For Sale By Owner - Pitfalls to watch out for...and should I bother?

In My Humble Opinion
1

Like all of the truly stupid out there, I’ve found a house I like before selling my current one. As a matter of fact, I haven’t even put mine on the market, yet. I intend to do it by Monday, one way or the other.

My current neighborhood is full of starter homes, so they generally move quickly unless someone is trying to get way too much for their sale. I don’t plan on doing that.

I’m not a greedy person by nature, but every penny I can squeeze out of this thing means another penny I can shovel into the payments on the new one…or possibly on remodeling two bathrooms.

If I try to sell this thing on my own, it will probably move more slowly. However, with my current mortgage, and assuming the realtor gets 5% I’m looking at having a FSBO sign on the lawn for 8 months before I’ve spent enough on the mortgage equal to the 5% that the realtor would have gotten.

I have a hard time believing it’s going to take more than 3 months, to be honest. My current idea is to give it, say, a month and if I haven’t gotten any serious interest turn the professionals loose on it.

Anyone have any advice? I’m looking for anything ranging from, “Don’t do it, you fool!” to “It’s not too bad, just keep an eye on people looking through the house to cut down on shoplifting”.

So…what do you all think?

-Joe

2

It’s normal to believe that one’s own house is so perfect that the first buyer to look at it will snap it up, the same way it’s normal to believe that one’s children are perfect. However, reality frequently dictates otherwise–the house goes unsold, the daughter isn’t invited to the prom. Personally, I wouldn’t stake any cash flow on your house selling in three months, unless you live in an area with a chronic housing shortage.

But then the glass is always half-empty for me, so YMMV. :smiley:

3

Watch the TV show called Sell This House. No, seriously. Do. How you stage your home can make a difference of thousands of dollars and cost only a couple hundred.

4

Oh, trust me, I am intimately familiar with every little flaw in that place.

If it doesn’t get taken to the prom I totally understand.

I’m just looking for ideas on what to do or not to as far as selling it on my own.

-Joe

5

I think this one is better suited to IMHO. MOved.

samclem GQ Moderator

6

5%? :eek: Here in the UK we pay 1-2% to estate agents.

As for the time a house can spend on the market, I sold one flat in 15 minutes. :cool: The estate agent put the details in the window on Monday at 0900, a man asked to view at 0915 and then bought it.
I have also known an apparently desirable property spend 8 months on the market.

7

My mom sold her house FSBO last year and it was a positive experience.

She had already bought/sold houses many times through realtors so she was pretty familiar with the process. She lined up a lawyer and so on herself. I helped with putting the house online (use a junk account! My junk account was flooded with scam emails of all kinds after listing).

She sold her house in about a month for the asking price (based on appraisal), despite several significant repair issues and it being an aging home. She got a great deal of interest very quickly and had other lower offers as well. She gave up a few pieces of furniture in the deal - unbeknownst to them, she was going to sell them in a garage sale anyway so it all worked out great.

8

Give it a try - one thing to keep in mind - realtors won’t show your place because there is no reason to, so you are counting on people to find it through advertising and anyone that is working with a realtor may not come and see it, especially if they are under contract.

If it doesn’t work get a realtor. You may be able to negotiate the 5%.

9

I sold on my own. It did take longer, but then I was able to live there during the process.
As I was living there, I continually upgraded the property, painting, retiling the kitchen counter, removing a dated paneled wall, etc.

10

How does the buyer’s agent (I realize strictly speaking there isn’t one) fees work in a FSBO operation? You might not be saving 5% after all, but only 3%.

If you are dealing with a buyer not going through an agent, you need to worry about qualifiying the person, and that the person is likely to drive a harder bargain because he will assume you can cut your price by at least 3% since you’re not paying fees. No free lunch, after all.

There are some companies who sell for a flat fee, which is a lot less than 5%, at least around here. You might check them out as a compromise.

11

I have bought and sold numerous houses and properties. I have always gone the FSBO route, successfully, with no problems.

  1. Use a service that does some minimum help. There are companies that will put a “realtor” sign in your front yard, give you a step by step tutorial, answer your questions over the phone,get you a lockbox for showings, disclosure statements (things that are wrong with the house,) they’ll print up a number of flyers, advertise in the local paper, and most importantly, get your listing on MLS (the multiple listing service that all realtor’s use, and that is listed on the internet, that any buyer can see.) It’ll cost between $500-$1000. Well worth the money, and the only way to go.

