For Sale by Owner: it’s an appealing way to sell. For a $200,000 home, you could save up to $14,000 in commission fees by doing it yourself! However, it’s not as easy as putting up a for sale sign and receiving a big check; you have to do the work that a real estate agent would have done for you. Here’s what you’ll have to take care of:
Asking price: Real estate agents will generally help you determine an asking price for your home. Without an agent, the responsibility for this important figure falls on you. You don’t want to set an unreasonably high or tragically low asking price. For about $200, you can hire an independent appraiser to determine your home’s market value. Before you set the asking price, take into account lawyer fees, advertising and other selling expenses. In a strong market with low interest rates, the asking price can be 10 to 15 percent above what the appraiser thinks it will go for. In a weak market, price at or below the appraisal. Decide ahead of time how much, if at all, you’re willing to negotiate the asking price to make a sale.
Advertising: Multiple Listing Services (MLS) are a great way to get exposure for your property. Unfortunately, to list with an MLS, you must be a licensed agent with membership in the MLS system. To get around this requirement, you can contact online services or brokers that will list your home for a flat fee. Another option is to list your home with services like BuyOwner that conduct a matching service between sellers and buyers.
Pre-qualifying buyers: Before showing your home, a real estate agent will pre-qualify buyers to make sure they’re worth the effort. To save yourself time and hassle, you should do the same. You don’t want to tie up the sale of your home waiting for a buyer to locate financing that’s out of their range. Find out if your prospective buyer has a mortgage lined up. If your buyer doesn’t have financing yet, find out their income and debt to determine the likelihood that they’ll be able to buy in your price range. Use a pre-qualification calculator to make sure you get it right.
Disclosures: Disclosures are known issues that may affect the price or sale of the home, like leaky pipes or a death on the property. Real estate agents are well versed in their state’s requirements for property disclosures. When selling your own home, it can be tricky to figure out the law regarding this information. To determine exactly what you have to disclose to buyers, contact your state’s real estate commission or hire a lawyer.
Negotiating: Traditionally, agents representing the seller and buyer work together to negotiate a sale price and contract. In a For Sale by Owner situation, you will have to do this negotiation on your own. You may find yourself up against a seasoned professional in the buyer’s agent or an unrepresented buyer that is difficult to work with. Whatever the case, you must brush up your skills in the art of negotiation. Understand the components of a sales contract, earnest money and and all special clauses that may get thrown your way. Consider hiring a real estate lawyer to look over your contract before you sign.