What is FSBO and what do I need to be one?
For Sale by Owner or FSBO is the common term that is used to identify a house or property that is being sold without a middleman (Real Estate Agency, Broker, Agent).
They sell their home on their own (technically with the help of a lawyer or other professional entities that specializes in home selling) and prepare all the documents for the transfer of ownership.
How much do they typically save without hiring a Real Estate Professional?
It depends but according to Zillow, closing costs can range between 8% to 10% so that means if you sold your house by your own at $300,000 you’ll be saving $24,000 to $30,000.
These figures might entice you to DIY your home selling, who can resist right?
Before you put that for sale signage outside of the tour house here are the things you need in the selling process:
You need to know the “Value of your Home.
When we say “Value of your home” it must come from a reliable source and must be an actual CMA (Comparative Market Analysis).
If you want to know the comprehensive value of your home with CMA and guides? Click here.
There are tons of websites offering an estimated value of your homes like Zillow, Redfin, and NK Real Estate Group. Keep in mind that these valuations are just “estimates”, our Real Estate Team here at NK can make that estimation customizable by reaching out to you and giving you a deeper insight about your home equity.
You can also opt to hire an independent Real Estate Appraiser who can give you an “almost” accurate valuation of your home, you just have to pay them $300 to $600.
Please, we beg you not to get an estimate of your home from your neighbors, family members, or close friends, unless they are professionals who know what they are doing. Often times we are persuaded to sell because of what our sphere of influence says. JUST DON’T.
Getting ready for a Home Inspection as a For Sale By Owner is a lot of work, when we say a lot it means “A LOT”.
You need to tidy things up and make sure that you follow certain city or county rules before the inspectors come into your unit. Most Inspectors will look at these major concerns:
Homes Utilities – They need to make sure that water, electric and gas lines are intact and working.
Who would like a home without these necessities?
Physical Structures – They will check for major issues surrounding your house like the parking area, garden, attic, basement and etc.
Interiors – The House wall, windows, and flooring will be inspected to ensure nothing will cause a burden to the new owners from these things.
Hire a Home Inspector, but the buyer must do it on their end right? Yes! In fact, they are the ones who really need Home Inspectors before buying a house.
Hiring an Inspector as an FSBO is a game-changer because it will increase your chance of closing the sale by detecting early possible hindrances like molds and broken stuff that needs to be fixed.
What’s the cost of hiring an Inspector? Bankarate says it’s around $350 – $600, it’s quite costly but it can cost you more if after all your efforts you end up not selling your home.
Get your free printable Home Inspection Checklist here.
Get your Home Ready
With the pending inspection in mind, getting your home ready for visits is one of the key factors that will make a potential buyer close the deal.
Decluttering your house is the first step in making sure that your home is ready to be bought. Let the Buyers feel that they own the home by removing all your personal belongings in the storage area like family photos, band posters, or anything that will determine your own personality.
Hiring someone to clean your home (professionally) and shine your wall to perfection is a big time-saver, plus you will be sure that there is no dusty spot that will be left behind.
Replace old Appliances or Fixtures, you don’t need to spend too much on the upgrades but make sure that the whole kitchen area is presentable, keep in mind that women do almost 80% of the decision in a relationship and what are they looking for in a house?
A nice Kitchen!
Repaint your house make sure that the color you will use is cozy and will make the area more spacious. You can hire a professional painter to do this job for you by paying $40-$60 an hour depending on the location and condition of the house that will be painted.
Rearrange the whole place and keep the buyer’s intent in mind. You may have been comfortable seeing your home as it is but try looking in Pinterest or other interior-focused websites for some inspirations in home decoration.
Make a Draft of listing – Photos/ Data / Description
“Photography for me is not looking, it’s feeling. If you can’t feel what you’re looking at, then you’re never going to get others to feel anything when they look at your pictures.”
— Don McCullin
So, you prepared your home for potential buyers’ eyes “physically” now it’s time to entice them “digitally.
You have to make sure that your home is Instagramable and have a captivating description that has these characteristics:
- Accurate Description of the Property
- Highlights the unique features of your House
- Some touchy stories that will get the emotions of your buyers pumped up
Do not over-promise about the house, be honest and make it super simple, we don’t want to read a description that’s overpopulated by adjectives right?
Advertise your Home
This is the trickiest part here on the list.
After all your preparations, research, and wall scrubbing, you are now going to pitch your home to potential buyers.
Advertising online is the most effective way of selling your home because almost all people are finding what they need to buy online. Based on research, 51% of home buyers bought their home online and only 16% comes from yard signs, friends, relatives, and people who knew the seller combined.
