Welcome, For Sale By Owners

I understand why some homeowners prefer to sell their homes themselves. I wish you success in selling your home, but if there comes a time that you decide to hire a real estate firm to manage this process for you, I would welcome the opportunity to show you how I can get your home sold and save you money with our full service listings for only 3.4% total commission.

I have included some information below which I hope will be useful to you.

Tips for Pricing Your Home

Consider comparables. What have other homes in your neighborhood sold for recently? How do they compare to yours in terms of size, upkeep, and amenities?

Consider competition. How many other houses are for sale in your area? Are you competing against new homes?

Consider your contingencies. Do you have special concerns that would affect the price you’ll receive? For example, do you want to be able to move in four months?

Get an appraisal. For a few hundred dollars, a qualified appraiser can give you an estimate of your home’s value. Be sure to ask for a market-value appraisal. To locate appraisers in your area, contact The Appraisal Institute (www.appraisalinstitute.org) or ask your REALTOR® for some recommendations.

Ask a lender. Since most buyers will need a mortgage, it’s important that a home’s sale price be in line with a lender’s estimate of its value.

Be accurate. Studies show that homes priced more than 3 percent over the correct price take longer to sell.

Know what you’ll take. It’s critical to know what price you’ll accept before beginning a negotiation with a buyer.

How to Prepare for the Open House

Advertise your open house. Ideally you should advertise both the weekend before and the weekend of the open house. Check with the local paper to see when their ad closing deadlines are.

Create a property summary sheet. This sheet gives prospective buyers an overview of your home. Include dimensions for each room, copies of a property survey, summaries of utility costs and property taxes, and a list of when capital items such as roofs and furnace were added.

Develop a sign-in form for prospects’ addresses. You’ll ideally want both phone numbers and e-mail addresses to follow up with prospective buyers.

Put up signs. One or two days before the open house, place directional signs at major intersections within three to four blocks of your house. Be sure you check on anti-sign regulations in your area.

Get your house ready. Remove clutter, clean your house, wash your windows, add flowers, turn on lights, open draperies and blinds, remove valuables and breakables, confine pets, turn on soft music, and set up a table for your property fact sheet near the entrance.

Develop a follow-up sheet. Getting feedback on your home from prospects who attended your open house will give you a better understanding of how to make your home more appealing to buyers.

Open House Safety Tips

An open house can be a great sales tool, but it also exposes you to numerous unfamiliar people for the first time. Stay safe by practicing these guidelines.

Call the local police department and ask them to have a squad care drive by during your open-house hours.

Check your cell phone’s strength and signal prior to the open house. Have emergency numbers programmed on speed dial. Carry an extra, fully charged cell phone battery.

Determine several “escape” routes that you can use in case of an emergency. Make sure all deadbolt locks are unlocked to facilitate a faster escape.

Turn on the lights and open the curtains. These are not only sound safety procedures, but also great marketing tactics.

Make sure that if you were to escape by the back door, you could escape from the backyard. Frequently, high fences surround yards that contain swimming pools or hot tubs.

When prospective buyers begin to arrive, jot down their car descriptions, license numbers and physical descriptions.

When showing the house, always walk behind the prospect. Direct them; don’t lead them. Say, for example, “The kitchen is on your left,” and gesture for them to go ahead of you.

Notify a friend or a relative that you will be calling in every hour on the hour. And if you don’t call, they are to notify the police immediately.

Inform a neighbor that you will be showing the house and ask if he or she would keep an eye and ear open for anything out of the ordinary.

Source: National Association of REALTORS® Safety Week kit

Is Your Buyer Qualified?

Unless the buyer who makes an offer on your home has the resources to qualify for a mortgage, you may not really have a sale. If possible, try to determine a buyer’s financial status before signing the contract. Ask the following:

1. Has the buyer been prequalified or preapproved (even better) for a mortgage? Such buyers will be in a much better position to obtain a mortgage promptly.

2. Does the buyer have enough money to make a downpayment and cover closing costs? Ideally, a buyer should have 20 percent of the home’s price as a downpayment and between 2 and 7 percent of the price to cover closing costs.

3. Is the buyer’s income sufficient to afford your home? Ideally, buyers should spend no more than 28 percent of total income to cover PITI (principal, interest, taxes, and insurance).

