory-heavy housing market, you can't afford not to be honest with yourself about the money and time you're willing to spend on marketing, selling and closing, and your ability to successfully represent yourself and your home.
Before you attempt for sale by owner, here's an overview of Sales 101 to help you weigh your options.
There's much more to marketing your property than simply sticking a For Sale sign on the front lawn. You'll need detailed, descriptive fact sheets to accompany that sign and to post elsewhere, advertising online and local newspapers and real estate circulars, and access to other promotional tools that will reach your target buyer. One thing's for sure: this isn't anything like selling your old set of golf clubs. It takes savvy to promote your home's best assets in a sea of competition, and commitment to stay on task in unpredictable circumstances. It also takes money, so, just as the pros do, you'll need to add home marketing costs to your monthly budget if you're doing for sale by owner.
Accessibility for the sale. The best time to sell a home is when the buyer is in the mood to buy, which may or may not suit your personal plans and schedule. It's possible to designate show days and times, but you really need to be flexible in order to welcome opportunity when it literally comes knocking. Remember, you're a salesperson now, and you're up against many other homes on the market at the same time.
Touring the digs. Also consider your comfort level with actually showing your home to potential buyers. As excited as you may be over the move you and your family are making, your current abode has a lot of memories, sentiment, and life experience tied into it--all things that have to stay out of the conversation during a sales pitch. You may be selling a home, but the buyer is shopping for a property, and the more objective their tour guide, the better.
Paperwork, paperwork, paperwork. The sale of a home involves an important array of documentation, from contracts to disclosure forms, and you'll be in charge of sourcing and assembling every last bit of it. To avoid for sale by owner pitfalls, you may employ the services of a real estate attorney to help clarify complicated jargon and processes, interpret local and state laws involved in the transaction, or handle the closing process. Regardless of the assistance you get, you must have a clear understanding of all requirements to properly organize and manage the paperwork process.
Passing inspection. Before putting your home on the market or even thinking about an asking price, it's wise to have your home evaluated by a professional home inspector. He or she will look into every structural nook and cranny to determine developing issues as well as existing problems to be addressed, all of which impact your preparation of the home for sale and the parameters of the sales contract. Also be aware that just about all home purchase contracts include an inspection contingency clause, allowing the buyer to bring their own home inspector in to evaluate the structure before the sale is final. Conducting your own home inspection early in the process is both important for your own preparation and a way to prevent surprises at closing time. For more information on home inspections, check out our Home Inspection Survival Guide.
Writing the price tag. You may have big dreams about the profits you'll reap by selling on your own, but before they come true, you've got to set an asking price that's based on a number of factors, including reality. You'll need to research sales data for comparable homes in your area, and may also require a review by an independent real estate appraiser. Also consider a dollar range in which you're willing to negotiate, keeping in mind that the commission an agent would receive should be incorporated into the total price (no discounts for the buyer just because you're the agent here).
Setting the stage. Finally, you'll need to spend time primping your property for up-close attention from potential buyers. This requires looking at indoor and outdoor spaces through their eyes and doing the kind of sprucing and simplifying that will allow them to visualize themselves being completely at home. Removing clutter and tending to landscaping are two important starting points, but professional real estate agents typically go several steps further by employing home stagers to perform cosmetic repairs, bring in fresh paint and carpeting, and arrange a furnishing scheme that is neutral yet welcoming. If you plan to equal a professional's sales success, expect to invest both time and money in staging before opening your door to browsing buyers. See "Stage Your Home for Sale" for more planning details.
Still think that for sale by owner is a snap? Considering all there is to do and know, it's easy to understand why professional agents earn the commissions they do selling homes. Training, experience, and a host of resources are the valuable contributions they bring to the sales table, and whether you involve their help or go it alone, you really do get what you pay for.
Finally, in addition to the monetary costs of the sales process, consider the value of your own time. You'll have to invest a lot of it if you decide to be your own agent. Also consider the costs of making a mistake. Inexperience can lead to errors, which can lead to lawsuits when for sale by owner transactions go astray.