If the following sounds like it was intended to discourage you, it should. There was no intent to do so though. Marketing and selling real estate is a complex business. Much of the following applies to sellers who are represented by agencies—and you will find it on the Seller Info page as well.
Most of the advice for FSBOs is in the form of cautions related to critical mistakes commonly made when deciding to sell by owner. In addition to this page, Real Estate ABC and the Department of Housing and Urban Development Web sites are good sources of info for FSBOs.
Another valuable resource are the services I will be happy to provide without charge:
A CMA to help you price your home right for the market.
Marketing advice to help you maximize exposure of your home to the market:
A marketing strategy to help you maximize your net proceeds.
Advice about staging your home to maximize its appeal to prospective buyers.
Feel free to contact me.
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How To Sell Your Home By Owner
The following is the step-by-step process for everything you need to know about selling your home by owner in San Antonio.
Setting the Right Price—More than half of the homes being sold by owner are priced more than 5% over their market value, and 1 in 3 of those homes are priced as much as 30% over market value. FSBO buyers are typically too sophisticated and have too many resources to be expected to pay any amount over market value. Moreover, they expect to be able to get a discount of at least half of the seller's savings on the commission.
Use a professional. Do not trust Zillow.com’s "Zestimates" to be right. In example, their own statement about accuracy indicated that the median error for values in Galveston County was 20.9%. If homes priced as little as 5% above market value languish on the market for over 6 months—and they do—you will likely want to price your home right..
You have two options for getting it right. Order an appraisal by a certified appraiser for as little as $395, or get a free CMA from a REALTOR®. Just be up-front with the REALTOR® and make a pledge to the agent (and to yourself) to list with the agent if you cannot sell your home yourself.
It makes no sense to price your home below it's value according to the CMA. No buyer will believe that you are not trying to get more for your home than you would had you used a REALTOR®. You may actually have reduced the price by 3% or so to give a buyer a price break, but they will suspect that you are trying to get the full 6%–7%. This likely accounts for the reasons so many FSBOs fail to sell their home, or end up netting as much as 15% below what they may have netted using a REALTOR®. Refusing to negotiate down from the price you set will turn most buyers away, and negotiating down an additional 3% from a reduced price makes the whole point of going FSBO pointless.
Contact me, let me know what you have in mind, and I will help you with this and many another aspect of selling your home.
Get Yourself and the Property Ready to Show—The information below and the information on the Home Seller Info page of this site will help you with this.
Market Exposure—In addition to advertising in the local paper(s), you should place your property in at least the two top FSBO dot com Web sites, and create your own personal Web site. Advertise weekly, and don't overlook the small local news publications through Echo Media. Before listing on the FSBO dot coms, create your personal Web site on ePropertySites.com, and make sure to link to it from every site you can. If you are willing to pay a 3% commission, consider paying for the flat fee one time listing in the San Antonio MLS when you post on the FSBO dot coms: ForSaleByOwner.com, Owners.com, HomesByOwner.com, and FSBO.com are the leading sites.
Hold Open Houses—Hold open house on Saturday and Sunday of the first week you put your home on the market. Be sure to advertise the open house, and distribute fliers throughout the neighborhood that invite your neighbors to bring a friend who is looking for a home. You should also post signs from the major thoroughfares to your house.
Make It Easy For Buyers—If you don't already have a cell phone, get one and use that number for your telephone contact number on the sign. If you are listed on the FSBO sites, reply to all email inquiries on the same day they are sent if possible.
Consult With an Attorney—This should not be considered to be optional. There is much about the home selling process that is a matter of some rather complex laws (see justia.com), not the least of which are the disclosures you must make to a buyer prior to entering into a contract for sale. The disclosures can be as routine as a property condition addendum (you can download one from the Texas Real Estate Commission), or complicated by matters related to flood plains, protected habitat, wetlands, the presence of lead based paint—or the kind of waste disposal system. The attorney can also provide you with the forms (contract, disclosures etc.) that you will need. Optionally, you can buy the forms you will need in order to be in compliance with the law, but you should still seek legal advice. There are specialized requirements which you may not be aware of that are not covered by any single packet of forms.
Line Up the Financing—If you are not offering seller financing, having some lenders lined up will be a big help. Most of your callers (lookers) will be totally unprepared. Not only will they not know what your home is worth when they call, but they will not have discovered what they can afford—or whether they can qualify for a home loan at all. Penney Mazzanti at SWBC Mortgage and Mike Horner with Gold Financial are two very hard working pros. The Find a Lender page of this site will also help you and your buyer. Keep a list of Mortgage bankers, brokers and contact numbers for the mortgage loan officers at banks available for buyers who come by.
