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% of the sale price, which could mean as much as $12,000 in commissions on the sale of $200,000 house. Considering many sellers also have a mortgage, the commission could result in a significantly higher percentage of the profits being lost to broker fees, says Colby Sambrotto, chief revenue officer for Home Captain, a real estate concierge service.
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 eight things you should do to make selling your home on your own a success:
Decide Whether FSBO Is Right for You
The very first step to successfully selling your own home is deciding whether you are up for the challenge. "It can be done, but you have to be really cautious," says Mike Hills, vice president of investment brokerage at Atlas Real Estate in Denver.
Home sales are complex and time-consuming transactions. As a personal seller, it will be up to you to prepare, market and show your home. Plus, there is paperwork and legal requirements that may demand you hire a real estate attorney, title company and other professional service providers. For some homes, such as vacation properties in other states, it may not be feasible to sell a property without an agent to handle these matters.
Owners who do decide to sell their own property should have a plan in place for what that process will look like, says Zachary Schorr, head attorney at Schorr Law, a real estate law and litigation firm in Los Angeles. This plan should outline each step in the sales process, and it's also helpful to identify in advance which professionals, such as attorneys and escrow agents, will be used when the time comes to finalize a sale.
Price Your Property Right
Pricing a property correctly can be among the most challenging aspects of the FSBO process, according to Sambrotto. "Ultimately, your property is worth what people will pay for it," he says, but it can be tricky to determine that number.
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 Trulia. "I wouldn't necessarily rely on the estimate they provide, but they are a good starting point," Schorr says. Sellers could also scour local tax records for recent sales data to determine going prices in the neighborhood.
Prepare to Show Your Home
After pricing, the next hurdle to overcome is preparing the home for listing and showings. Clearing out the excess, improving lighting and making cosmetic repairs can go a long way toward making your home attractive to buyers.
Rather than taking your own photos, hire a professional photographer who can make your home look its best. Another option is to 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.
"It's a cost-efficient way to show off these spaces," says Lindsay Dillon, vice president of strategic partnership and marketing for roOomy. There is no need to buy or rent furniture or bring in a staging expert. Dillon stresses that the service isn't about misleading customers about the condition of a property.
"What's important to us is that we are showing the home's potential," she says.
Get Serious About Your Listing
Now 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.
However, the visibility of listings on these sites can make selling a challenge, Hills says. Without inclusion on the multiple listing service, known as MLS, a property won't turn up on many real estate websites. For a flat fee of around $400 to $500, you can be included in the MLS and expand your potential customer base, but be aware you'll likely need to pay a 2% to 3% commission to the buyer's agent if they have one.
Be Flexible and Responsive to Buyers
When it comes to listing and showing your home, remove emotion from the process. Homeowners undoubtedly have their favorite property features, but buyers may have other priorities, and focusing only on the things you love could be off-putting. For the sales process, you need to shift your perception from selling your home to selling a house.
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. "You have to ask yourself if you can adequately market the property," Schorr says. In today's digital world, homebuyers may move on to the next property if you wait too long to address their concerns.
Negotiate the Price
Every seller should be prepared to negotiate the price with buyers, Sambrotto says. Buyers often expect there will be some haggling over the price. Failing to do so could mean a lower selling price that what the buyer may have been willing to pay.
"Usually when an offer is made, you have two to three days to respond," Schorr says.
If you have a real estate attorney already lined up, that individual may be able to review the offer details. In some cases, the highest price may not be the best offer. For instance, it may be better to take a lower cash offer than a higher bid that is contingent on financing.
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. "The standard real estate contract in Colorado is 17 pages long," Hills says. "If you're not using a broker, you need to use a lawyer."
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. Even if your state doesn't require it, a real estate attorney can be a trusted guide who may be able to provide referrals for escrow agents and title companies as well as answer any questions about the selling process you may have.
While some attorneys may dabble in real estate as well as other practice areas, Schorr recommends finding a lawyer who specializes in these transactions. "I see the same contract over and over, so I can go through it quickly," Schorr says.
The attorneys in his office know exactly which paragraphs and terms may need to be adjusted to meet a client's needs. While billing practices vary, Schorr says many attorneys charge a flat fee or on an hourly basis.
Consider an iBuyer
A newer option for homeowners is to sell their property to an iBuyer. Companies such as Zillow, Opendoor and RedfinNow make cash offers for homes, and this can be a convenient way to quickly sell a property.
"We've reduced the typical 90-day home sales process into a few simple steps online," says Beatrice de Jong, consumer trends expert for Opendoor.
Homeowners submit a short questionnaire about their home and receive a cash offer within 24 hours. Once accepted, the company conducts a free home assessment to determine what repairs, if any, need to be completed. The homeowner then has the option of completing those repairs themselves or allowing Opendoor to do it and deduct the cost from the sale price.
"We pride ourselves on providing the most accurate and transparent offer possible," de Jong says.
Not every home is eligible for an offer through an iBuyer, though. For instance, de Jong notes Opendoor operates in 21 cities and typically only buys homes with values from $100,000 to $500,000. It does not buy properties built before 1960.
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.
Ensure a quick sale.
Selling your home quickly not only allows you to move on with your life, it also means fewer days of keeping your home in pristine condition and leaving every time your agent brings prospective buyers for a tour. According to real estate information company Zillow, the best time to list a home for sale is on a Saturday between May 1 and 15; homes listed during those times sell six days faster and for 0.7% more than the average annual home price. But how fast your home actually sells, and at what price, depends on factors beyond timing. Here are 10 secrets to selling your home faster, no matter when you list it.
