FSBOs (for sale by owner) are NFE (not for everyone)
Sell a house, buy a real-estate
agent a car.
That's how a lot of the burgeoning cadre of
do-it-yourself house-sellers think. They're selling their homes
without the help of a real-estate broker because they don't want
to pay commissions.
Just how hefty do commissions get? Nationwide,
they average about 6 percent, so if you sell your house for $200,000,
you'll pay $12,000 in commission. That's more than the cost of a
base-model Hyundai Accent.
In a world where the commission on the sale
of a middle-class home can buy a subcompact, it's no wonder that
lots of homeowners try to sell their houses on their own. In real-estate
terminology, these houses and sellers are called FSBOs (pronounced
FIZZ-bo), which stands for "for sale by owner."
By selling your home yourself you can save a
pile of money by not paying a commission. But the savings come at
a price: You have to do the time-consuming work that real-estate
brokers do for other sellers.
are NFE (Not For Everyone) Going the "for sale by owner"
route is not for everyone. If you get nervous at the thought of
showing your house to strangers, negotiating directly with the buyer,
and working with title agents, you must either get past your discomfort
or list the house with a broker.
"A lot of people just don't
want to deal with the confrontation of negotiating a sale,"
says Lee Burbidge, author of "For Sale By Owner: How To Sell
Your Home Yourself and Save Thousands of Dollars in Real Estate
Commissions," a book and tape package. "But a lot of people
And selling your house on your own takes work.
You have to find a title agent, and it's a good idea to hire an
attorney. You'll take care of marketing the house, and that includes
showing it to prospective buyers. The amount of work might seem
daunting, but Burbidge believes that many sellers find the effort
worthwhile. Take, for example, a region where real-estate agents
take a 6 percent commission.
"If it's a $100,000 house, it's going to
save you $6,000," he says. "How hard are you going to
work for $6,000?"
Besides saving money, selling your house yourself
allows you to remain in control of how you advertise it and when
you show it. That's why Hans Koch, former vice president of Owners.com,
prefers the phrase "self-directed real-estate market."
"It's a broader term for what was traditionally
a by-owner market," Koch says, and the phrase acknowledges
that sellers have wide latitude over how much work they do themselves
and how much work they farm out to hired experts.
steps to success
Experts such as Burbidge list four main steps to selling your own
- Find out the house's value and price it
- Prepare the house by making repairs, cleaning
- Market the house effectively.
- Close the sale properly and legally.
the house's worth
The biggest mistake people make when trying to sell their own home
is "not being realistic to values," Burbidge says.
"People generally think their houses are
worth more than they are because it's their home," he adds.
"They put in special walnut cabinets and they cost a lot, but
the guy who wants to buy it doesn't like walnut."
What's important is how much the house is worth,
not how much you paid to buy it and fix it up.
The successful seller goes with the hard facts:
How much do houses in the neighborhood go for per square foot? Are
prices generally rising or falling, and how fast? How much are extras
worth? For example, your in-ground swimming pool might have cost
$6,000 to install, but houses in your neighborhood with pools sell
for $3,000 more than comparable houses without pools. That means
the pool is worth $3,000, not $6,000, to a buyer.
You have to look at the house from the buyer's
viewpoint, not the seller's. Those walnut cabinets that Burbidge
mentioned might have cost you hundreds of dollars, but the buyer
might dislike them, in which case they're worth no more than cheaper
oak cabinets. Your beloved property is the repository of countless
wonderful memories, but those remembrances are in your head, not
on the land -- and the buyer isn't going to pay extra for them.
To find out how much you should ask for the
house, do some research and consult the right people. You might
be able to find out the recent selling prices of homes in your neighborhood
by viewing Domania.com.
The title company you choose will be able to
provide you with selling prices for comparable houses in the area
(called "comps" in real-estate lingo), and the title company
can steer you to a certified appraiser who can do the most thorough
job for a few hundred dollars.
You can even ask a real-estate agent to give
you a list of comparable prices. Because many FSBO sellers give
up after a while and end up listing their house with an agent, an
agent might help you as a way of getting a foot in the door.
Negotiation experts say that you should arrive
at a reasonable bottom line on price and conditions -- the minimum
you will accept -- and stick with it.
the house ready to show
The buyer is going to hire an inspector. Before you show the house,
why not hire one yourself to point out problems? Based on the inspection
report, you can seal those cracks, fix that faulty furnace and repair
that leaky roof before visitors arrive.
In addition to fixing the big problems, spiff
the place up by cleaning it and reducing clutter. Tidy up closets,
clear off kitchen counters, put excess furniture in storage. Wash
the windows and get the floors as clean as you can.