Line Up a Title Company—You should actually be ready to just provide your buyers with a list of title companies. By law, the buyer has the right to select the title company in any transaction that involves government insured or guaranteed loans. See the Helpful Links page of this site for help finding a title company. Make a list of title companies and keep copies available for buyers who come by.
FSBO Facts
Sacrifices—In addition to any other occupation, FSBOs are in the real estate business. Some sellers are sophisticated and objective enough to optimize their selling experience, but they pay for what they get with their time and foregone pleasures and opportunities in addition to advertising and other expenses related to selling. The same is true of real estate agents, but this is just the cost of doing business. Moreover, an agent's clients do not have to rely solely on our availability to sell their homes. In San Antonio, any one of the thousands of other REALTOR® members of the MLS will always be available to show the homes we have listed.
Real estate agents are also trained professionals with ongoing professional development (educational) requirements, and the agencies they represent go to great expense to advertise and promote properties to a target market. They are also leaders in the employment of Internet marketing technologies, and the most likely source of information about a home that a buyer eventually buys.
FSBO Dot Coms—Those FSBO Web sites are likely not the advantage that sellers may be led to believe they are. They were created as lead generating and revenue raising instruments by lenders for the most part. They raise their revenue by selling FSBO data to agents who pay for the service, as well as from the FSBO. Click here for the low-down on what you get from a FSBO dot com.
This does not mean you should not use them—you must use them if you want to succeed. Over half of all home buyers shop for and buy homes they found on the Internet. ForSaleByOwner.com, Owners.com, HomesByOwner.com, and FSBO.com are the leading sites.
Real estate agents represent their sellers and actively market their listings to targeted buyers and other agents.
FSBO Success Rates—According to a survey conducted by the National Association of REALTORS®, 12 percent of sellers sell their home without the assistance of an agent. Among all sellers, 5 percent of FSBOs knew the buyer. Not all the news is that discouraging though. Realty Times, a trade publication, allows that nearly 30% of FSBOs sell thier home in a robust market.
FSBO Bottom Lines—The average FSBO nets far less than they would have received by selling through an agency.
A survey by the National Association of REALTORS® (NAR) found that "The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold." In effect, a FSBO can save the 5%–10% commission charged by most real estate brokers, and still expect to net 6%–11% less after doing all the work—and paying any additional expense.
Mortgage lenders know the business, and understand this fact. For this reason, home owners who find that they must sell their home to avoid foreclosure through a short sale require that the seller list the property with a real estate brokerage.
A Baker's Dozen (plus 6) of the Worst Mistakes FSBOs Make
—and the Advantages of Agency Representation
Not consulting an attorney—Real estate sales and law are so filled with complexities that even agents cannot afford to consult with an attorney. Such a failure could result in liability and loss.
In addition to pre-licensing courses in real estate law, REALTORS® must take legal update classes every two years. Most of us also have both our broker's attorney to consult with and legal council available through the Texas Association of REALTORS® at no charge.
Setting an unrealistic price for your home—Slightly over 2 in 3 homes offered for sale by owner are drastically overpriced. Many of these are priced as much as 30% over their value in the San Antonio market. Even were the sellers of these properties to find an unsophisticated enough buyer to agree to their price—or even discount it by 10%—it would likely not appraise.
You can rarely get back the full cost of a swimming pool or other improvements and upgrades that are not "usual" for homes in your neighborhood. Even improvements that are common in your neighborhood, like a converted garage, will not bring the same value per square foot of an otherwise comparable home with a garage.
Real estate agents use the same methodology in determining the market value for your home that an appraiser uses, and will want to maximize their income from its sale. This means that the price the agent recommends will be as high as the market will likely bear. Really good agent also understand how to use price and terms to differentiate a property from others like it, and to put their seller in control of the negotiation process.
Setting an unrealistic price for your home—Buyers have too many resources at their disposal, and those who search the FSBO dot coms are looking for a bargain. If they are sophisticated enough to check agency list prices on realtor.com, they will have a good enough idea of property values to know when a FSBO is overpriced.
You cannot expect a buyer to believe that you are discounting your home to make it more competitive. You can expect however to receive a low-ball offer from a prospective buyer who anticipates that you are just trying to increase your net on the sale. You do yourself no good by discounting up front (setting the price below market value) for a quick sale. Determine your home's market value, price it accordingly, and get ready to negotiate.
