Got
a Hot House to Sell?
You may be able to sell it without an agent
By Jeremy Vesbach
When my wife and
I were about to sell our home in Southwest Portland a few months ago,
we decided that before we hired a realtor, we would try for a few
weeks to sell the house ourselves. It cost us about $150 to buy several
“For Sale by Owner” (FSBO) signs and advertise in the Oregonian
classifieds for four consecutive Sundays. And $150, we felt, was worth
risking to possibly save ourselves $10,000 (which is the amount we
would have to pay in real estate commissions).
Most attempts
at home sales by an owner fail. My wife and I were well aware –
before we purchased our FSBO signs – that statistics predict
we’d eventually throw our signs away and hire a realtor to sell
our house. If you are thinking of selling your house without a realtor,
the first thing to know is that there’s no shame in hiring a
realtor.
In fact,
the first step in selling your house is to interview several realtors
– even if you plan not to use them. Any good realtor will be
happy to inspect your home, prepare a written comparative market analysis,
and tell you how much they believe they could sell your house –
all free of charge, because any good realtor knows there’s a
good chance you’ll call back in a month or two.
Most FSBOs (pronounced
fizbo among the pro real estate crowd) have several factors working
against them. It’s not possible to make all of these disadvantages
go away, but it’s not hard to vastly improve the odds of finding
a buyer on your own – if you know how to go about it.
People tend
to overprice their own homes. I believe this is part pride and part
hope to snag the rare sucker. By interviewing several realtors and
asking for written comparative market analyses, you can easily avoid
overpricing or underpricing your home.
Decreased exposure.
Most buyers work with a realtor, and few realtors bother to check
the classifieds for FSBOs. If your house is not on the MLS (multiple
listing service) you simply won’t have as many potential buyers
see your home. If you have an extremely desirable house, however,
you might not need the MLS. Also, some real estate firms provide a
barebones service: for a sales commission of around 1% the firm will
list your house on the MLS, but provide few additional services.
Fear. Many potential
buyers are simply fearful of making such a large investment without
the pros in the room. Two pieces of advice here:
Many FSBO ads
contain the phrase “no realtors please.” There is no reason
for this. Sure, an offer made through a broker will cost you about
3%. So what? Tell potential buyers with agents that you do “courtesy
to broker” (meaning you will consider an offer made through a
real estate agent) – just remind the potential buyer that any
offer made through a realtor is obviously 3% less attractive to you.
Do your homework,
or don’t bother going FSBO. Some realtors will try to scare homeowners
away from going FSBO by referring to the “maze of legal paperwork.”
There’s no maze, just necessary components – but you will
need to do a little research. If you decide to show your own house
you’ll be answering a lot of questions – about the structure,
about plumbing, about paperwork. The best way to allay fear is to
know most of the answers to these questions.
What Is FSBOing?
The way I look at it FSBOing is a little like fishing. For some people,
it’s enjoyable. Not everyone enjoys touring strangers through
their home for four solid hours on a Sunday afternoon, but my wife
and I loved it. We’d put a lot of work into the house –
and it was a joy to show off. Another way FSBOing resembles fishing
is that there is a “school” of hungry buyers out there watching
the newspaper ads ready to snatch up hot houses (and the school is
large at the moment due to the low interest rates). If you’ve
got a hot house, and want to do the work yourself, it doesn’t
hurt to throw an ad in the newspaper and see what bites. The third
(and final) way that FSBOing is similar to fishing (I promise to drop
the fishing comparisons after this sentence) is that if you don’t
catch anything – if you don’t find a buyer – that’s
just the way it goes. Hopefully you still had fun trying. Now go hire
the best realtor you interviewed before you put the house up for sale.
My wife and I
didn’t have to hire a realtor. We had a beautiful house in a
nice neighborhood and had two offers in by the end of our first four-hour
open house. One of the offers was a few thousand dollars less than
we were asking, and the other offer was at our asking price. The buyer
was able to obtain financing and close the deal in a matter of weeks.
The buyer felt that he got a great deal, we felt that we got a great
deal – and there wasn’t one bump in the whole process.
Is FSBOing
for you?
