SELL YOUR HOME YOURSELF:
Stop Paying a Realtor Commission,
Put That Money in Your Own Pocket
Published by Diane Funk at Smashwords
Copyright 2010 Diane M. Funk
Smashwords Edition, License Notes
This ebook is licensed for your enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you're reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.
This booklet contains the author’s opinions. Some material in this book may be affected by changes in the law (or changes in interpretations of the law) or a change in market conditions since the booklet was prepared. Therefore, the accuracy and completeness of the information contained in this booklet and the opinions based on it cannot be guaranteed. Neither the author nor the publisher is engaged in rendering investment, legal, tax, accounting, or other similar professional services. If these services are required, the reader should obtain them from a competent professional. The publisher and author hereby specifically disclaim any liability for loss incurred as a consequence of following any advice or applying information presented in this booklet.
Testimonial: "the title of Diane's first chapter 'You Can Do It', says it all! You can do it because we did! Her book was a great resource, taking us through all the phases of selling our home. The book is easy to read and full of excellent tips. After only 11 days of marketing our home we had an offer, 30 days later we had a check. With the help of her book we kept the profits in our pocket instead of paying a realtor. - By Anne Bloomfield, 4/10/01
Cover Artwork by Diane Funk, "Relaxation Time" acrylic paints and pressed flowers from my garden.
CONTENTS:
YOU CAN DO IT!
GETTING STARTED
DETERMINE SALE PRICE
PREPARE YOUR HOME
MARKETING STEPS
SIGN
FLYER
NEWSPAPER AD
INTERNET LISTING
OPEN HOME
OFFERS
FINANCING
SALES CONTRACT
ESCROW
CLOSING
MOVING TIME
POCKET COMMISSION $$$
1. YOU CAN DO IT
You can sell your home yourself. If I can do it, you can do it. I have not had training in real estate transactions but I sold my home myself without listing with a realtor. Every year a larger number of homeowners sell their properties themselves without the assistance of a real estate agent. Many people assume that an agent is the only way to sell real estate. But more people are finding out that they do have a choice. Some estimates show that up to 20 percent of the homes on the market today are For Sale by Owner or FSBO pronounced "fizz-bo". You CAN sell it yourself and I am going to show you how!
As the seller, it is difficult to justify the high cost of commission to a real estate brokerage firm when you can do most of what a realtor can do. It is not as complicated as you may think. The commission is simply the fee you pay to a real estate broker for securing a buyer who is ready, willing, and able to pay the price and comply with the terms that you have specified for the sale of your property. In these next few chapters, I am going to show you step by step how to find a buyer and accomplish your goal of selling your home.
My biggest incentive for selling on my own, which is the same for many others who have sold on their own, was to save on the cost of the commission. I bought my home when the market was high. When I sold my home five years later, it appraised for less than what I had paid for it. It would have cost me money to sell my home if I had used a realtor. Instead, I sold it myself and got money back after the balance of the mortgage was paid. The commission would have taken most or all of the small equity I had in my home.
The process of selling your home will require some of your time and minimal cost financially. Your out of pocket expenses will include newspaper advertising, signs, a flyer, an appraisal, and possibly legal counseling. You will also need a roof inspection and a termite inspection; whatever is required in your locale. You would need to pay for the appraisal and inspections with or without the assistance of a realtor. Therefore, the cost of advertising and signs is quite low compared to a commission, which is usually 5 to 7 percent of the sale price of your home. For instance, on a house selling for $100,000.00 the commission would be $5000.00 to $7000.00.
No one knows your personal and financial situation better than you do, so therefore you will need to decide for yourself if this is the best solution for you. If you will simply educate yourself by reading the books such as this one, do some research on the internet, and check out the latest news and laws regarding the real estate market, you will be able to make an informed decision. You may also wish to seek advice from people you know who have your best interest in mind.
