Selling your home yourself?
Your first big decision is whether to sell your home yourself or use a real estate agent. Some sellers feel more comfortable relying on the expertise of a real estate agent, while others want to avoid paying a commission.
The Klines have heard that real estate agent commissions can be as high as 7 percent and they aren't excited about paying that much to sell their house. They are thinking about selling their home themselves. Agent-free selling is what people in the real estate industry call "FSBO" (pronounced "fisbo," which stands for "for sale by owner").
If you're not under any time constraints, you might want to give selling your own home a shot. If you fail, you can always hire a real estate agent later.
Pros and Cons of Being a FSBO
The number one reason to sell your home without an agent's help is to avoid paying a real estate commission. In Minnesota, real estate commissions run as high as 7 percent of the home's sale price, although you may be able to negotiate a lower rate.
Time and expertise are also major factors in determining whether or not to sell your own home. Do you have a minimum of one hour per day to spend on advertising, screening buyers and showing your home? FSBOs need the flexibility to schedule showings at convenient times for buyers. If your home isn't shown, it won't get sold.
Business savvy also helps. When negotiating the sale, will you be able to keep your cool if a buyer wants to knock a couple of thousand off the price because the home is "obviously going to need a complete redecorating job?" Agents are used to negotiating and can be objective about the value of your home. Can you say the same about yourself?
And, as a FSBO, you won't have access to the Multiple Listing Service (MLS) used by real estate agents to locate homes for buyers. This computerized service lists homes for sale and homes that have sold by neighborhood, price and features. However, you may be able to list your home on the Internet with a variety of companies for a fee.
Tips For FSBOs
If you're still unsure about whether or not to sell your own home, find out more by talking to several people who have tried to sell their homes themselves and get a book from the library or bookstore. Sometimes, school districts offer adult education classes on selling your own home.
Additional Tips Include:
Keep your home clean and ready to show at all times.
Price your home according to what similar homes have sold for in your area not by how much cash you need from the sale of your home and how much you paid for improvements.
Consider selecting an agent in advance to list your home if you can't sell it in a few weeks. Get the agent's advice about pricing and repairs.
Hire professionals to help you along the way. These can include a closing agent and/or a real estate attorney. You will also need a home inspector if an inspection is required by your city.
Keep a notebook with potential buyers' names, addresses and phone numbers so you can follow up with them.
Don't stop advertising your home when you receive a bid. A buyer's offer may not survive the negotiating process.
Prepare and make copies of a fact sheet about your home to hand out to potential buyers. Have a blank purchase agreement for interested buyers to take with them.
If you're having trouble selling your home, consider offering a sales commission to a buyer's agent. Determine what commission will entice local agents. By offering a sales commission, you'll still save what you would have paid a listing agent to advertise your home.
If you want help advertising you home, consider hiring a company that specializes in sales by FSBOs. They will also assist you with legal documents and the terms of the sale. Look for them in the real estate section of your Yellow Pages, or get a referral from another FSBO.
Hiring A Real Estate Agent
If you're thinking of hiring an agent, interview several different agents. Talk with friends and family about agents they've used. Find an agent who will work on your terms. Make sure what you're asking is realistic, however. Here are some things to discuss with prospective agents:
"Have you sold homes in my neighborhood in the last year?" If the answer is yes, ask for the names, addresses and current phone numbers of the sellers, as well as the sales prices of the homes. If the agent hasn't sold homes in your area, find one who has. They'll have a better feel for the market in your area. And, if the agent won't give references, be skeptical. Don't accept excuses about why he or she can't give you the information.
"I'm not willing to pay the commission that you're asking." Many agents will give you the impression that their commission is not negotiable. However, their fees are always negotiable. For example, Ellen Bower hopes to negotiate a lower commission because she lives in a popular development. Other homes on her street have sold quickly, so she thinks her home will be easy to sell. (Of course, this is what most people think!)
"Are you willing to put your sales strategy in writing?" To make sure you get the services you're paying for, ask interested agents for their sales strategy before you hire one. When you agree to list your home with an agent, you could be forced to pay the commission even if you don't get the service promised. So when you find an agent you like, ask to make the commission contingent on the agent sticking to his or her sales strategy. Any understandings you have with the agent should be in writing in the listing agreement. (See Appendix for sample listing agreement.)
"What will you tell potential buyers when they ask whether the price is negotiable?" Make sure the agent will convey the information you want to be conveyed to buyers.
A final note about agents: Your real estate agent is obligated to get you the best possible price for your home as quickly as possible. Ask your agent to send you copies of your MLS sheet and any other marketing materials for your home. Also ask the agent to call at least twice a week to update you about potential buyers. Make sure your agent knows you are going to hold him or her accountable for getting the job done!