Note: this article is intended for those who have decided to sell their own home. If you have not yet decided completely you wish to do this, we have compiled a list of considerations to take into account when making your decision.
You can sell your home yourself without listing it with a real estate agent, but there are many things to be done, which means that you need to do the work of the agent. If you're willing to put in the effort and learn the process that top agents use, your chances of success will increase greatly.
Maintain a business attitude throughout the entire process. Homeowners are often quite emotional about their homes, and it can prevent them from making rational decisions when selling. They reminisce about all of the holiday get-togethers, back yard barbecues, and how the family grew together in the home. Please realize that potential buyers are not interested in, nor effected by your emotional attachments to your home! They are not looking to buy your home, they are looking to buy a house that they can make into their home. You must put your emotions aside and realize that you are going to have to make a dollars and cents business transaction.
This is by far the most important, yet most often misunderstood step. Failure to understand the market and properly price your home is the single biggest factor that will cause it to not sell for top dollar and sit unsold for months on end! To make sure that this doesn't happen to you, you must first focus on two main areas: Current Market Conditions and Your Time Requirements.
There are two basic types types of markets when it comes to real-estate, both of which are direct results of the laws of supply and demand. A Seller's Market exists when there are few homes for sale and large amounts of eager buyers. Conversely, a Buyer's Market exists when there are many homes for sale and few people looking to buy. Of course, many more factors play into your local market, such as interest rates, new home sales, and local economic factors such as zoning changes, large businesses opening or closing, etc.
To properly analyze your current market conditions, you will need to research the homes currently available, under contract, and recently sold in your area. There are several ways to get information on homes that have sold.
One way is to do the research yourself. The sales prices of homes that have sold and closed is public records, so you can go to your county, or city, records office and dig for all of the information. I don t know exactly how long it would take, but don't make any other plans that day!
Another way to research is via title companies. Many title companies will provide you with data on sold homes. Most will do this for free, to entice you to use them for your title insurance policy.
To get the most complete researcg information, give us a call. Within a short time we can have a complete computerized market analysis of your area (including those available for sale, under contract-in escrow, and sold/closed homes, average price per square foot, average days on market, etc.) printed out for you quickly. We would be happy to bring it over for you, with absolutely no obligation, sales pitch, or pressure to list with us.
Once you have the market information on homes in your area, take some time and drive around the area, stopping in front of the homes on your list. Make notes about the appearance and other details of the homes. If any of the available homes are having an open house, take a look inside. Be up front with the owner or agent, and tell them, "We live in the area and are planning to sell our home ourselves. Do you mind if we take a quick look?" This driving around is an important step, because it gets you more familiar with the market, and will help you make a more objective decision on pricing your home.
Next, sit down at the table and review the data and make honest, unbiased comparisons based on criteria such as size, age, bedrooms, bathrooms, pool/spa, basement, garage, view, lot size, other features / upgrades. Start by taking a brief look at the homes that are currently available for sale. The purpose of looking at the available homes is to get a feel for what other people in your area are asking, not to use the information to base your price on. A seller can ask for any price on their home, regardless of actual worth. If you like, you can send us information about your home and we can calculate your property's worth for you. This free service is provided here.
Many of the available homes are priced unrealistically. These prices do not reflect the realities of the market. In fact, professional appraisers can not use available prices at all when appraising a house, only closed sales within the past six months.
Now move on to the pending and closed sales. This is the real bottom line, where the "rubber meets the road". It is the hard reality: what buyers were willing to pay and what sellers were willing to sell for in a free, open market.
Study the closed sales. The first thing you may discover is that the actual sales price of the neighbor's home that sold 2 months ago is less than what they told you when you saw them out in the driveway. Imagine that!
Identify the homes that are similar to yours, ones that are nearly the same size, style, etc. Then look for items that are different like a remodeled kitchen, pool, family room, or oversized lot and make adjustments.
