Doing a For Sale by Owner (FSBO) without representation isn't always difficult when demand is high and inventory low. Still, most FSBOs find a number of challenges with the process, particularly finding buyers for their home.
According to the National Association of Realtors, 86% of all homes listed For Sale by Owner are eventually listed through a real estate agent. There are several reasons for this, including the fact that most buyers are themselves represented by an agent. Owners often lack the necessary expertise and time to price a home properly and market it effectively.
If you're thinking about selling your home on your own to save on real estate commissions, be aware that the savings comes with a price, as it will be your job to do all of the time-consuming work of a real estate agent.
The first challenge of a FSBO is figuring a fair asking price for the property. Correctly pricing a home is equal parts research, intuition and timing. One of the biggest mistakes you can make is over-pricing your home. Buyers' interest is at the highest during the first two weeks your home is on the market. If it's priced too high, buyers will move on quickly; most won't bother visiting or making an offer.
As your property languishes on the market, it gets a bad reputation as buyers and their agents assume something is wrong with it. You're then left chasing the market by lowering your price again and again hoping to recapture interest in your home.
While you may love your home and all of the little touches you've added, you must be realistic. The walnut cabinets in the kitchen that cost you a fortune may look great to you, but the person who buys the home may hate them. Do not use the price you paid for the home and what you put into it to determine an asking price. The home is worth what the market says it is worth.
To get past your emotional attachment, look at the facts. How much do comparable homes in your neighborhood sell for per square foot? Are prices falling or rising? How much are the extra features in your home really worth?
You can check with the title company to find recent sales prices for homes, and hire a certified appraiser to determine your home's value. You can even ask a real estate agent. Because most FSBOs end up with an agent in the end, many will be willing to help.
Marketing is another challenging area for a FSBO. From the money you save over hiring an agent, it's a good idea to put a lot of it into advertising and marketing that gets people in the door.
Even a decent real estate agent will be experienced and skilled at targeting buyers and getting them to look at your house; you will have to learn this from scratch.
A good place to start is a professional sign in the yard, followed by word of mouth and print advertising. Turn to local newspaper ads, Craigslist and websites that cater to FSBOs.
The biggest marketing issue is not being listed on the MLS. When buyers and real estate agents search for homes, they look through MLS listings. If you aren't represented, you aren't listed. You may want to consider hiring a company that will list your property on the MLS in exchange for a smaller-than-average commission.
Once you receive an offer on your home, it's up to you to bargain on the price and conditions, including when the buyer will take possession, what repairs must be paid, what stays with the home and more.
At this point, it's a good idea to have an attorney with you to check anything that passes between you and the buyer in writing. You will also want an attorney to make sure you're not agreeing to anything that will leave you liable for something unexpected after the sale.