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have actually sold a couple of homes as a "for sale
by owner" seller. It wasn't as easy as I thought it
would be. But I made the decision based on the fact that
I had not owned the homes long enough to generate substantial
equity to pay a real estate commission. These are the things
I learned from my actual experience, my research, talking
to real estate agents, and talking to others who had sold
a home. I spoke with two friends who are ex-real estate agents,
and they helped me quite a bit. I also took an appraisal
course many years ago in anticipation of starting a real
estate appraisal business. I did not start the business,
but I learned a lot about appraising homes.
First
of all, expect to be bombarded by real agents eager to list
your
home, when they see your, "For Sale by
Owner" sign. They will contact you over and over hoping
that you will become frustrated with the whole process, throw
up your hands and say, "where is that pesky real estate
agent? I'm listing my house with her or him, yesterday!" Unfortunately,
sometimes you will feel like that, but don't give up too
soon. The following information should be helpful.
1. Fix up your home to make it presentable
to sell. That
includes electrical and plumbing in tip-top shape, clean
carpet, clean walls, clean doors, an attractive front door,
and well-groomed landscaping, and maintenance painting,
just to name a few.
2. Then you need to decide how much
to sell your house for. If your asking price
is too high, your home could stay on the market a long
time. If your asking price is too low you
may lose money you deserve. There are several ways to find
out the right sales price. If the homes in your neighborhood
are very similar, i.e. square footage, number of bedrooms
(bathrooms), and similar size yard, you can use the recent
sales from the last two homes similar to yours, in your
immediate neighborhood. It gets a bit more complicated
when the homes
are all different, but appraisers use a similar method.
You will have to find homes with your similar square
footage,
number of bedrooms, number of bathrooms, and if the home
is on a lake, gulf course or ocean. You can also pay for
a sales appraisal, use your local yellow pages for a listing
of real estate appraisers. The next option is to check
city or county records. Just call your local city records
office
and ask them where you can find information on the most
recent home sales in your area. Verify which of these
homes are
similar to yours and use those comparisons to price your
home.
3. Then there are the forms, those
dreaded forms! They are
dreaded but necessary for the legal transfer of your property
to another person. You will need legal real estate sales
and disclosure documents for your home sale. You can get
these documents from a title company or you can pay a real
estate lawyer to do the work for you. The real estate lawyer
will provide you with the documents and fill them out correctly,
for no more than an hourly fee. Verify his/her fee, the
time it will take, and agree on a fee before he/she fills
out
the documents.
4. Let the buyer know that he/she
can pay for an independent inspection of your home, and
put it in writing. The new buyer can have an inspection
for plumbing, electrical, and structural
soundness as well as other things. To be on the safe side,
I paid for an independent inspection on one of my homes,
I had several things fixed as a result, before I sold the
home.
5. Let them know that they need
to choose a mortgage company. Both of the buyers
in my case had never purchased a home. So, I did some
research on the best mortgage companies in
the area and gave them several to choose from, this just
helped to speed up the process. The mortgage company gave
them title companies to choose from or they can search
for their own title company. For safety purposes, you
could have
the person go to your mortgage company of choice and
get pre-qualified, before you show your home. This way
you
will know, who the person is, and that they are serious
about purchasing
your
home.
6. Now let's get back to those
pesky real estate agents. There may be an aggressive real estate agent or two who will
actually present you a buyer. If that agent is willing to
take 3 or 4%, which very few actually can, and they have
a buyer, then you may want to talk. The problem you may experience
is trying to negotiate with an experienced real estate agent,
they will most likely try to get you to reduce your price
for their buyer. Make sure you add up your cost, 4% to the
realtor, fixing up the home for sale, your mortgage sellers
cost (sellers usually pay around 2%), and your moving cost.
Do you have enough equity in your home to pay all of these
costs and still have a substantial amount to put down on
another home? Most homeowners who sale their own home, do
so because they don't have enough equity to pay a real estate
agents cost of 6 or 7%. So, don't let an experienced real
estate agent come along and talk you into decreasing the
price of your home, and giving them 3 or 4% real estate commission,
in that case you could have hired a real estate agent to
do everything to began with, and the agent could get full
price for your home.
Lois Center-Shabazz
is the founder of MsFinancialSavvy.com and author of the
3-time award-winning personal finance book, Let's Get Financial
Savvy! ISBN #0971979502.
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