Do not make the mistake of thinking that maintenance items can be considered as improvements that increase value. Things such as a new roof or new heating/cooling unit are really maintenance items. While these items may make your home sell faster, they typically do not add much to the potential asking price of the home. After all, a buyer will expect a home to have a roof that doesn't leak and a properly functioning heating/cooling unit!
As a pricing example, let's say that there are 4 homes similar to yours that have recently sold, priced at (for example) $166,500, $169,900, $179,000, and $183,900. The home at $183,900 has some extra features that yours doesn't, but yours is superior to the one that sold for $166,500. Overall, the two other homes are close to yours. This gives you a current price range of $ 169,900 to $ 179,000. Now all you have to do is pick a price within this range!
Once you determine the proper price range for your home, how quickly you want to sell will dictate whether you price at the lower or higher ends of the price range. This is where your own time requirements come into play. Your own personal situation will have some effect on the price you ask for your home. It is easy to see that if you needed to sell your home within 4 days, you would have to price it lower than if you had 4 months to sell it.
If you were not in a major rush, but still wanted a sale in a reasonable amount of time, you might decide on an asking price of $ 175,000.
If you are still having difficulty determining the proper price for your home, you can contact us (no obligation, of course), use our online form, or hire a fee appraiser, which you can find listed in the phone book.
It is natural for every homeowner to have a certain "pride of ownership" and to think that their home should be worth more than the one down the street. This is where you must be objective, and try to take your emotional attachments to your home out of the situation.
You must be reasonable. Unless you are in a complete seller's market, if you price your home too high it will not sell. It will sit on the market for months on end, getting the reputation of a "problem property"
People will assume that since the home has not sold, there must be something wrong with it. They will start to avoid it like the plague!
Even if you then drop the price, the damage is already done... the stigma is there, and you may need to drop the price even further to entice skeptical buyers.
Improper pricing is the single biggest mistake that sellers make. Don't let this happen to you. Make sure that you set a reasonable price for your home right from the start.
Once you have determined a fair market price for your home, you can calculate your bottom line. This is the amount that you will net (get a check for) after paying all of the expenses associated with selling a home.
Remember, by selling your home yourself, the only cost you avoid is the real estate agent's commission. You will still have to pay all of the other closing costs just like any other seller.
Closing costs vary from area to area and also depend on how each individual contract is structured. The following are items that you may need to deduct from your sales price to determine your net proceeds:
Any first, second, etc. loans, or mortgages. Also, any liens that occurred if you used your home as collateral. Call or write your lender and ask for the amount to pay the loan in full (often not the same as the principal balance).
In many areas it is customary for the seller to pay points on the buyer's loan. This is negotiable, except on certain government loans. One point is equal to one percent of the loan amount (not sales price). For example, if the sales price was $200,000, and the buyer put a 10% down payment of $20,000, the loan amount would be $180,000. One discount point would be $2,000, two points $4,000, etc.
Mortgage interest is generally charged in arrears. This means that when you make your July payment, you are actually paying interest for June. So, if your home sale closes on July 26th, you will still owe interest for 26 days even though you already made your payment on July 15.
Many buyers will ask the seller to pay part or all oftheir closing costs. On some government loans it is required by law that the seller pay some of the costs. These costs can include, but are not limited to: loan application fees, credit report, loan origination fee (usually 1% of the loan amount), loan discount points, title, escrow, funding fees, tax service, mortgage insurance premiums, and impounds for taxes, insurance, and interest.
Escrow companies are disinterested third parties that hold funds, handle paperwork, and make sure that all necessary conditions are met before releasing money or transferring title.
Government percentage of taxes / charges. Transfer fees are often charged by state or local government as a way to increase revenue. They vary widely, and are often based on the sales price.
If the buyer is obtaining new financing for the purchase, the lender will require a professional appraisal on the house. This is another negotiable item, but is often paid by the seller in some areas.
Required on some government loans, and requested by many buyers.
Professional independent inspection services are required by law in some areas and often requested by buyers to make them more confident about the purchase.
