Spring home selling season is here and you may be wondering about how to sell your house by owner.
Truth be told, selling your house by owner — or for sale by owner (FSBO) as it’s often called — involves more than just sticking a sign in your yard!
In this article, we’ll take a look at what to do to get ready, what to expect when you’re on the market and what money expert Clark Howard says you can do to increase your chances of successfully pulling off a FSBO.
Here’s how to sell a house without a realtor
Selling your home isn’t cheap. According to one new study, the costs to sell your home via a traditional real estate agent could be anywhere from $20,000 to $30,000.
So it’s no wonder the prospect of paying that kind of money inspires many people to try selling their house themselves!
“It has been easy in the moderately priced housing market to sell your home FSBO until just recently,” money expert Clark Howard says. “For the last six years, it has been a seller’s market. However, in much of the U.S. things are now more balanced between buyers and sellers. That means a FSBO is hard work again.”
How to sell your house by owner: Table of contents
- Do your prep work
- Research the comps
- Set a price
- Develop a sales plan
- Hire a professional to handle the final contract
Do your prep work
Before you can put your home on the market as a FSBO, you’re going to need to make some preparations.
The basic projects include painting, staging, house and carpet cleaning, lawn care and gardening, etc. Depending on your locale, the price to hire out for many of these jobs varies widely as well. Unless, of course, you do the work yourself. That’s the most cost-effective option of all!
But no matter where you live, bringing your residence up to snuff can cost a pretty penny. According to one study, sellers spend an average of $4,985 to hire professional help for this part of the process.
Research the comps
Once your home is ready for sale, it’s time to start to think about pricing. One good way to do that is to look at the “comps.” In real estate lingo, “comps” means the recent sale prices of homes that are comparable, or similar, to yours.
Finding out what similar homes in your neighborhood last sold for is pretty easy thanks to the Internet. You can visit any number of sites like Zillow, Redfin, Trulia and many others to find recent comps.
However, if the comps you’re finding from these sites seem outdated, you can always go to your Board of Tax Assessors to see what recent comps they’ve got on file.
Set a price
OK, this part is more art than science! Sure, you’ve fixed your house up, staged it and have it in move-in ready condition. Plus, you have an idea of what similar homes in your area are selling for.
All of that is a great starting point as you aim to set a price. But don’t forget to take into account the upgrades you’ve done as you set a price. Ditto for any unique architectural features your home may have that could increase its value.
Remember the Goldilocks rule. You don’t want to be priced too high or too low; you want to be priced just right!
Develop a sales plan
Before you buy that yard sign, figure out when you’re going to have open houses and how you’re going to advertise them. Be aware that potential buyers will critique your home right in front of you when the open houses begin.
You’ll want to list your home in the Multiple Listing Service (MLS) via any of the flat-fee providers you can find online. Expect to pay several hundred bucks for this service.
Meanwhile, be sure to put “Agents Protected” on your sign out in front of your yard.
“The sign means there’s a buyer’s agent commission and it’s protected,” Clark says. This will help ensure real estate agents won’t steer clients away from your FSBO listing. Because you’re signaling to them that they won’t get cut out of the deal if they bring a buyer to you.
For many people, the added benefit of having agents helping to sell the home is worth it when they consider the prospects of having their property languish on the market for an extended period of time.
The agents’ commission is usually in the 2% to 3% range. “If someone brings a buyer to me, I’m happy to have 97 cents on the dollar [out of the deal] rather than having to wait to sell it,” Clark says.
Hire a professional to handle the final contract
You are not a real estate professional, right? So you should have a real estate lawyer handle the contract when you do have a buyer.
This is money well spent, according to Clark. It’ll probably cost a few hundred dollars, but it’s important. When you try to use a contract from an office supply store, you’re asking for trouble.
“One of the things I care about is that sellers don’t take enough of a deposit (sometimes called escrow or earnest money), and if you don’t, the buyer doesn’t feel enough of a psychological commitment to the deal,” Clark notes. “Or sometimes the buyer will get buyer’s remorse and the next day will stop payment on the deposit check.”
“A good-sized deposit will make sure the buyer doesn’t change his mind, and a good contract will make sure the deal will be solid.”
Traditional real estate agents still sell the bulk of homes in the United States. And the reason for that is selling your house on your own is hard!
But if you read up on how to sell your house by owner and manage to pull it off, think of the money you’ll be saving!