Updated on March 20, 2020: This story was published at an earlier date and has been updated with new information.Pick a selling strategy.
Pick a selling strategy.
Before putting a for sale sign in your yard, it's important to pick the selling strategy that will work best for you. The for-sale-by-owner option may be best if you feel confident in your ability to market the home and negotiate. If your time is better spent on other details, a real estate agent could be best. If you need to sell the home quickly, you may want to inquire with an iBuyer, an entity that can make the deal close faster than the typical homebuyer. You should feel confident in the selling strategy you choose, and avoid switching from one to the other while your house is on the market. Buyers could be turned off by the constant changing of circumstances.Invest in a professional photographer.
Invest in a professional photographer.
According to NAR's 2019 Profile of Home Buyers and Sellers, 44% of recent buyers started their search online. Of those, 87% found photos very useful in their home search. If your listing photos don’t show off the features of your home, prospective buyers may reject it without even taking a tour or going to the open house. Hiring a professional photographer and posting at least 30 photos of your home, inside and out, is a good way to attract buyers. Photography is often free for home sellers, as shoots are often conducted at the expense of real estate brokers as part of marketing the property.Clean everything.
(People Images/ Getty Images)
Nothing turns off buyers like a dirty house. Hire a company to deep clean if you can’t do it yourself. “When the (home) is on the market, no matter what time of day or night, it should be clean and neat,” says Ellen Cohen, a licensed associate real estate broker with real estate brokerage Compass in New York City.
Key places to clean while your home is on the market include:
- Kitchen countertops.
- Inside cabinets and appliances.
- Floors and room corners where dust collects.
- Bathroom counters, toilets, tubs and showers.
- Inside closets.
- Windows, inside and out.
- Scuffed walls, baseboards and doors.
- Basement and garage.
Depersonalize the home.
Remove all your family photos and memorabilia. You want buyers to see the house as a home for their family, not yours. Remove political and religious items, your children’s artwork (and everything else) from the refrigerator and anything that marks the house as your territory rather than neutral territory. The same goes for any collections such as figurines, sports memorabilia or kids' toys that can make a buyer think less about the house and more about you. Family photos can be replaced by neutral art or removed entirely – just be sure to remove any nails and repair nail holes where any hanging photos used to be.Let the light in.
Let the light in.
People love light and bright, and the best way to show off your house is to let the sunshine in. Open all the curtains, blinds and shades, and turn lights on in any dark rooms. If the natural light situation is lacking in any room, strategically place lamps or light sources throughout to set the mood. And while your house is on the market, open all curtains and turn on lights every time you leave your house for work or errands in case you get word that a buyer would like to tour the space before you get home.Be flexible with showings.
Be flexible with showings.
Buyers like to see homes on their schedule, which often means evenings and weekends. Plus, they want to be able to tour a home soon after they find it online, especially in a hot market where they're competing with other buyers. If your home can be shown with little or no notice, more prospective buyers will see it. If you require 24 hours’ notice, they may choose to skip your home altogether. "That's one less person who gets to see the property," Cohen says. Be ready to leave quickly as well – if you're still cleaning up or hanging around outside when the buyer arrives, it can make for an awkward interaction.Set the right price.
Set the right price.
No seller wants to leave money on the table, but the strategy of setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate. Buyers and their agents have access to more information on comparable homes than ever, and they know what most homes are worth before viewing them. A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it. "Pricing correctly on the lower side tends to work much better," Cohen says.Remove excess furniture and clutter.
Remove excess furniture and clutter.
Nothing makes a home seem smaller than too much big furniture. Rent a self-storage container or a storage unit and remove as much furniture as you can. It will immediately make your home seem calmer and larger. Remove knickknacks from all surfaces, pack them away and store the pieces upon which you displayed them. Take a minimalist approach to books, throw rugs and draperies, and clear off your kitchen and bathroom countertops, even removing appliances you normally use. If you can scale down the contents of your closets, that’s even better, because it makes the home's storage space look more ample.Repaint in neutral colors.
Repaint in neutral colors.
A new coat of paint will do wonders to freshen up your home, both inside and out. This is the time to paint over your daughter’s purple bedroom, nix the quirky turquoise bathroom and cover up the red accent wall in your dining room. Busy wallpaper can also turn off potential buyers. Your goal is to create a neutral palette so buyers can envision incorporating their own personal touches in the home. "You just want people to see the space for what it is," Cohen says. Rather than a stark white, consider neutral shades of gray, taupe and cream on the walls.Spruce up the front of your home.
Spruce up the front of your home.
You’ve heard it 100 times before, and it’s still true: Curb appeal matters. You don’t get a second chance to make a first impression. A new or freshly painted front door, new house numbers and a new mailbox can breathe life into your entryway. Fresh landscaping and flowers in beds or in pots also enhance your home’s first impression. Trim trees and bushes, tidy up flower beds, remove dead leaves from plants, clear out cobwebs from nooks near the entrance and pressure-wash walkways, patios and decks. Leave the outdoor lights on, too, because prospective buyers may drive by at night.Here are 10 tips to sell your home faster:
Here are 10 tips to sell your home faster:
- Pick a selling strategy.
- Invest in a professional photographer.
- Clean everything.
- Depersonalize the home.
- Let the light in.
- Be flexible with showings.
- Set the right price.
- Remove excess furniture and clutter.
- Repaint in neutral colors.
- Spruce up the front of your home.
Updated on March 23, 2020: This story was published at an earlier date 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.