In today’s tough SW Florida housing market, some sellers are looking to cut costs by selling their property without using a real estate agent.
But FSBO sellers should be prepared to do a lot of legwork to manage the sales process, with no guarantee of a final sale.
1. Do I know the value of my home in today’s market?
A common mistake FSBO seller’s make is to price their home too high. As a result, the property languishes on the market.
“When a home sits for a long while, buyers start to wonder what is wrong with it.”The best option is to come out of the gate priced right.”
To market a home competitively, sellers should research the final sales price of similar properties in their community.
Updated sales information is available to agents through proprietary reports, but individual owners can also dig up sales data from public sources.
“It takes a lot of work to look at this data and figure how to price your home, but it’s important in order to come up with the right value.
Buyers eventually have to pay for their own appraisals. But homeowners who buy an appraisal before putting their home on the market can eliminate the risk of a pricing surprise when a buyer applies for a home loan.
Even if sellers think they’ve arrived at fair home values, potential buyers may still try to negotiate prices downward.
2. Am I ready to work with a buyer’s agent?
In a typical real estate transaction, the listing agent represents the seller. But the buyer may choose an agent to represent his or her interests in a for sale by owner transaction.
When a real estate deal is made, the seller usually pays both agents involved a commission based on the sale price of the house. That commission is negotiable, but it has traditionally been about 6 percent of the purchase price. The buyer’s agent and seller’s agent generally split the commission in half.
As a FSBO seller, you may decide not to use a listing agent, but you can’t control whether or not a potential buyer wants to use a buyer’s agent.
If the buyer does use an agent, homeowners should consider offering that agent the typical commission, which would be about 3 percent of the sales price.
3. Will I take charge of sales and marketing responsibilities?
Some FSBO sellers underestimate the amount of effort it takes to market their home.
Sellers should be prepared to keep the home clean, clutter-free and “show ready” at all times.
Prepare the look of your home, both inside and out.
Other steps sellers should take include:
- Take good photos of their property and write effective sales descriptions.
- Buy and install a “for sale” yard sign with promotional fliers that include contact information.
- List the property in multiple classified ads and real estate Web sites.
Placing the home in the Multiple Listing Service, or MLS, is another important way to market the home. The MLS is a database of homes for sale offered by brokers.
FSBO sellers can’t submit to an MLS.
In addition to marketing their own property, FSBO sellers often need to find and hire people to help them complete the sales process. These professionals include real estate attorneys (to review contracts and offer advice), appraisers and contractors (to make any necessary home repairs).
4. Can I bear criticism of my home?
The emotional aspect of selling a home is often overlooked, but it’s an important part of the selling process. Owners will probably hear a lot about their home’s shortcomings from buyers trying to negotiate a lower sales price. Or worse, they may not receive any interest in their home, especially if the price is too high.
5. Am I willing to screen potential buyers?
It may seem pushy, but FSBO sellers must be willing to screen their own buyers.
You don’t want to take your house off the market to negotiate with someone who was never qualified for the home in the first place or has the cash funds.
Before you sign a contract with a buyer, make sure the purchaser will be able to come up with the necessary funds by asking for the proper paperwork and documents.
A lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller’s disclosures. A seller of real estate has an affirmative duty to disclose any fact that materially affects the value or desirability of the property. The seller can be held liable for fraud, negligence or breach of contract if he/she does not disclose properly. The issue of whether a fact is material or not is generally established in the case law of the state in Florida.
Unless you’re a real-estate attorney, your agent probably knows more about disclosure laws than you do. If you fail to disclose a hazard, nuisance or defect and the buyer comes back to you after they’ve moved in and found a problem, they could sue you. Agents can make mistakes, too, but they have professional errors-and-omissions insurance to protect themselves and to give the buyer recourse so the buyer may not need to pursue the seller for damages.