Sunday, February 13, 2011 -
By Sheree R. Curry
Special to Relocation.com
Ever wonder if you could sell your home yourself, without an agent?
For most sellers, the cost savings of a for sale by owner (or FSBO) is tempting, but there's more to an FSBO than saving agent fees. Relocation.com spoke to some sellers who went FSBO about what it takes to go it alone – and the pros and cons with this approach.
1) Save on commissions. The primary motivation for FSBOs is to save on the five to six percent commission the real estate agents demand (about three percent to the buyer's agent and three percent to the selling or listing agent is typical). On a $300,000 home, commissions can be about $18,000, and about $30,000 for a $500,000 home. If an agent can deliver a contracted buyer in about 30 days, that's about $500 to $1,000 a day you paid for the privilege of having a listing agent. That kind of moolah is enough to sell some home-sellers on selling their own home.
2) Be Available. When people take on a side business, friends might joke, "Don't quit your day job." Well, to have the time to show your home properly, you might just have to quit your day job, at least temporarily. Showing homes is time-consuming if you want to reach the maximum number of potential buyers.
Buyers go house-hunting before work, on their lunch hour, after work and all hours in between. Sure, you can say you are only doing showings between 6 p.m. and 9 p.m. on weekdays and all day on the weekends, but what if while waiting for you to be available, the potential buyer goes off and finds another home they like? Also, you need to be available to return phone calls or e-mails promptly to anyone with inquiries.
Buyers can be turned off if they don't hear back for 48 or more hours; some won't even leave messages if they don't reach a live person when they call.
3) Use well designed marketing materials. Of course you know you need to market your home, but remember you're competing against agents who are professional marketers. Take some tips from the pros and provide potential buyers with a detailed brochure about your home, complete with high-quality photo images. And in all marketing materials provide a website URL where buyers can go for more information. You're not design-savvy? Fork over some money to pay a seasoned graphic designer to layout your brochures and website. The cost would still be less than paying an agent's fees.
Also, the Internet has made it easier than ever to get your home in front of potential buyers. Check out sites like ForSaleByOwner.com, FSBO.com and even Craigslist.com
4) Know your competition. Take time attending open houses about three months before you're ready to list, and keep going periodically for the duration that your home is up for sale. Looking at other homes and how they're marketed will give you a good idea of how the other homes compare to yours. You can even approach other real estate agents about obtaining a list of sold and active comparables and perhaps even give you an idea of how you should price your home; they might do so because they hope you'll recommend them to a friend or even use them if you grow tired of being an FSBO.
5) Offer incentives. Again, you're competing with the marketing muscle of a Coldwell Banker or Re/Max and even homebuilders. Buyers will find them to be more reliable about disclosures than they'll find you.
Here are some incentives you can offer to put them at ease or to simply make your home appear to be a better deal.
- Pay for a home warranty that will cover repairs on major appliances for a year.
- If you purchased a website domain with YourAddressHere.com, offer to transfer over ownership of it to the buyer upon sale -- after all, you will not need it anymore.
- Offer a utility cost report and a year of paid utilities. Provide potential buyers with a list of what each utility costs you per month, or on average each season, and then offer to pay one year of utilities for the lucky buyer by paying the companies in advance. The cost will still be less than any commissions you'd have to pay – and even if you go with an agent, you might have throw in similar types of incentives.
And of course, you could always offer to split the commission-or in effect lower the sales price-based on what you would have paid a real estate agent.
6) Don't do the paperwork yourself. There are stacks and stacks of forms involved to close on a home, from the title insurance to escrow accounts. Most FSBO sellers say this is above their head and most buyers aren't willing to trust their own knowledge, let alone yours, in this area. Offer to provide (and pay for) a real estate attorney or a real estate agent to handle the paperwork, and stipulate that you will do so in your marketing materials. Many real estate agents or attorneys will provide this service for a flat fee or on an hourly basis.
Steve Sultanoff, a psychologist in Irvine, California who sold as an FSBO his $500,000 home for asking price in 10 days, hired a real estate agent for a flat fee of $1,000 just to handle the closing. He says buying and selling a home is part psychology. "When people are looking to buy from a private party, the buyer is worried ... 'What could go wrong?' 'How will I get in trouble?' "Your job as the seller is to alleviate those fears and make the buyer feel more secure."