Ask yourself a few questions:
1. Will you enjoy touring all kinds of people around your house and
answering pointed questions?
2. Do you have a desirable house?
3. Most people want a good neighborhood and a house that is clean,
structurally solid, and move-in ready. In other words, if your house
is perfect for one person in 100, you probably want to hire a realtor
to find that person. If your house is perfect for one person in five,
you have a good chance going it alone.
4. Are you prepared to do the homework?
The idea that you will “save” the real estate commission
is a bit misguided. You’ll be earning it.
How to sell
without an agent
If you decide to sell it yourself, the following pointers will help.
Obtain a professional
home inspection. This is a good idea whether or not you use a realtor.
Any buyer with an ounce of sense will not close the deal until completing
a thorough, professional inspection of your home. You can head off
unexpected surprises (such as the buyer backing out of the deal halfway
through) by investing a few hundred dollars in a home inspection before
you sell. This way you can fix problems or inform potential buyers
of problems that need fixing before they make an offer.
Staging. Do not
show your house the way it normally looks. Take everything out of
that overstuffed closet and store it in boxes in your friend’s
basement. You want your house to look like it has storage space to
spare and has been cleaned daily since the day you moved in. Whether
or not you hire a realtor, a thorough cleaning and a little staging
will make you money.
Interview several
realtors before you set your price. This point bears mentioning again.
By interviewing realtors you will obtain a free professional analysis
of how much your house will bring on the current market (ask for a
written comparative market analysis). Also, you’ll have an agent
ready to hire if you are unable to find a buyer on your own. Something
to consider: you can actually decrease a realtor’s recommended
price a few percentage points and still make money. (In most cases
you’ll have to pay about 5% or 6% in real estate commissions.)
If you do drop below the realtor’s recommended price, be sure
to let potential buyers know it.
Learn the required
legal steps
A good place to start is by interviewing title insurance companies.
Traditionally the seller selects an escrow agent, so you might as
well find a person you enjoy working with before you put your house
up for sale. Although the escrow agent doesn’t come into the
picture until after the contract is signed, most are good sources
of knowledge about the forms you’ll need.
Obtain the required
legal documents before your first open house. Some of the forms you
will need are: a contract, a seller’s disclosure form, and a
lead paint disclosure form if your house was built before 1978. These
forms can be purchased at a legal printing shop. It is the buyer’s
responsibility to prepare an offer, but you’ll find that many
potential buyers will appreciate contract forms if they are working
without a real estate agent. Develop a marketing plan. You don’t
need a portfolio, but you’ll want a basic plan.
Decide how much
time you want to put in. You don’t need to show your house every
day, but you will have to open your house for a few hours each Saturday
or Sunday and maybe a few weeknights. Most interested buyers watching
the classified ads will see your home in the first two or three weeks.
You can step up exposure considerably by hiring a real estate agency
to list you on the MLS (multiple listing service) thereby gaining
exposure to the many buyers who work strictly through real estate
agents. Many real estate agencies offer this service for about 1%
of the home sale price. The newspaper classifieds, FSBO signs, and
MLS are the basic advertising media at your disposal. When you interview
realtors, remember to ask them to articulate what their marketing
plans will be – this way you’ll get ideas and better know
which agent to call if you can’t find a buyer on your own.
Print informational
flyers for open houses. The handout requires basic information: your
name and contact information, size of the house, price, number of
bedrooms and bathrooms, and lot size (if you know it). Additionally,
it is a good idea to include a list of attractive features about your
house. Some title companies, for example Oregon Title Insurance, can
print up an informational packet on your neighborhood.
Rehearse your
spiel. It’s not a bad idea to go through your home before an
open house and list the strong points and any problems that need to
be addressed. This way when you provide the “nickel and dime
tour” at open houses you can lead potential buyer’s eyes
to the strong points in each room, and show – by revealing any
problem areas – that you are not hiding anything. You also will
have a list of facts ready to tell people who call on the phone.
Require pre-qualification
from anyone who plans to make an offer. For anyone with good credit,
it is an easy matter to obtain a letter of pre-qualification from
a lender. Requiring pre-qualification increases your chances that
the deal will actually go through.
If none of the
above sounds like much fun, hire a realtor. |