Selling your home yourself can be an extraordinary experience in more ways than one. Do not allow the process to become an emotional issue. Stay focused on your goal of selling your home and you will be successful. You will not only have the satisfaction of having done it yourself and possibly even enjoying the experience but also of having saved the cost of paying a realtor.
2. GETTING STARTED
The first thing I did when I decided I was ready to sell was to visit the Title Company that handled the title when I bought my home. The Title Company did not charge me for my short consultation. I simply asked, “I want to sell my home myself, what do I need to do?” They advised that one of the most important issues in selling on your own is that I make sure any perspective buyer is "pre-qualified" with a lender before I enter into any negotiations with them. They also informed me about which types of buyers’ loans I may encounter and I will discuss this later on in this booklet. The Title Company listed the types of fees required in selling a home and gave me an estimate of what all those costs would be so I would know what to expect and I would be aware if they were in excess. They advised that I could set a limit on the amount that I would pay in closing fees. The Title Company also offered to open escrow for me once I had an offer on my home. They said that I would first need to determine a sale price.
3. DETERMINE THE SALE PRICE
I learned that there are a few different ways to determine a price for your home. The first and most effective way to price your home is an appraisal. An appraisal will tell you what your home is worth in the current market. The appraiser evaluates your property based on the property size and shape, the style and size of the home, the size and type of other buildings on the property, the condition of all structures, structural materials, heating and air conditioning systems, plumbing, electrical system, and foundation. They will also check the condition of the neighborhood, public improvements, and building code regulations. An appraisal will cost a minimal amount of money, from $150.00 to $300.00, possibly more depending on the locale and value of your home.
It is possible to wait to have the appraisal done by the buyer’s mortgage lender after you have a sales contract but then you risk the chance that your home will not appraise for the amount of their offer. Your home has to qualify for the mortgage amount they are applying for. It is advisable to use a professional organization to get a qualified opinion as to the value of your home. You can find them in the phone book in the yellow pages or on the internet. Call several appraisal companies and ask what their fees are to compare and choose the one you feel will be most fair and professional. Make sure you ask for a written copy of the appraisal so that you have a document you can show to a perspective buyer.
The second method for pricing your home is to check comparable homes in your area yourself, or, have a realtor “run the numbers” for you. Realtors have access to “comparables”, also referred to as "comps", through a computerized listing service. This Comparable Market Analysis (CMA) includes details of homes sold in a specific area and typically represents sales within the last 6 months. Some realtors may be willing to help in hopes that you will eventually list with them. Be up front in asking a broker for a comparable market analysis and tell them that you are going to attempt to sell your home on your own. Keep notes on who you talk to because you just may need to employ their services if you are not able to sell your home in the time frame you need to.
There is no charge to have a realtor run a list of comparable homes in your area. Realtors will not charge you until you actually list with them and sign a realty agreement. Call around to find one who is willing to give you some assistance. Ask for a list of homes that have recently sold in your area and a list of homes currently on the market. You will want to look more closely at the prices of the homes that have already sold because the currently listed homes may not sell for that price. The list should cover homes that are comparable to yours with the same number of bedrooms, bathrooms, and other amenities, and the sale prices. From this you can determine a median sale price, in other words, a midpoint range of all houses sold in a specific area during a specified period of time. You can also ask a realtor what the average time is to sell a home in your area so you know what to expect.
When you have your list of comparable homes is it best to price your home based on the lower range of comparable homes for sale. For example if the homes in your area are selling from $250,000.00 and $235,000.00 and $225,000.00, then you want to list between the middle and lower end say like $230,000.00. Although, if there is a special feature to your home such as an in-ground pool that you put in then you want to make that stand out.
If a real estate agent or broker offers to do an appraisal, make sure it is understood up front that there will be no charge. Most realtors are not actually qualified to do appraisals. And also be aware that a comparable market analysis is not the same as an appraisal. There is no such thing as Fixed Market Value but there is such a thing as Fair Market Value. Fair Market Value is the price a buyer will pay and that a seller will accept for a particular property. Each buyer, seller, home, and selling situation is different.