Real estate agents are experienced negotiators, and can advise you about negotiating points that can turn unrealistic offers to your advantage.
Not becoming as informed as possible—Knowledge empowers, and learning as much as you can is in your best interest. Magazines, books and the Internet abound with helpful information for home sellers.
Real estate agents and other professionals are better sources of information. They can provide advice that relates specifically to the local market and your specific needs. Direct your legal questions to an attorney, your questions about taxes to an accountant and so on.
Not being ready to serve a buyer's needs—This is a corollary to the preceding mistake—because a lot of buyers who have not done their home-work will come to your door. Many of them will be completely unprepared, while others, despite having read or heard that they should get pre approved for a loan, will not have taken this important first step. Those who have will likely have done nothing more. It is not likely that a buyer will object to you deciding on the title company, but you can melt the ice that may be chilling the negotiations by providing them with a list of title companies. They will also need to find an appraiser, home inspectors, termite inspectors etc. You can point buyers who have Internet access to this Web site, but you should also have a brace of lists of providers for the various services your buyer will need. And don't forget to provide them with copies of the CC&R’s, By-Laws, and information about the Homeowner's Association fees.
Real estate agents are keenly aware of the need for buyers to pre qualify, and remain at the ready to serve a buyer's needs. They are also able to provide direction and point buyers to the providers of services that they need.
Not screening prospective buyers—A lot of "lookers" who are learning about the market as they go—or bargain hunting—will want to see your home. When you receive calls, get names and verify phone numbers, ask whether they have a mortgage pre-approval letter before scheduling a house tour to satisfy yourself that they know what they can afford.
Real estate agents are trained to screen and pre-qualify prospective buyers.
Not being security conscious—Though the risks are often overstated, opening your home to strangers presents potential risk. As a first safeguard, ask callers for their telephone number, and explain that you only set appointments after verifying phone numbers for security reasons. Prospective buyers will likely respect this, and cooperate with you—professional criminals will likely decline. Make sure that you always keep your doors and windows securely latched. Make it clear on your yard sign that viewings are by appointment only, and make an excuse when they come knocking—my wife/husband is in the shower. Then ask them to call for an appointment. Never show your home when you are alone. Make sure that your valuables are put safely away—including anything that may put you at risk for identity theft—rent a safe deposit box if necessary. After each showing, go around the house to make sure that all your doors and windows are still latched.
Real estate agents face the same risks, but mitigate them by verifying phone numbers and maintaining secure records of their activities. Though they need to give buyers their "space," good agents also remain with their buyers while touring a home.
Assuming that you will be better able to relate to a buyer than an agent—Prospective buyers will be as wary of you as they are of an agent; perhaps more so. While an agent must melt the wall of ice between himself/herself and the buyer during the course of establishing an agency relationship, you risk making the next mistake—becoming overly friendly with a buyer. You will need to be open and transparent (helpful): When prospective buyers arrive, give them your data sheet and property disclosures, show them the basics and give them some room to explore. This last point is a trade-off between your need to put prospective buyers at ease and your security, but taking appropriate security measures in advance should minimize the risk.
While your lisitng agent will put your interests foremost, buyer agency (see: Real Estate Agency Info) facilitates the development of rapport between a selling agent and their client, while providing the greatest possible security for a seller.
Allowing a buyer to engage you in casual conversation—This is a real dilemma for a FSBO. You may lose your objectivity, because the buyers are such a nice couple, or you may innocently say exactly the wrong thing—or failing to chit-chat with them may put them off. You need to be helpful, but remember you also need to focus on the prospective buyer's reactions and impressions if you hope to do your best to sell your home. Unfortunately, you cannot expect them to talk freely and openly with you.
Real estate agents do not face this dilemma.
Not detaching yourself emotionally from the property—This can be very difficult, because your house is your home. You can't afford to let emotional factors affect your objectivity. While you can't take every part of your home with you, you can take the molding on the utility room door that you never painted—the one where you measured your children's growth—if it helps you let go.
Real estate agents cannot make this easier on you, but we can provide a sympathetic ear and suggest ways to make the move easier.
Not getting the property ready for showing—Does the house need a "spring cleaning," or painting, inside or outside? Is there a threadbare rut in the traffic-way of your carpet, or damaged or discolored tile in the kitchen? Do the bathrooms need re-caulking? Does the house smell like your "best friend" or is it filled with smoking odors? Get the house "spic and span" and make sure there are no lingering odors. Consider whether any repairs that are not functionally necessary may significantly affect the appearance of your home, and weigh the pros and cons of each factor that may elicit a negative reaction from a prospective buyer. And don't overlook the lawn and landscaping—clean up anything unsightly, put away the lawn equipment, keep the lawn mowed and seed the bare spots at the very least. Click here for more specific recommendations, and here for yet other important considerations.
