With limited knowledge of home sales (they'd purchased three homes but never sold any), Jim went online, searched "for sale by owner" and came across www.ForSaleByOwner.com.
Following the site's instructions, the couple took pictures of their home, listed it and waited for buyers to come.
They spent their winter holiday hosting open houses and corresponding with potential buyers to no avail. So when it came time to return home to Long Island, they handed the listing to a Realtor with a caveat -- that it exclude a couple they'd met through ForSaleByOwner.com who needed to sell their own home first.
Weeks after the Maguires returned to Long Island, the couple called.
"I knew the market was tough, but "I figured 'what do I have to lose?,' " Jim Maguire said. "I knew what I had to gain – saving $15,000 on a real estate commission."
The Maguires successfully maneuvered the For Sale By Owner process, or FSBO (pronounced "fizz-bo") in real estate lingo – not an easy task in a down market. In 2009, 11 percent of home sales were FSBOs, according to the National Association of Realtors. And just over half of these, 6 percent, actually sold on the open market. (The remaining 5 percent were private transactions among family, friends or neighbors, according to the NAR).
The NAR estimates that nearly 70 percent of all for-sale-by-owner sellers eventually hire a professional agent for help. While these numbers might look discouraging, this percentage includes home sales using a real estate agent, says Joanne Cleaver, a senior editor at ForSaleByOwner.com.
So while a for-sale-by-owner home sale is hard work, it can be done. With the right attitude, knowledge, motivation and some Internet savvy, nearly any homeowner can turn their property into a successful home sale.
Experts and homeowners alike agree on these six steps to a successful for sale by owner experience:
1. Do your research
The first order of business in preparing for a home sale is to become familiar with the ins-and-outs of real estate transactions. Since you've been through the experience at least once, pull out the paperwork and contracts on your home and read them. Learn the language of real estate and read a book or two about how to sell your house.
Gather all the paperwork and forms you'll need for the home sale closing, including copies of property records for appraisers, the title company and others, as well as insurance documents, disclosures and legal documents. At this time, also line up people who will help you in the process, including a real estate attorney, an appraiser if you plan to use one, and a title company. Finally, consider how you want to structure the deal. Will you want to offer such incentives as owner-financing or lease-to-own to attract first-time homebuyers? Learn how these arrangements work.
2. Prepare your house
Now turn a critical eye to your home. Cleaver says house issues fall into three categories: cosmetic problems; functional issues; and things you can't fix. The first two should be corrected before you try and sell your home and the third, if any, should be addressed with the home's pricing.
Turn a critical eye to your house. Paint scuffed or brightly colored walls in soothing neutrals. Replace carpeting or refinish floors. Make sure that your home is cosmetically clean and perfect. Then turn to the working items in your house – the functional things – and see if they need to be repaired or replaced. Ruthlessly inspect appliances, the heating and air conditioning, the roof and other items. Cleaver says. If these are nearing the end of their lifespan, they could turn off buyers. Finally, take a look at things that you can't change about your house: Is it on a busy road, adjacent to an odiferous chicken farm or on an awkward lot directly facing the neighbor's back windows? You may need to adjust or lower the price to entice buyers.
The next step is to clean it, clear away clutter and personal items and stage it. Aim for crisp, clean interiors, closets and spaces. "Trim the trees, wash the windows, get rid of big heavy draperies. Stuff like that doesn't cost you anything and it brings the light in, making a home seem bright and spacious," Cleaver says.
3. Price your house
The number one mistake owners make is pricing their home too high, says Piper Nichole, author of "The For Sale By Owner Handbook." Price it too high and you might scare off potential buyers. Allow it to sit on the market and it gets stale. "Buyers start to wonder what's wrong. Pricing effectively helps a home sell faster," Nichole says.
To determine what you consider the home's fair market value, check out neighborhood sales from the past six months. Attend open houses and check out the competition. Use our Home Values Guide to get a starting idea. You can interview real estate agents, but be up front with them regarding your intention to try to sell the house yourself. Some may decline an offer to speak with you, but many know that you still might need an agent and will welcome the chance.
Finally, if you are stumped, hire an appraiser. A professional assessment could cost between $300 to $500, but having that appraisal in hand is also helpful if there is a wide discrepancy with the potential buyer's offer or the lending appraisal.
4. Market your house
The internet has taken away what used to be a real estate agent's ace-in-the-hole: the multiple listing service. For a small fee, owners can list their for-sale-by-owner listings on an MLS, giving them similar exposure to the market. Other outlets, including Craigslist and websites geared exclusively to home-sales-by-owner draw home shoppers. "If you use these online avenues to market your home, make sure the site gets a lot of unique visitors. You don't want to waste money on a site that doesn't get a lot of traffic," Nichole says.
Also, spread the word on social networking sites, forums you frequent and traditional media outlets like local newspapers. To entice agents with buyers, offer a commission, one comparable to one they'd receive in a normal sale. "We love buyers' agents," ForSaleByOwner.com editor Cleaver says. "Many first-time buyers use an agent and we encourage our customers to offer that 'co-broke' fee to help reach that market."
Be prepared for the offer and the counteroffer on your home sale. If you have a firm bottom-line in mind, make sure it's justified with strong research and weigh the cost of continuing to market the home. Again, if you are squeamish about haggling, consider bringing in someone – a real estate attorney – to assist with negotiations.
6. Closing the deal
Make sure you are familiar with the required closing paperwork for a home sale in your state. Hopefully, your buyer will have already shown you their written preapproval and you will sail through the closing process. But be prepared for snags or delays along the way. Add some cushion to the closing date: Schedule your move and the turnover so that it's somewhat flexible, should the mortgage approval process be delayed. Be prepared for the results of any home inspections and appraisals, and come to the closing table with everything mandated by state and federal law.
In the Maguires case, they hired a title company that managed all the last-minute details, Jim Maguire said. "It was no trouble at all."
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