Whether you need a larger home for your growing family, you are looking to downsize now that the kids have grown up and moved out, or are just looking for a change, selling your home can be a daunting prospect. Hiring an agent, decluttering, cleaning, painting and making repairs can be time consuming not to mention expensive. The thought of it all is enough to make anyone ask how they can save some money in the process.
How do I sell my house? What are my options?
For-Sale-by-Owner (FSBO) Two ways
Some home sellers look to save money by selling their home themselves instead of hiring a full service agent, and why not? A full service real estate brokerage charges the seller several percent of the homes’ sale price in exchange for their services. With an average sale price of $230,000 in Dane County, the commission due at closing will often run well north of $10,000. The thought of saving that kind of money, especially when you are looking to buy a new house, is very tempting.
There are two ways that a home owner can sell their own home. The first is a true for sale by owner (FSBO) approach. You put a sign in your front yard, run classified ads and hope that an interested buyer calls you or knocks on your door wanting to buy your house.
The second approach involves hiring a limited service real estate broker. For a relatively modest fee this type of broker will post an advertisement for your home on the multiple listing service (MLS) and will often place a for sale sign in your yard. The MLS is the system that real estate agents use to find homes for sale for their interested buyers. The MLS also feeds information on homes for sale to most of the public websites that list homes for sale such as Zillow, Trulia and Homefinder.com. This approach is a good upgrade over the true FSBO approach, as many more potential buyers are likely to see that your home is for sale than if you are placing individual classified ads on Craigslist and the local newspaper.
At this point things sounds pretty good, right? You’ve found a way for potential buyers to find your house that you want to sell. No doubt you’ll find somebody who wants to buy from you, agree on a price and trade the keys for money.
Well, I hate to burst your bubble, but there are a few additional factors to consider before you decide to sell as a FSBO.
Are you comfortable getting your home ready for market, deciding on a list price, holding your own open houses and showing your house to potential buyers? How about negotiating directly with your buyer, and most likely their experienced agent? As a FSBO, you will be responsible for carrying out these jobs yourself .
How many of these tasks would you feel comfortable executing on your own? Do you know which improvements are worth making and which are should be left for the next owner? Are you comfortable staging and photographing your own home? How will you determine your asking price? By using your assessed tax valuation? Zillow’s Zestimate? Both of these can vary from the true market value by tens of thousands of dollars in any particular instance. By looking at other homes that have sold in your neighborhood? Are those houses really comparable to yours? While most buyers are not market experts themselves, they will have looked at several homes in person before they make an offer to purchase and will have a pretty good idea of whether your house is overpriced or not. If you are priced too high, they may not make an offer at all…even if they like your house.
Almost all buyers look at houses online before viewing them in person. If your photos don’t appeal to buyers, how likely is it that they will ever view your house in person? If you do draw buyers in, are you comfortable showing your home to potential buyers yourself? Once they make you an offer, are you comfortable negotiating and reviewing the contract yourself to make sure you are appropriately protected? You can certainly hire an attorney to review the offer, but that is going to cut into the money you are saving by selling on your own. What if you end up accepting multiple offers before you successfully sell your home? Will you pay your attorney to review each of those offers? How much will that cost?
How about staying in touch with your buyers lender to make sure that the loan process is on track? Inspections, the appraisal, the loan commitment. Do you know what questions to ask to make sure that the lender will be willing to loan the funds necessary for your buyer to close when they are supposed to, or at all?
Moving out and closing
Congratulations! You have an accepted offer and are moving toward your closing date. There is lots to do. You need to pack up your stuff, make sure the utilities are turned off at the old house and turned on at the new one, hire movers or rent a truck. It’s more than enough to drive you crazy. But wait, you are selling yourself, in addition to all of that work you are going to need to work with a title company to get title insurance in place and arrange for the closing to take place.
So what does going FSBO actually cost?
This can be broken down two ways. There are the direct costs of going FSBO vs. hiring Realtor which are relatively easy to quantify; and then there are the indirect costs which are more difficult to define.
You may think that by selling FSBO you can avoid paying Realtor commissions. That may be partially true, but oftentimes you will end up paying some commission. The reason for this is that the majority of buyers are represented by an agent, and with good reason. In the agency agreement that buyers sign, they agree to pay their agent a success fee that is generally a percentage of purchase price of their new home. When a buyer purchases a home that is listed by an agent this isn’t a concern. Almost without exception the seller will pay the buyers agents commission. If a buyer is choosing between your home, which is a FSBO, and another home that is listed by a realtor they are likely going to be inclined to choose the house that will not require them to pay the commission out of pocket. This puts you between a rock and a hard place. Either agree to pay the commission for the buyer or lose out on the sale of your home.
If you are considering selling your home and would like a no obligation consultation on the process of selling your home or to know the value of your home please contact me today at 608-239-3433 or email@example.com