Real estate agents know what needs to be done to make a real property presentable, and what should be left to a buyer—and how to use each in the negotiating process.
Not getting the clutter out of the way and depersonalizing your home—A lifetime's accumulation of treasure can reduce that critical sense of spaciousness that a prospective buyer needs in order to imagine how their belongings will fit into your home. Even those personal touches that make your house your home matter, whether the house looks cluttered or not. Family pictures and other personal artifacts detract from the buyer's ability to picture themselves in the home. Consider renting storage space where you can temporarily keep your treasures. Click here for some more specific recommendations.
Your real estate agent will know how to make your home "buyer-neutral," and selling agents are practiced at focusing their buyers on how the home will look when the buyer settles in.
Not asking any "lookers" or agents who show your home for feedback—Have you truly done everything possible to make your home presentable to a prospective buyer? Getting feedback will help answer this question and more.
Good real estate agents routinely ask for feedback from buyers to whom they show a real property, and other agents who may show the property.
Getting offended by a low offer from an overzealous buyer—Many buyers have unrealistic expectations, and others are just fishing for the best deal (steal). When an offer comes in that offends you for these reasons—or because the terms call for undoing something you did, and in which you take great pride—remember that selling the home under the best possible terms is your objective. Make a counter offer that more nearly meets your expectations—and get ready for more give and take.
Real estate agents deal with this routinely, and can read motivation into a low offer—which helps develop negotiating strategies that can result in a sale that satisfies both the buyer and seller.
Interjecting an inconvenience for a prospective buyer—Try to recall your home buying experience. Despite all the rewards, wasn't it a long and tedious experience that was filled with anxious moments? The ongoing relationship agents have with their clients usually affords them the luxury of reserving personal time and they seldom have significant scheduling problems—FSBOs are not so fortunate. Putting off a showing because it is inconvenient for you puts you at risk of losing the sale. When a prospective buyer calls the phone number on your sign and is answered by your voice mail system, you stand to lose buyers. Use your cell phone number, and keep the phone charged. You need to be ready when your buyers are ready, so be ready to cancel that anniversary dinner, put off going to your daughter's ballet recital, Superbowl party and the like, and show the house.
Real estate agents know that any personal inconvenience is just part of the job, and that serving their client's needs at the client's convenience is paramount.
Not removing potentially offensive material from sight—If you are a history or American Studies professor, and researching contemporary racist literature, don't leave it sitting on top of your desk! A prospective buyer may not be aware of your reasons for possessing the material. If your teenage son or daughter is into "Gothica," you may want to repaint any black walls, and remove the "Ozzie" posters, pentagrams and dead rodent collection too.
Real estate agents can only advise you about the potential for problems of this nature.
Trying to conceal a latent defect—If the problem is a major structural defect, you are risking a potential suit for triple the damages, ugh! Discuss this risk with an attorney if you have any questions. The best policy is to disclose every known major defect up front. If it's an oil stain in the living room carpet left behind when you overhauled your Harley, don't try to cover it with a throw rug—some buyers and any good buyer's agent will look under it. You will likely need to correct problems of this nature or offer some allowances for the buyer if you don't take care of them up front.
Real estate agents are not attorneys or engineers, so they must rely on you to be forthcoming about any latent defects. They can however inform you about the marketing implications and discuss your alternatives with you—and they can discuss the alternatives to replacing that oil stained carpet.
Failing to Abide by the Legal Requirements—Anyone who sells their home by owner absolutely should consult with a real estate attorney about their obligation to provide the required legal notices to a buyer. In the past, caveat emptor (buyer beware) was the name of the game. This is not so today. There are a number of notices and disclosures sellers are required to make in addition to the disclosure of defects mentioned above. Failing to provide these disclosures could at the least delay closing, very possibly cause a sale to fall through or result in significant legal liability.
Real estate agents are familiar with the requirements for disclosure, and can provide the forms necessary for their clients to comply with the laws.
Radon Gas
Over about the last decade, the issue of Radon gas infiltration has become a concern that is becoming increasingly addressed in real estate transactions. Many home inspectors now test homes for Radon gas, and you may find it necessary to pay the cost of mitigating the problem.
Good luck, and let me know if things don't work out, and you decide to use a REALTOR®.