Another option for pricing your home is to call or visit the county recorder’s office and they can direct you to the information you need. The recorder’s office also has the list of homes sold in your area and the price they sold for.
The sale price of your home may also depend on your status with your mortgage company. How much do you owe on your house? How much equity do you have in it? How much do you need to get out of it? Talk to your mortgage company. Is your mortgage assumable? Do you want to carry a second mortgage or a note for the buyer? Will your mortgage company qualify perspective buyers? Do they have some literature you can provide for a new mortgage for the new owners? Also ask if you will be subject to a prepayment penalty if you pay off your loan in full before the end of the term.
There are many variables that affect the price you ask for your home. The price you get could depend on the type of financing the buyer pursues. Interest rates can affect what the buyer can pay. Also, your price and the current market will affect your ability to sell. It may depend on whether it is a buyer’s market or a seller’s market at the time you are ready to sell. A seller’s market suggests that there are more buyers than properties available for sale. A buyer’s market means there are more homes than there are buyers to purchase them. This is something that a realtor can give you some insight into. Even though you may be looking at a buyer’s market, don’t let this dissuade you. Evaluate all of the factors involved in selling your particular home and base your decision on what is right for you.
Be careful not to price your home on the basis of just what you need or want but also according to the current market. Many homeowners tend to overprice due to sentimental value and “pride of ownership”. If you have been in your home for a length of time, you may be quite attached and proud of your home. If you find that you have priced your home too high you can lower the price after two weeks of being on the market and after four weeks you can lower it again if necessary. If you own your home outright and are in no hurry to sell, it could be a great advantage to set the terms and provide owner financing to greatly increase your profit.
Estimate what your selling costs will be and add this to the total dollars you want to receive from the sale of your property. Now take a look at the appraisal value and the comparable sales and figure an intermediate price and add around ten percent. You do not want to use the average price to list your home. You will want to use a slightly higher price because a buyer is probably not going to offer you the asking price; they will most likely offer you slightly less.
Let buyers know that the price is lower because there is no commission added on. You can also show them your mark down to allow for repairs. For instance you can say the asking price for the house is $100,000.00 less $1000.00 for the exterior to be painted. Tell buyers you are serious about selling and will consider all offers.
I advise that you set a limit on how long you will list your house yourself before you will list with an agent, perhaps 4 - 6 months, depending on your circumstances.
It may also help you to know that the peak season for selling a home in any area of the country is from February through May. Factors that may influence your decision as to when to sell may be when the kids are out of school, what time of year may have an advantage for tax purposes, summer vacation, and best time for you to buy your next home. The summer is the slowest season so if you can wait until the fall season, it may be worth the wait to get what you want for your home. The middle of November through January is significantly slower and therefore the worst time to sell. Houses just do not show as well in the winter. I put my house up for sale in the late summer and everything was still in bloom. The garden was bursting with tomatoes and peppers and zucchini and the orange tree was heavy with ripe oranges. One of the features that sold me on my house when I bought it was the flower beds all around the front and back yards. The moment I made the decision that this was the house for me was the moment I saw the Bird of Paradise plant in full bloom in the back yard. It was so unique and so beautiful.
From what I have seen it is not advisable to evaluate your home online. There are too many variables that can be left out such as any upgrades, improvements, and remodeling you may have done. You may opt to use one of the sites available online to appraise your home but some do not take into account what you paid for your home, the number of bedroom, number of bathrooms, square footage, the size of the garage, or type of heating or air system you have in the house. In other words, you are not able to provide enough detail to get a good comparison. This method of evaluating your home is still evolving so if you use an online service I would suggest utilizing at least one other method for comparison.
4 PREPARE YOUR HOME
Once you have determined a sale price you next need to prepare your home. It is true that “curb appeal” is most important. Any realtor would tell you the same. Your house must be appealing from the street or buyers will not venture to see the inside of your home. Mow the lawn, edge the lawn, prune any overgrowth and clean out the flowerbeds. It is a very good idea to plant some colorful flowers. Pansies, geraniums, petunias or marigolds will bloom all summer. If it is at all possible, try to sell your house in the spring or summer. Any home shows better at this time of year.