And, says Burbidge, never underestimate the
power of paint, which almost always pays for itself and more.
Real-estate agents always ask sellers to take
as much off the kitchen counters as possible and to make closets
seem more roomy by removing stuff. A buyer won't be charmed by a
jumble of shoes on the floor of a closet. The same goes for rooms:
the sparser the furniture (within reason), the bigger-looking the
Burbidge says you should set a mood with sights
and smells to make the house feel homey. That doesn't mean you should
go overboard on scented candles, but use your imagination to present
the house in a good light.
"You'll categorize your house by the way
it looks: a fix-upper, a regular house or one that's been well taken
care of," Burbidge says. Present it accordingly.
But, above all, he says, the house has to be
clean when you show it.
the house effectively
"You're not looking for thousands of calls," Burbidge
says. "You're looking for one call -- from the buyer."
That means you should be specific about what
you're selling. If you're selling a three-bedroom house for $180,000
near a nice school, you're not interested in getting calls from
retirees looking for two-bedroom homes for $90,000, nor do you want
to field calls from Ferrari-driving mansion-hunters.
So specify your asking price everywhere you
advertise -- on handbills, newspaper ads, the Internet and maybe
the yard sign. Specify number of bedrooms and bathrooms, size of
garage, number of stories and the approximate square footage. "Cozy"
means different things to different people, but "800 square
feet" means exactly what it says.
A drawback to selling your house yourself is
that you risk drawing from a smaller pool of potential buyers. You
can advertise the house on the Web, but most house-hunters using
real-estate agents narrow down their choices through the Multiple
Listing Service -- and you get listed with that huge computer database
through the services of a Realtor.
Owner is one of many businesses that let house-sellers advertise
on the Web in a format that allows buyers to search for the kind
of house they want in the area they want. The company has an agreement
with a real-estate brokerage that allows sellers, if they wish,
to get their homes listed on the Multiple Listing Service, president
Scott Eckert says.
"We call it the best of both worlds, where
your property can be online with Buy Owner and at the same time
be in the Multiple Listing Service," Eckert says. The company
also provides yard signs and advertises on TV, radio and billboards
and in newspapers, but Web listings are the backbone of the service.
Owners.com, too, offers sellers the chance to
advertise their houses on the Web. The site also offers thousands
of words of advice about buying and selling a house, including ad-writing
tips, pricing information, marketing and negotiating strategies,
finding attorneys and title agents, and recommendations for how-to
Koch, the former vice president of Owners.com,
says that many visitors to the site are using a real-estate broker,
but go to the site "to understand the sequence and the process."
"If you understand the process, you can
make better decisions, even if you have an agent," he adds.
"We would be incomplete if we didn't also help those who had
relationships with Realtors."
It would be a mistake to rely solely on the
Internet. Signs, handbills, word of mouth and newspaper ads all
can help bring a buyer to the house. Burbidge recommends reading
advertisements written by professionals to get an idea of which
words and phrases to use.
Experts differ on the value of holding an open
house. It seldom leads directly to a sale, but you can consider
an open house as just another marketing tool, along with advertising
and word of mouth.
Once a buyer comes into the picture, it's
time to bargain not only on price, but on conditions: when the
buyer will close and take possession, how much to deposit, what
repairs will be made, which fixtures stay and which go, and so on.
Each situation is unique. Entire books have been written on the
subject of real-estate negotiation. One of them is Robert Irwin's
and Traps When Negotiating Real Estate."
This is also the time to have your attorney
available to check out anything that passes between you and the
buyer in writing or any other agreement you may come to. And before
anything moves on to the signing stage that attorney can also make
sure you are not going to be liable for anything unexpected after
to closing without a hitch
When it's time to sign all the papers and transfer the property,
the last thing you need is trouble. That's why you have to take
care to choose the right title company. The title company will make
sure that the mortgage company, appraiser, insurance company and
government agencies get the proper paperwork on time. It can provide
you with sale prices of comparable properties in your neighborhood.
A title officer usually is a real-estate attorney
who is trained to spot problems before they topple a deal, Burbidge
says. He or she can answer your questions and walk you through the
tricky parts of a real-estate sale.
Chances are that when you bought your house,
you signed the papers at a title company's office. Burbidge recommends
that you start looking for a title company right there. Ask if they
have experience dealing with FSBOs and if they'll have time to help
It's also a good idea to have an attorney to
consult you along the way. Your attorney can give you referrals
to title agencies, too.
If you sell with caution and care, you can save
enough on commissions to pay your attorney -- and have thousands
of dollars left over. New subcompact anyone?