4. Does your buyer have good credit? Ask if he or she has reviewed and corrected a credit report.

5. Does the buyer have too much debt? If a buyer owes a great deal on car payments, credit cards, etc., he or she may not qualify for a mortgage.

Forms You’ll Need to Sell Your Home

1. Property disclosure form. This form requires you to reveal all known defects to your property. Check with your state government to see if there is a special form required in your state.

2. Purchasers access to premises agreement. This agreement sets conditions for permitting the buyer to enter your home for activities such as measuring for draperies before you move.

3. Sales contract. The agreement between you and the seller on terms and conditions of sale. Again, check with your state real estate department to see if there is a required form.

4. Sales contract contingency clauses. In addition to the contract, you may need to add one or more attachments to the contract to address special contingencies — such as the buyer’s need to sell a home before purchasing yours.

5. Pre- and post-occupancy agreements. Unless you’re planning on moving out and the buyer moving in on the day of closing, you’ll need an agreement on the terms and costs of occupancy once the sale closes.

6. Lead-based paint disclosure pamphlet. If your home was built before 1978, you must provide the pamphlet to all sellers. You must also have buyers sign a statement indicating they received the pamphlet.

Checklist: 17 Service Providers You May Need When You Sell

Real estate attorney
Appraiser
Home inspector
Mortgage loan officer
Environmental specialist
Lead paint inspector
Radon inspector
Tax adviser
Sanitary systems expert
Occupancy permit inspector
Zoning inspector
Survey company
Flood plain inspector
Termite inspector
Title company
Insurance consultant
Moving company

Used with permission from Kim Daugherty, Real Estate Checklists and Systems, www.realestatechecklists.com.

Why People Are Afraid To Buy From You?

Many homeowners believe that to maximize their profit on a home sale they should sell it themselves. At first glance, they feel selling a home is simple and why should they pay a broker fees for something they could do themselves? In fact, close to 25% of all the homes sold last year were sold for sale by owner (FSBO).

However, close to half of the FSBO’s said that they would hire a professional next time they sold. Thirty percent said they were unhappy with the results they achieved by choosing FSBO. Why?

Many FSBO’s told us that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings were even more disappointing. By the time they figured the amount of fees paid to outside consultants, inspectors, appraisers, title lawyers, escrow and loan officers, marketing, advertising... they would have been better off having paid the broker’s fee which would have included many of these charges up front.

Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself serious money. Some FSBO’s discovered that the lost money as a result of poor decisions outweighed the commission.

Before you decide to sell FSBO, consider these questions and weigh the answers of assuming the responsibility versus employing a professional. A little time spent investigating up front will pay off tenfold in the end.

Questions To Consider:

Do I have the time, energy, know-how, and ability to devote a full forced effort to sell my home?

One of the keys to selling your home efficiently and profitably is complete accessibility. Many homes have sat on the market much longer than necessary because the owner was unwilling or unavailable to show the property. Realize that a certain amount of hours each day is necessary to sell your home.
 

Am I prepared to deal with an onslaught of buyers who perceive FSBO’s as targets for low balling?

One of the challenges of selling a home is screening unqualified prospects and dealing with lowballers. It often goes unnoticed... how much time, effort and expertise it requires to spot these people quickly. Settling for a lowball bid is usually worse than paying broker commissions.
 

Am I offering financing options to the buyer? Am I prepared to answer questions about financing?

One of the keys to selling, whether it’s a home, a car... anything, is to have all the necessary information the prospective buyer needs and to offer them options. Think about the last time you purchased something of value, did you make a decision before you had all your ducks in a row? By offering financing options you give the home buyer the ability to work on their terms and open up the possibilities of selling your home quickly and more profitably. A professional real estate agent will have a complete team, from lenders to title reps for you to utilize...they’ll be at your disposal.
 

Do I fully understand the legal ramifications and necessary steps required in selling a home?
 
Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your states disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, a professional would be a wise choice.
 

Do I have the capability of handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented?
 
Ask yourself if you are well versed in legalese and if you are prepared to handle disputes with buyers. To avoid any disputes it is wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.
 

Have I contacted the necessary professionals....title, inspector (home and pest), attorney, and escrow company?
 
Are you familiar with top inspectors and escrow companies? Don’t randomly select inspectors, attorneys, and title reps. Like any profession there are inadequate individuals who will slow, delay and possibly even cost you the transaction.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights reserved.