For those hoping to maximize profits on a home sale, posting a “for sale by owner” sign in the yard is an appealing option. Real estate brokers typically take 5 to 6 percent of the sale price, which could mean as much $12,000 is lost to commissions in the sale of $200,000 house.
However, saving money isn't the only reason people decide to sell on their own. “Selling your home can be a very time-consuming process, especially when you have a broker representing the sale,” says Allen Shayanfekr, CEO of real estate investing platform Sharestates. While a broker will do much of the work, Shayanfekr says owners will find they have to coordinate schedules with their agent and work on their timeline, which some people might find inconvenient and frustrating.
Regardless of whether you want to sell your own home to walk away with more money or retain more control over the sales process, you need to do it the right way. That may involve spending a little extra money upfront to maximize the sale price and minimize any headaches.
Here are six things you should do to make selling your home on your own a success:
- Have your property appraised.
- Get serious about your listing.
- Remove emotion from the process.
- Approach your house sale like a professional.
- Hire a real estate attorney.
- Don’t rule out an agent.
Have your property appraised. “In a low-inventory market like we're seeing today, pricing your home correctly is crucial,” says Emile L'Eplattenier, real estate analyst for FitSmallBusiness.com. Normally, a real estate agent provides a comparative market analysis to price your home appropriately. This analysis will look at the features and condition of your house and compare it to other recent sales in the area to determine the appropriate asking price.
If you don’t have an agent, you could do your own market analysis using free online resources such as Zillow and HouseCanary or by scouring local tax records for recent sales data. Some homeowners ask local agents to provide a free comparative market analysis even though they have no intention of listing their home with that broker, but paying for an appraisal may be the best way to get an accurate value while bypassing the ethical questions associated with this strategy.
If your agent isn't returning calls or lacks knowledge, consider moving on.
Get serious about your listing. Once you know the right price for your home, it’s time to create a listing. Homeowners have options that run the gamut from posting free ads on Facebook sales groups and Craigslist to setting up a dedicated website to market the property. For a flat fee of around $400 to $500, you can have your property listed in the multiple listing service, known as MLS. This will post your home where real estate agents can easily find it. Paying for MLS inclusion can expand your potential customer base, but be aware you’ll likely need to pay a 2 to 3 percent commission to the buyer’s agent if they have one.
However, even an MLS listing may not get much attention if the photos are dark and the rooms cluttered. Clearing out the excess and improving lighting can go a long way toward making your home attractive to buyers. Other options would be to pay for a professional photographer or use a service like roOomy, which allows people to virtually stage their house by uploading photos of rooms, erasing old or unsightly furniture and replacing it with images of more stylish décor.
Remove emotion from the process. Homeowners undoubtedly have their favorite property features. There may be aspects of the home they love and naturally would like to emphasize. However, buyers may have other priorities, and focusing only on the things you love could be off-putting.
“The right buyer might be someone who is looking to completely redesign the property and while meeting, they might make comments that would, in a different setting, offend your taste,” Shayanfekr says. For the sales process, you need to shift your perception from selling your home to selling a house.
Approach your house sale like a professional. Removing emotion is only the first step toward selling your house like a pro. You also need to be ready to put in the time to show the house, respond to emails and calls promptly and provide thorough information.
People also need to be strategic about their marketing and take care not to share too much about defects upfront. “The ‘warts and all’ approach can and will backfire on you if your home is not priced carefully,” L’Eplattenier says. “Skilled salespeople downplay negative aspects of the home until they get their clients physically [inside] to talk them through their options.”
The stresses of selling a house will never completely go away, but these steps will help you enjoy your time away even with a home on the market.
Hire a real estate attorney. Between the documentation needed for the mortgage, title transfer and other legal requirements, the paperwork for home sales is extensive. “There are two common hurdles we see related to the [for sale by owner] process,” says Craig Evans, an executive with Ally Home Mortgage. “The first is the accuracy of the purchase agreement. The second is related to aligning expectations on both sides of the purchase transaction.”
Evans says both problems can be addressed by having a real estate attorney review paperwork. A handful of states, such as New York and Georgia, have laws requiring all sales, even those in which the buyer and seller have agents, be overseen by a real estate attorney. Zillow estimates the cost for one to be between $500 and $1,500.
Don’t rule out an agent. L’Eplattenier says selling a house isn’t for everyone. Not only does it require a significant investment of time and energy, it may result in a lower sale price. In 2016, the median price of a home sold with an agent or broker was $245,000, while the median price of properties sold by the owner was $185,000, according to the National Association of Realtors. There is no hard data on whether “for sale by owner” properties are sold below market value, but L’Eplattenier says the homes that do sell this way tend to go quickly, which is an indication that they are underpriced.
For those who want to use an agent but can’t stomach paying the full commission, a discount real estate broker may be a good choice. Redfin is one example of a company promising full service but charging only a 1.5 percent fee. However, keep in mind you’ll still need to pay the customary 2 to 3 percent to the buyer’s agent.
Going the “for sale by owner” route can result in more cash in your pocket, but you need to be smart about how you approach the sale. Spending time and money on your listing and an attorney can help ensure you get the best price possible and that the transaction goes smoothly.
8 Home-Selling Buzzwords That Annoy Consumers
Draw buyers to your home, not away from your online listing.