Title insurance protects the buyer and lender against issues of improper ownership or transfer. The title insurance company will research the title to make sure there are no liens, judgments, or clouds on the title that would effect the ownership rights.
If the area has a HOA, chances are that there will be a fee to transfer the account from one owner to the next.
Many private and some conventional loans have specific monetary penalties if the loan is paid off prior to a certain date.
This fee may be charged by an escrow company to remove the lien on the title when your existing loan is paid off at closing.
Some government lenders can charge one extra month's interest if you fail to notify them at least 30 days in advance of your intent to pay off the loan.
Loans that are being assumed by the buyer often have an assumption fee charged by the lender.
Depending on the plan, a home warranty covers items in the house (plumbing, electrical, appliances, etc.) for a period of usually one year.
For a list of specific charges, you can contact a title/escrow office, mortgage lender, or a real estate attorney. Of course, I would be happy to provide you with thorough net proceeds analysis at no cost or obligation.
After completing the first two steps in the process, it is entirely possible that you may decide not to sell after all. Perhaps the market values are not what you had thought, and you won't be able to net enough money on the sale to be able to accomplish your next goal.
The important thing is to accept the realities of the market. If the timing isn't right for you, it isn't right!
Properly preparing your home for sale can make the difference between a quick sale at full price, and a home that sits unsold for months... even after several price reductions.
The first order of business is to forget your emotional attachment to your home and look at it through the eyes of a potential buyer. Be impartial, and recognize the weaknesses of your home.
Remember, potential buyers are going to be viewing lots of other homes, and if yours doesn't stand out, it will be much more difficult to sell. Buyers buy what they see. If what they see is dirty, messy, and worn looking, you don't stand a chance.
It's just like if you were going to sell your car. The first thing you would do is clean and "detail" the car inside and out. Your house is no different!
With a mental picture of a model home in your mind, make an "attack list" of items to be completed on your home. It may be a short or long list, depending on the condition of your home, but keep in mind that all your efforts now will pay off big on closing day.
The objective is to make your home appear well maintained, spacious, organized, and clean. Many factors such as how light it is, the colors, sounds and smell, subtly effect the buyer's impression of your home.
Start by walking out to the middle of the street and take a good, focused, look at the overall appearance of the exterior of your home. Good "curb appeal" will make the critical proper first impression. Remember, if a home is unattractive from the outside, buyers won 't bother to see the inside! Here is a quick checklist:
Next move to the inside of your home. Remember, Clean Houses Sell!
If you have lived in your home for a while, by the time you finish with your attack list you will probably have truckloads of stuff to either sell, give away to charity, or take to the dump. Your motto should be "if in doubt, move it out!"
Consider having a huge garage sale. Not only will you reduce the clutter in your home, but you can use the proceeds to pay for some of your touch-ups and repairs. Plus, movers charge by the pound, so you'll save there too!
It can be a lot of work, but it will be worth it. Clean, organized, clutter-free homes are always the first to sell!
Now that your home is ready, it's time to find some interested buyers to show it to. The effort required to attract potential purchasers depends on the current market conditions in your area.
If you are in the midst of a seller's market, where there is a shortage of homes for sale, simply throwing a FOR SALE sign out in the yard can produce a frenzy of activity.
Unfortunately, most markets are nowhere near that good for sellers, so plan on flexible, and long hours. You are competing with all of the other homes for sale, and the competition is often fierce.
The first step in your marketing plan is to put up a for sale sign in the front yard. Before you run down to the comer drug store, keep in mind that a cheap, flimsy looking sign does not convey the quality image that you want. Invest in a nice looking, quality sign that will last longer than the first rain storm.
It should be at least as nice as the ones that the real estate agents use. Call some sign painters and get some bids.
Next, put together a professional looking brochure that communicates all of the features and benefits of your home. Include a nice picture of your home and touch on such items as proximity to schools, shopping, major transportation routes, major employers, and recreation areas.