Trim the trees, trim the bushes, and clear out any refuse. Make a trip to the dump with anything that may be cluttering your yard. You want it to be as well manicured as you can. Sell or move old cars or campers. Store yard ornaments and toys in the garage and conceal trash cans.
Rent a storage space if necessary. Fix the fences and gates and replace latches as necessary. Repair cracks in the driveway and remove oil stains. Get rid of cobwebs and secure any outdoor handrails. Make sure the doorbell works and a new Welcome mat is a great idea. The house numbers should be clearly visible and well lit. Keep the driveway and sidewalks swept and hosed also because once your sign goes up, those are the things that will catch their eye. A well-kept yard is very inviting to a perspective buyer.
Here are some suggestions for the inside of your home. Make sure all of your windows are clean to let in all the sunshine possible. You must replace any broken windows or screens and replace any burned out light bulbs on the inside and outside of your house. I cannot stress enough that your home must be spotless. The inside is what will sell your house. Hire a team of professional house cleaners if you must. Whether you are selling your house yourself, or if you are using a realtor, it must be clean.
Your house should be free of clutter, no newspapers, no shoes or socks, and no toys lying around. Wipe down the walls, wash and wax the floors, clean the carpet or have it cleaned professionally. Professional carpet cleaners are not very expensive and it is well worth it. If you are considering replacing the carpet you always have the option of an allowance on your price for new carpet. The new buyers might like the idea of picking the carpet color themselves.
The same goes for painting the interior or exterior of your home. Depending on the condition of the walls, you may want to let the buyers paint in the color of their choice. If you have to paint then you should use a light neutral color to make rooms look bigger. Patch any holes in the walls and on white walls you can do as I did and fill the picture nail holes with white toothpaste or crayon so the holes do not stand out. Straighten all the closets and cupboards. Some buyers looking at your home will not miss one cupboard. A messy closet could be a real turnoff so be sure you are as thorough as possible. One tip I learned in my research is that you can color coordinate your closet and it will make it look larger and more organized and it may even help you when you are getting ready every day. To make more room, pack away your seasonal clothes. You can do like I did and put them in your suitcases to get a start on moving.
Some home sellers will hire someone to "stage" their home. They employ the services of professional decorators to come in and arrange the furniture and all the accessories to bring the home's comfort and attractiveness to the maximum level.
Before you have an open house go through your home the way you would look at a home you are thinking of buying. Get rid of everything you no longer need. To open up the space, take out any furniture that you can. Have a big yard sale, throw it away, store it, or give it away. Clean all the indoor and outdoor light fixtures and lamps and ceiling fan and replace any burned out light bulbs. You want as much light and sparkle to make your home warm and inviting. The first thing that visitors see coming to your home is your front door so paint it or replace it as necessary.
I had considered remodeling before I sold my home to increase the sale price and attract more buyers. But, some professionals advised that it was not likely that I would recoup the cost of remodeling. Cost of improvements or additions can rarely be added to the value of the property.
Cosmetic improvements, on the other hand, do help to sell a home so look carefully at what your home may need. The minimal amount of fix-up is all that is needed. All the doors and cabinets and latches should all work properly. I had to replace a kitchen cabinet hinge and the funny thing was that I had lived with that bent hinge for all those years and all it took was a couple of dollars and a couple of minutes to install a new hinge.
You do need to make certain that all the plumbing and electrical are up to safety standards. Try to save money by doing as much of the work yourself.
When I sold my house there was one item that the buyer requested that I replace. The hot water heater, which was located in the garage, had some rust on the top of it and it probably was going to need to be replaced soon. I was happy to comply and had it replaced and actually put in a bit larger water heater. Of course this met with their satisfaction and showed good faith as the seller.