Selling your home without the help of a real estate agent can be tricky, and most home sellers can benefit from the experience and expertise offered by good Realtor. But a do-it-yourself home sale isn’t impossible.
Perhaps you’re planning to sell your home to a friend, neighbor, or relative, and you’d like to avoid the hassle of involving a real estate agent in the deal.
Maybe you don’t have a buyer just yet, but you know that you’ve got a great home in a desirable neighborhood. You’re pretty sure your home should sell without too much trouble, and you’d like to avoid paying the commission fee required to have a Realtor help you sell your place.
Read on for tips on how to sell your own home correctly, and how to know if going ‘For Sale By Owner‘ is right for you.
Is ‘For Sale By Owner’ a Good Idea?
The National Association of Realtors notes that only about 8% of homes sold in the last three years were FSBOs—that’s real estate lingo for For Sale By Owner—and that for those successful FSBO home sales, the seller already had a buyer lined up before the home went ‘on the market’ about half the time.
For most prospective home sellers, the big draw of the FSBO home sale is that if you sell the home yourself, you can avoid paying a real estate agent’s commission. The average commission on a home sale is about 6%: if you’re selling your place for $200,000, that’s $12,000, which is nothing to sneeze at.
That said, not hiring a real estate agent may not save as much money as you might hope. If a buyer comes in with their own real estate agent, you’ll still need to pay about 3% commission to the buyer’s agent. (You can specify that you don’t want to work with buyers represented by agents, but then, you’re cutting out a good number of potential buyers.)
Of course, any savings you might have realized disappear if you price your home incorrectly, if you run into any expensive legal snags along the way, or if you are unable to sell the place on your own.
(Sounds like too much trouble? Check out our thoughts on picking the right real estate agent.)
Ready to take the plunge? Here are some tips on how to sell your own home without getting into hot water.
Step 1: Pricing Your Home Correctly
To come up with a good price for your home, you’ll want to start by doing research on other comparable homes in your area. Look at homes similar to your own that are currently for sale, and see what you can find about other, similar homes that have recently sold. Each real estate market is different, but generally, more rooms, more square footage, recently updated interiors, better local schools, or better overall condition can give your home the advantage. Do your best to try to evaluate your home objectively.
Price your home too high, and you risk being unable to find a buyer. Go too low, and you’ll leave money on the table. It can be tempting to price your home on the high side to leave room to come down in a negotiation, but many buyers won’t bother with a home that appears overpriced.
You might consider hiring an appraiser to help determine your home’s current value. Really, it’s not a terrible idea to get an appraiser into your home early in the process. If you have any serious structural concerns or needed repairs that could impact the selling price of your home, it’ll be better to know that before a buyer’s appraiser finds issues down the road. If you do hire an appraiser, be clear that you’re looking for a selling price value of your home.
Secret pro tip: many Realtors are willing to create a competitive market analysis report on your home and help you come up with a listing price for free, even if you tell them upfront that you aren’t interested in hiring a real estate agent for the sale. Realtors know that homeowners sometimes change their mind and decide to go with a real estate agent for the sale after all. They’d be happy to be the first agent you think of, should you decide you do need one.
Step 2: Getting Your Home Ready to Sell
Before you officially list your home for sale, you’ll want to put in at least a little bit of effort to spruce the place up for potential buyers.
You might not spend a lot of time looking at your home from the outside, but for buyers, curb appeal is a big deal. Consider doing some landscaping to spruce the place up. (You can check out our landscaping tips here.) At the minimum, make sure your home looks well-kept and inviting. Sweep the porch, clean dirty windows, fix the broken screen door, and get that abandoned tricycle out of the yard.
Clutter can make your home look smaller than it is, and make potential buyers worry that your home lacks sufficient storage space for their belongings. Moving to a new place is a great opportunity to clear out some junk you no longer need, anyway.
Everything looks better with a fresh coat of paint. If you can, consider repainting the interior of your home. If you currently have bright colors on the walls, it may be wise to go with more neutral tones before you invite potential buyers in. Your goal is to help buyers imagine themselves living their lives in your home: bold colors, printed wallpaper, or other personal touches can be distracting to some would-be buyers.
Step 3: Finding a Buyer
If you already know you’re selling your house to your cousin Terry, you can skip ahead to the next step.
Otherwise, it’s important to know that most buyers begin their search for a potential new home on the internet. And that means to get your home in front of buyers, you’ll want your home listed on the internet, too.
When you work with a real estate agent, your home is listed in your area’s Multiple Listing Service (MLS). This lets local Realtors know that your home is for sale, which they in turn can pass along to their clients. A quick Google search for ‘flat fee MLS listing’ should turn up a service that will allow you to list your home in your local MLS without a Realtor. Other real estate listing websites like Zillow and Trulia also allow FSBO sellers to list properties.
Depending on your area, it may also be worth taking out an ad in a local real estate publication or newspaper. Word of mouth never hurts, and sharing with friends and family on social networks like Facebook can turn up some potential leads.
Don’t forget about a yard sign or two. You can get a ‘For Sale by Owner’ sign at most hardware stores, with room to add a phone number for interested buyers. But you might consider heading to your local print shop for a custom sign: most print shops will help you with the design, and while a more professional-looking sign shouldn’t cost a ton of money, it can help assure would-be buyers that you know what you’re doing.
Remember too, that without a real estate agent to handle showing your home, you’ll need to be prepared to let potential buyers into your home to look the place over. You can host an open house, if you’d like, though you’ll need to be prepared to schedule additional viewings with interested buyers, too.
Step 4: Accepting an Offer and Closing the Deal
Assuming everything goes well, you should receive an offer, or potentially a few offer for you your home.
Selling your home is an emotional moment, but do your best to evaluate offers rationally. Negotiating doesn’t come easy to most of us, but fair and reasonable negotiating is a critical skill for selling your home.
When it comes to closing the deal, the help of a real estate attorney can be invaluable, especially if you don’t have an experienced real estate agent to help you prepare the contract.
State and local laws dictate what must appear in a real estate purchase contract, including any required disclosures from the seller. You can wind up in court if you try to sell property without following all of the local rules and regulations. An attorney can help you prepare a contract that meets all the appropriate legal standards and protects you from liability in case something goes wrong—like if an inspector finds lead paint in your home, or if your buyer’s mortgage falls through at the last minute.
A real estate attorney can also advise you on other professionals whose input you’ll need before you can finalize the sale of your home. You’ll likely need to pay a title company for a title search and find an escrow company to hold any earnest money from the buyer, at the minimum.
The closing process varies a little depending on the part of the country you live in. But in general, you’ll want to stay on top of deadlines, keep lines of communication with your buyer’s representatives open.
If everything goes according to plan, you’ll be signing the last document and handing over the keys to your now-former home before you know it.
(Need some ideas for finding your next home? Check out our house hunter’s guide here.)