  2. Before putting your house up for sale, have at least 3-5 realtors come into your house, and give you a market analysis of what your house is worth. You’ll get your idea of pricing from there, and also pick their brains as to what you could do to make your home more attractive to buyers, such as painting, perhaps new carpeting, how to make it more welcoming, and how to sell it faster.

  3. Print up a lot of flyers, go to all the local real estate companies, and pass them out. Also have a realtor “preview showing,” something that only they are invited to, it lets them get a feel for the property, and if it matches any of their clients needs.

  4. Obviously if a realtor is going to be presenting a buyer to you, and if you expect them to help you, you’re going to have to pay a percentage of the commission. Be generous, and make it known in all the literature. If the local market is 6.5% commission, with the listing agent getting 3.5% and the buyers agent getting 3%, tell the realtors you’ll pay 3.5% if they bring you a buyer. Some agents hate dealing with homeowners, some are ok, all like a sale.

  5. Declutter everything, and I mean everything. Sparse is better than cluttered. Clean the hell out of everything. Also, perhaps look at other homes in your area in the same price range, that’ll give you an idea of your competition, and things to look out for, both positive and negative when selling your house.

  6. When showing your house, LEAVE. A friend of mine, who saw how easy it was for me to sell my houses, decided to sell her own. She tried for 3 months, it was disastrous. Ended up finally using a real estate agent, and selling it for a lot less than the house was worth, because everyone thought there was something wrong for it to be on the market that long. She tried to sell herself, not the house, she took it way too personally.

If it’s an agent, use a lockbox. If it’s a private party, meet them initially for 2-3 minutes, LEAVE. No one is going to steal your stuff in 20 minutes. Come back, ask for feedback, any questions they might have. DO NOT LIE ABOUT ANYTHING. Bad policy in general, especially bad in home selling.

  1. Always get feedback for any showings, realtors or private parties, it’ll help you tweak your house.

8)Hire an attorney for closing, one with a background in real estate. Should be less than $500.
Make sure that you are always available, a cell phone is a must, call back immediately, and always be willing to show at a moments notice. Treat this as a job, at least a part time one, and you’ll be successful. Think like a professional, that’ll help a lot.

12

Actually, if I want the good package from the realtor I’m most likely to use (Century21) I’m looking at 5.5%. How’s that for a kick in the nuts?

Actually, that’s part of the deal. If I sell through an agent I’ll probably start asking for the price that fits my neighborhood with the correct square footage and I’ll probably be inclined to be a little more inclined to hold to my asking price to make up the 5%. If I get someone while FSBO’ing myself, then I’ll be happy to drop the price by a good 3% with no hard feelings.

I’m not sure how your typical Exclusive deal with a realtor as a buyers’ agent goes, but the last one I signed applied to Me+SpecificAgent+ParticularHouse.

Anyways, still considering, still looking for a make it or break it here.

-Joe

13

Oh, and don’t worry about having people off the street making offers they can’t afford. Just make sure they have a qualifying statement from a lender before accepting any offers.

I have bought and sold 6 properties in the last 10 years, all of them FSBO, and ended up not ever dealing with an agent, even from the buyers end. I saved almost $100,000. But I treated it like a job, researched the hell out of everything, and was as professional as possible. It was worth it, and the income (basically income) was all tax free.

14

I think darfisheroo summed it up perfectly, so I won’t even attempt to add on except to say I’m another one that went the FSBO route and would do it again.

15

You might also expect that the first twenty people thru the door once you put up the FSBO sign will be realtors trying to get you to sell with them.

Regards,
Shodan

16

Inviting realtors over to give you the market price is theft of services. Damn it. They only get paid if they sell a house and you traipsing them over to your house to do YOUR work for YOU is rude. You are capable of doing a market analysis yourself. I am certain you like to get paid when you work.

That being said, take a look at the area listings on realtor.com, forsalebyowner.com etc. See how your houses compare. Check your local property appraiser to see about recent sales. Don’t use stupid phrases like “exquisite back splash.” Make the information relevant, provide lots of it. You can offer a Home Warranty pretty cheaply and for older houses, they are usually a good deal.

When you agree to list a home and pay 5% commission, realize that only half of that is going to your realtor, the other half is going to the Buyers realtor. Of that 2.5%, your realtor will be lucky to get half of that, the rest is brokerage fees. In a hot market, it’s less necessary to use a realtor because as evidenced above, the buyers can find you.