Also, cover neighborhood amenities, age, appearance, condition, bedrooms, bathrooms, type and style, landscaping, garage, kitchen, family room, laundry, pool/spa, basement, etc.
Don't forget financial information such as the price, down payment, monthly payment, year round utility expenses, property taxes, what items are included in the sale (such as appliances, shelving, etc.), and of course, directions to the house along with your name, address, and phone number.
A representative from a local mortgage company should be willing to provide you with all of the information you'll need regarding loan programs, down payments, interest rates, monthly payments, etc.
With personal computers, desktop publishing is much easier than ever before. If you have access to a computer, you should be able to put together a nice looking brochure. Please, no junky looking flyers!
If you can't do it yourself, sketch out a rough draft, by hand, and take it along with a picture of your home to a quick-print shop. They should be able to fix you up fairly inexpensively.
Once you have your brochures, you need to have a weatherproof information box to put them in next to (or attached to) the yard sign. The box should read: FREE INFO - PLEASE TAKE ONE. Monitor the box and keep it full.
Also pass out the brochures to all of your friends and neighbors, pass them out at area businesses, drop some off at the relocation office of any large employers in the area, and put them up on bulletin boards wherever possible.
Now write a good, enthusiastic sounding ad to run in the newspaper. Try to make your ad stand out from the others. It is important to have an attention-getting headline such as:
Test different ads and see what the responses are. You can try running a different ad each week, or a different one in separate publications.
Focus on the benefits of your home. Don't write a boring ad that sounds like all the others and will get lost in the crowd. Stress items such as views, quiet street, landscaping, master bedroom, kitchen, and family room.
The whole purpose of the ad is to get your phone to ring, this means someone needs to be around to answer it! The biggest complaint that buyers have with For Sale By Owners is that no one answers the phone when they call or they get a child or baby-sitter that is not prepared to handle the call properly.
You are competing against professionals. You need to be home, or utilize a cellular phone, call forwarding, or pager. If a buyer can't get through to you, theyoften just go on to the next ad or call a real estate agent.
Keep a copy of your brochure next to the phone, it can help you stay organized and not miss any features when callers inquire. If callers don't want to set an appointment yet, offer to mail them a brochure.
Also keep a call log handy, so you will know how many calls you are getting from which ads, and to keep track of names and phone numbers.
Look into all possible avenues to market your home. Your area may have a FOR SALE BY OWNER magazine, or cable TV program, etc.
An Open House can help get your home exposed to the market. Get some directional Open House signs and place them at corners leading to your home from major streets, and one in front of your house. Make sure to check local regulations before placing signs. You also may want to run an advertisement in the newspaper, many have separate Open House sections.
I am now going to suggest an option that can add a large amount of exposure to your home and still save you half of the normal commission you would pay an agent.
Before you have a heart attack, I am NOT talking about listing it with an agent. You do not have to use this option, but in most markets it makes a lot of sense. On your sign and in all of your ads, insert the words "Agents Welcome".
When agents call, tell them that you are not listing with an agent, but that you will be happy to pay them a 3% commission if they bring you a buyer that successfully buys your home.
This commission is about the same as an agent would make if they sold another agent's listing, and a majority of homes are sold by an agent other than the listing agent.
This option can generate a lot of additional interest in your home. If an agent does end up selling it, not only will you still save a substantial amount compared to a full commission, but you will have professional assistance along the way, as well.
Once you have attracted interested buyers, it's time to show your home. This is where all your time and effort in preparing your home will really pay off!
Before you set an appointment, make sure that the buyer is looking for what you have. If they need six bedrooms and you only have three, they probably won't be serious about your home.
Also take a few minutes to politely "qualify" the buyer by asking questions about how long they have been on the job, do they own a home currently, have they been "pre-approved" for a loan by a lender, etc. You don't want to waste time showing your home to prospects who can 't afford to buy it.
Also, a few words of caution. People are not always who they seem, and you can never be too careful. One look at the newspaper or evening news is proof enough.
