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Sell your house yourself

For sale by owner, usually seen as the acronym FSBO and pronounced "FIZZ bo," is when a homeowner sells a home without an agent. Selling your home isn't simple, but if you're willing to wear different hats, this deal can save you 5 percent to 7 percent, or an average $9,000, in brokerage commission fees.

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"Eliminating commissions allows [sellers] leeway to negotiate a lower, more realistic price," says Monet Cole, owner of Audrie.com, a real estate Web site.

Of the approximately 5.5 million single-family homes sold in the United States each year, less than 15 percent are sold without a real estate agent. "In my own experience in the Atlanta area, most FSBOs were successful in at least eliminating the listing agent," Cole says. However, some people who tried to sell their home on their own gave up because of pressure to move quickly, she adds.

The 2002 National Association of Realtors' Profile of Home buyers and Sellers found that nearly half of FSBO sellers did not want to pay a commission fee. Others were prompted to work without a real estate agent because they sold their home to a relative, friend or neighbor; they didn't want to deal with an agent; or buyers contacted a homeowner directly.

But sellers could be motivated by other reasons to go it alone. Some people have realized zero home appreciation, Cole explains. "Forced to move by careers or family, these people just want to get their equity and pay off the mortgage without having to borrow from the in-laws."

When owners do their own advertising they attempt to eliminate the cost of listing and selling agents. However, most prospective buyers still go through an agent even when they don't have to with an FSBO. If FSBO sellers are in a hurry, they will often pay a 2.5 percent to 3.5 percent commission to the agent who brings a ready buyer.

How to sell solo
You should first identify the type of seller you are, and whether you're willing to make the commitment to show the house. Then you should put up money for advertising, says Jon Squires, author of For Sale By Owner Homes: A Manual on How to FSBO.

Because FSBO sellers go solo, they must educate themselves on pricing, advertising, negotiation, marketing and closing. They must also coordinate with the title company, bankers and possibly an attorney.

One good way to do this is by talking with professionals, including real estate attorneys, agents and title companies.

Also there are online how-tos such as Owners.com's Seller's Handbook. Or there's Audrie.com's FSBO roadmap of each step from preparing to sell your own home to closing the sale.

Sellers will find that studying pays off. There are several legal formalities such as disclosure agreements that vary from state to state. If the seller doesn't understand what they're disclosing, they run the risk of being sued and the buyer can void the sale, says Ed Stevens, online publisher of Smart Sense Publications. Make sure you review all contracts with a lawyer.

Is the price right?
"When it comes to pricing a home for sale, a lot of people pull a number out of the sky," Stevens says. He suggests going to your county's public records to find out what comparable homes in the neighborhood sold for, paying for an appraisal, or consulting an agent to develop a market analysis.

Stevens says some agents price a house as a free service because they know homeowners eventually give up selling on their own.

"Find the recent selling prices of comparable homes in the neighborhood, and set your asking price a smidgen above. You can get recent prices from your local real estate agent," Cole says.

Marketing your home
In some states, do-it-yourself sellers can list their homes on the Multiple Listing Service even though they don't have a Realtor. Some FSBO Web sites will get an MLS listing for you, Squires says.

In hot markets, Squires says just putting a sign in the yard could work. But this is more the exception than the rule. You can also buy FSBO kits and online listing packages that can include contract forms, signs, FSBO books or brochures, all ranging from $15.95 to nearly $140.

Owners.com offers a premier listing package with a virtual home tour for $179. It includes yard signs, photos, directional signs, "Modern Real Estate Practice" textbook, and an open house rider. Their standard listing is $49.

FiSBO Registry Inc., at Fisbos.com, offers a kit for $675 to $950 that includes an appraisal service, video, textbook, and MLS listings-where available.

Open up to buyers
When you're ready to show your home off, go to several open houses with a critical mind to get an idea of how the professionals do it, recommends Mark Christopher, owner of Buyownersales.com.

Then, when you have your open house, you can gauge how well it's going by observing your buyers. You might learn that the screaming baby and frisky kitten need to be left with Grandma the next time you are showing your home.

Since you are letting strangers into your home, it's a good idea to escort them and not be there alone. Finally, don't plan on closing a deal with a buyer at your open house. Few homes actually get sold this way, but it's a great way to kick off a sales campaign.

Sellers should enter contracts only if they are confident the sale will go through. A contract contingent on the buyer getting a $90,000 mortgage at 5.5 percent becomes questionable if rates rise to 6.0 percent. Real estate agents will often bring in new buyers if they know your first buyer is shopping for a hard-to-get mortgage rate.

Negotiation time
Some buyers seek out FSBOs in the hope of getting a good deal. "If the FSBO is not paying 7 percent on that $200,000 house, maybe they'll sell it for $190,000," Cole says.

If there is no agent, the buyer must negotiate price directly with the seller. When this happens, try to forget that it's your home as you hash out a deal, Stevens says. Many times, people selling a house get emotional. He also stresses that nothing orally agreed upon is binding -- it all has to be in writing.

The buyer must also keep tabs on the mortgage lender, the appraiser, and building inspectors to make sure everything is ready at the closing. Buyers must disclose their finances to the mortgage lender but not necessarily to the seller. Stevens says the seller should keep in touch with the buyer to make sure everything is completed, such as getting the mortgage, homeowners insurance and appraisal.

When FSBO sales fizzle out
Selling a home on your own can save you money, but there are some pitfalls to watch out for. Problems for FSBO sellers include holding open houses, attracting potential home buyers and selling within a planned length of time, and the increasing complexity of the transaction process, with more disclosures and legal requirements than before, according to the 2002 Profile of Homebuyers and Sellers study conducted by National Association of Realtors, in Washington, DC.

Lastly, remember that it's closing the deal where most FSBO transactions break down.

-- Updated: June 13, 2003

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