Be wary of the FSBO services, they can have so many packages that you end up paying MORE. And don’t forget, if you don’t sell, you assume all the risk. If your agent doesnt’ sell it, your agent assumes all the risk for the advertising.

I went to a FSBO open house one day, beautiful home, desirable neighborhood, just fabulous. I went back to the office and did MY standard research only to find out that the house had toxic mold that they were NOT disclosing the existence of or proof of remediation. BTW, it was a $500k house.

Some folks just think that FSBO’s are taking the cheap way out to sell, then wonder what other cheap things they have done.

Get a real estate attorney at least. But really, show respect for the people out there doing their jobs. Don’t take advantage of the fact they work for their food.

17

I’m going to have to take exception to this. It is not theft of services. It is part of the price of doing business.

Hardly anyone only has one realtor come in and sell their house, it is oftentimes like a job interview. If I had three agents come in and do a market analysis with the intention of hiring one, would that be theft of services of the other two? How about if I just wanted to know approximately the value of my house and had no intention of selling within the next year? Are agents thrilled about doing these? Not as much as getting a 7% commission on a 1.5 million dollar house, no, they’re not. On the other hand they still get to get some time to try to sell themselves and their services, if they don’t come with a buyer, they have the hope that you’ll use them if you FSBO doesn’t work out.

I am a contractor. Part of my business is estimating bids, and going out to meet new clients. This can be a very involved time consuming process. If they are good consumers, they will get several bids from several different contractors. I am not paid for this, and they can choose to not hire me. I hope that they will use me, or if not, perhaps recommend me to a friend, or perhaps use the company in the future. It’s part of the cost of doing business. It is not theft of services, nor have I ever even considered it to be as such.

If you are lying, stringing the realtor along, then you are an asshole. But that’s not what I recommended.

18

I’ve never sold a house, but bought my house from a couple who were selling it themselves. They had an agreement with an acquaintance who was a realtor. They paid her an hourly rate for some upfront advice, market analysis, etc. Their plan was to list it with her if the house didn’t sell within a given period of time. I made an offer the week before they were going to list it. Once I signed the contract, they also put up the realtor’s sign with “Sale Pending” on it so that she got a bit of PR for having helped them.

I think this is the route I’d take if I ever sold my house…

GT

19

About 1988 I sold a g/f’s house, it was just a matter of chatting to the neighbours and one of their friends snapped it up.

I’m in the process of selling my place, I used an Estate Agent (realtor) and simply picked one who employs the son of friend of mine.

I wanted a valuation (they came up with more than $50k less than the minimum price).
I wanted to sort out some wrinkles before viewing, but on the next Saturday they started pushing people through the door - at times we had three different sets of people in there at the same time. The Agents kept my friend’s son out of things.

Start of business on the following Monday I got an offer for the asking price.
Interestingly, the guy is one of those that I dealt with.

As far as I can see, I am paying $9,000 to a bunch of scumbags who managed to annoy me, insult me and do the opposite of what I asked them to do. They produced a slightly misleading glossy leaflet and stuck it in their window and on the Interwob (sic).

My view is that a smart buyer will cruise round an area, probably know people who live there and will have a pretty fair idea of the local values.

If you are not in a hurry, then it would not do any harm having a go yourself, I bought my place 19 years ago through local contacts and should I buy another (which I probably will) then I’ll make it well known that I’m in the market. Actually, where I’m going they probably know about me turning up - word travels.

There has been some good advice in this thread

  • I would add, make sure you have a solid wad of cash in the bank, and that you are not under pressure.
20

If you live in a desirable neighborhood and you’ve priced your property fairly, you shouldn’t have any trouble selling your house on your own. That being said, you need to be prepared to:

a) Meet prospective buyers on their schedule, not yours. Are you able to take a few hours off of work to show people around?

b) Deal with unreasonable people (people who will insult your house, put in bids for 2/3 of what you’ve listed it for, want to keep all of your appliances without increasing the bid, etc.) while maintaining a professional distance. Once you put your ego into it, you’re doomed because selling a house is a business transaction, not an emotional one.

c) Deal with legalese or be willing to hire a lawyer. There are standard contracts out there, of course, but never every sale is textbook.

I would impress upon you to put some time and effort into making your house as nice as it can be, even if that means throwing a grand into cheap new carpet and a few hundred bucks into paint. Clean, clean, clean it. You should be able to eat off the garage floors.

I’d also consider hiring a house inspector yourself to identify any problem areas ahead of time. If you have termites, for instance, you’ll have to deal with them and it’s best to deal with it prior to having an offer on the table.