Eighty-eight percent of homebuyers use the internet as part of their home search, according to a 2015 National Association of Realtors report. That’s clearly a portion of buyers you can’t afford to miss when selling your home. But what makes an enticing home description? Specifics and honesty are key, but with so many home listings out there, it’s also important to avoid phrases and terms that have become cliche or have taken on a new meaning. Read on for real estate buzzwords to leave out of your listing.'Quaint' or 'cozy'
'Quaint' or 'cozy'
Any description of a house pushing the “quaint” and “cozy” factor is likely trying to mask the fact that the house is uncomfortably small. And while the size of a home matters to most buyers, let them determine if it's the right size based on the square footage listed. “Consumers look through a lot of listings. They don’t have the patience to decode all the cliches and euphemisms,” says Steve Udelson, president of Owners.com, a website for self-directed homebuyers and sellers.'Luxury'
High-end homes attract a whole new set of potential buyers, but “luxury” has been so overused it’s hard to tell the difference anymore. “You’ll find various listings that are by no means ‘luxury’ or ‘luxurious,’” says Michelle Farber Ross, a broker and managing partner at MMD Realty, based in Fort Lauderdale, Florida. “Agents use those buzzwords, and you look and think, ‘Oh gosh, this would never be a luxury home.’” She notes the true luxury market begins at $1 million (and starts even higher in pricey cities such as New York and San Francisco).'Up-and-coming'
The description of being in an “up-and-coming” neighborhood has taken on a whole new meaning – and often not a positive one. This phrase is a veiled attempt at pointing out a high-crime neighborhood, which gets into dangerous territory, as the Fair Housing Act prohibits providing subjective information that may steer homebuyers toward or away from a neighborhood based primarily on race or any other form of discrimination. “You can’t red-flag a neighborhood,” says Tim Brinkman, owner and broker of The American Real Estate Co. in Keyser, West Virginia. He tells his agents that they should only share information about the neighborhood that's location-based, such as the home's proximity to a grocery store or park.'Priced to sell'
'Priced to sell'
This all-too-common phrase has zero impact on a home description. Plus, Udelson explains, “priced to sell” raises awkward questions for online house hunters: “What does that mean? That means all other listings are not priced to sell?” A home description should remain focused on the home's qualities and let the listed price speak for itself. This phrase and others – including “motivated seller” – diminish the property's selling points and may leave you with lowball offers from buyers looking to score a deal.'Updated'
Every homebuyer may want an updated kitchen and master bath these days, but the word is so vague that it can lead to major letdowns when it comes time to tour the house. “Take that down a notch and be more specific,” Udelson says. New quartz countertops and recently installed stainless steel appliances should be described as such to differentiate from a kitchen that only got a fresh coat of paint.'Needs TLC' or 'Handyman Special'
'Needs TLC' or 'Handyman Special'
Overly vague terms get obnoxious when it comes to fixer-upper properties. Phrases like “needs TLC” and “great potential” fail to note how much work the home needs, often leading buyers to assume the worst so they don't even bother to see the home in person. Brinkman’s least favorite home description is “handyman special.” “Just how handy do they have to be?” he asks, noting this could be minor maintenance or a complete remodel.'Walking distance'
Close proximity to stores, restaurants and public transportation can be a huge selling point for many homes, but clarity is essential because “walking distance” varies significantly by person. While anything less than a mile might be considered walkable by one buyer, any more than a block may be too much for another. “That’s not bad, but you can be more direct,” Udelson says. Note the physical distance to the nearby shopping center or explain that there are no major roads to cross, which makes walking much easier for those who are inclined to pay a higher price for convenience.'This home has it all.'
'This home has it all.'
Lacking an actual description of the property, this phrase does little to draw homebuyers to a home showing. Udelson notes this and other expressions like “the possibilities are endless,” for example, are “vague, overused abstractions” that do little to sell to a new owner. You don’t want to leave room for a potential buyer to doubt a description. Instead, ensure the home's features speak for themselves. A home with a pool, master suite and chef’s kitchen might be everything a buyer wants, but if it’s simply described as having “it all,” the buyer may never check it out.Remember: No need to repeat the basics.
Remember: No need to repeat the basics.
When a property goes into a multiple listing service, the information that breaks down key details of the home, such as the number of bedrooms, bathrooms and age of the house, is presented in list form. Farber Ross warns against repeating those details again in the description you write: “They can see all those statistics on their own – you don’t need to reiterate any of that.” Instead, use the description as an opportunity to describe the type of hardwood floors and countertops that may pique a buyer’s interest.Read More
Updated on Jan. 18, 2019: This story was previously published on Aug. 11, 2017, and has been updated with new information.
With more than a decade of reporting experience, Ms. LaPonsie’s work has been featured on MSN, CBS MoneyWatch, Yahoo Finance, NerdWallet and numerous other sites on the web. She has been a guest of Consumer Talk with Michael Finney and The Steve Pomeranz Show.
A native of Michigan, Ms. LaPonsie received her bachelor’s degree from Western Michigan University. You can follow her on Twitter or connect with her on LinkedIn.
Devon Thorsby | June 5, 2019
Homeowners should not fret, as long as they're prepared for the possibility of a downturn.