Utilize these online platforms
Open House is a great way to advertise your home with a lot of prospects.
Private Showing can be a more time-consuming way of advertising your home but it will give you a higher chance because you can talk to the potential buyer deeply.
Learn how to Negotiate
The fact that you are not using a Real Estate Agent to sell your home, makes you vulnerable to hagglers.
You need to be mentally and emotionally prepared in negotiating because this is the major turning point between your ads and closing the deal.
If this task is too much consider reading these books:
- Influence – The Psychology of Persuasion
- Getting More – How you can Negotiate to Succeed in Work and Life
- Getting to Yes – Negotiating Agreement without giving In
- Never Split the Difference – Negotiating as if your life depends on it
- How to make Friends and Influence other People
Find reading books time-consuming? Type in the search bar in YouTube and watch people give advice on persuasion tactics, search in google on how to negotiate or a much better approach is to hire a real estate agent to give you advice.
Do whatever it takes to learn this crucial skill, remember that all your efforts will be wasted if you fail to learn how to negotiate.
Know the Legalities and Paper works that you need
It is not enough to stage a home, advertise it and fight for the right price if you’ll end up breaching a contract or being fined by the authorities.
There is a high price on knowing and not acting, there’s also no excuse for not knowing and remain in that state.
Here’s a comprehensive list of the documents that you’ll need:
- Before Listing
- Original Sales Contract
- Professional Appraisal from the purchase of your Home
- Home Repair and Maintenance Record
- Mortgage Statement
- Home Insurance Records
- Home Owners Association Documents
- Receipt of Capital Improvements
- Manuals and Warranties
- Past Utility Bills
- Supporting Documents to Launch Home Sale
- Comparative Market Analysis
- Listing Agreement
- Proposed Marketing Plan
- Seller’s Net Sheet
- While you are in the Market
- Preliminary Title Report
- Mandatory Disclosures
- Pre- Inspection Report
- Transfer Disclosure Statement
- Natural Hazards Report
- Once a Buyer makes an offer
- Purchase Offer and Counteroffer
- Final Purchase and Sale Agreement
- Contingency Removal Form\
- Between Contract and Close
- Home Inspection Report
- Appraisal Report
- Closing the Sale
- Most Recent Tax Statement
- Seller’s Estimated Settlement (Closing Statement)
- 1099-S Tax Form
Know special real estate laws/disclosure forms in your area here are examples:
- Real Estate Disclosure Law in Maryland – requires sellers of residential real estate to sign and complete the Residential Property Disclosure and Disclaimer Statement stating either the home defects or the condition of the house but not both.
- TOPA law in DC – The law differs for renters who are 62 or older or have a disability. For those tenants who signed a lease to occupy a single-family dwelling before Dec. 31, 2017, and occupied it by Jan. 15, 2018, a modified TOPA still exists. They must respond within 20 days after receiving notice the landlord intends to sell. If the tenant wants to buy the property, he would have 25 days to negotiate a sales contract, and closing must take place 45 days thereafter. However, if a lender needs more time, the tenant can have an additional 30 days in which to get lender approval and take title. – The Washington Post
- Virginia Real Estate Disclosure Requirements – Requires you to disclose property conditions and “Buyer Beware Disclosure” that includes and not limited to: Historic District Ordinances, Resource Protection Areas, Adjacent Parcels, Dam Break Inundation Zone(s), Sexual Offenders, Conservation or Other Easements, Stormwater Detention Facilities, Wastewater System, Solar Energy Collection Devices, Special Flood Hazard Areas, and Community Development Authority.
Being an FSBO seller is overwhelming, but if you want to take this route? Don’t omit the possibility of hiring professionals to help you with all the processes and paper works that are needed to successfully sell your home.
No man is an island and the more you convince yourself that you can do it all by yourself is a recipe for a “costly” disaster.
So, if you want to hire a Real Estate Agency to handle this long list of errands on selling a home, read on..
Sell your home with a Realtor and see the Magic Happens!
We all have that idea in mind that “cutting the middle man” is a great way to save more money, but is it the real deal?
If we look into statistics made by the National Association of Realtors, only 5% of buyers are willing to buy their houses directly from the owner.
Well in the surface it is a fact that Real Estate Agents get a commission, let’s say that the commission of the real estate agent and his/ her broker is at 6% (Commissions generally range between 4% and 6% across the country, though they may be higher or lower based on the market) and the listing price is at $300,000 the total commission of your hire Real Estate Agent will be at $18,000.
You are thinking, “Shoot! That money should have been in my pocket!”.