It is recommended that you note the license number of their car ask and ask for identification prior to letting strangers into your home. Serious buyers won't mind, especially when you cheerfully tell them that it is simply a security precaution that was recommended to you.
Stash all small valuables out of sight. Even though you will try to stay with the buyers as they tour your home, you never can watch them completely.
It is probably a wise idea for women to avoid showing the home without someone else present. This is not intended to be sexist, just cautious. You decide for yourself.
To get the most out of every showing, there are certain procedures you should follow, both prior to the buyers arrival and after they come in.
If they are not interested, they will probably politely thank you and head for the door. Don't take it personally, the layout or something else about the house probably just doesn't fit their personal needs.
If the buyers are interested, you will know it. They will stay longer, and ask lots of questions. If they show serious interest, don 't be afraid to suggest that they buy it!
Being familiar with the market conditions and knowing your personal motivation to sell will guide you in the negotiations.
Get a standard real estate purchase contract at the stationary store, and make sure that you are completely familiar with it and how to fill it out. Review it with a real estate attorney if you are not comfortable.
Generally, the buyer will present you with an offer for you to consider. In most states, only written contracts for the purchase of real estate are enforceable, so make sure it is in writing, not merely verbal.
The buyer may not have the proper forms, so always make sure to have several contracts ready to go.
Starting negotiations face to face with the buyer with both of you staring at a blank page can be a bit awkward, but just keep your objectives in mind and forge ahead. Politely but firmly take control of the situation.
This is where things can get a little sticky, and you will need to have done your homework. Having a contract that is not worded properly can put you into a real hornet's nest.
Make sure to spell out every little detail in the contract. A misunderstanding (honest or otherwise), could end up costing you thousands of dollars or even tying your home up for months.
When you are presented with an offer from a buyer, you have three basic options: Accept the offer, reject the offer, or make a counter offer.
Here are some items that you should consider when structuring an offer or deciding how to respond to an offer that is presented to you.
Contingencies may seem like a minor issue, but they can be a major stumbling block. A contingency means that something else must happen in order for the deal to go through.
A purchase may be contingent on the buyer getting approved for financing, selling the home that they already own, getting a favorable inspection report, or any number of other things.
Make the contingencies as specific as possible, and spell out exactly what will happen if the contingency is or isn't met. Also try to make them self-canceling. For example: "If buyer does not object in writing within 14 days from acceptance of this offer, contingency shall he considered removed".
Spending some extra time to make sure that the contract is "clean" can save you enormous headaches down the road!
Once you have a contract mutually agreed upon and signed by all parties, take it with the buyer's earnest deposit to an escrow company or real estate attorney.
Once all of the terms and conditions of the contract are agreed upon by you and the buyer, you will really need to stay on top of things on a daily basis. There are at least a hundred things that can go wrong and foul up the sale.
You will probably be dealing with a mortgage company, title company, escrow company, appraiser, and inspector, among others. Make certain that the buyer's deposit check clears the bank, that their credit report and other financial information is O.K., and that all deadlines and contingencies are met.
Make sure that everything is in order before you start loading things into the moving truck. You don't want to have to put the house back on the market after you have moved out! Plus, once you move out, the buyer has a lot more leverage to get you to alter the contract in their favor.
Don't forget the little details like transferring the utilities out of your name, and change of address for U.S. mail and newspapers.
There you have it. If you have taken the time and energy to handle your saleproperly, you will be rewarded with a nice proceeds check from the escrow company or attorneys office!
We hope you have found this report to be a valuable source of information to aid you in selling your home yourself. If you follow the tips and recommendations outlined here, you will be way ahead of most others attempting to sell their homes.
Every home sale is unique, so if you have any questions that we can help you with, please don't hesitate to contact us. Any time you call us you can count on knowledgeable assistance without any obligation, pressure, gimmicks, or sales pitches.
Good luck and happy selling.
This information is being provided to you as a reference and a free service from Redfearn Group.
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