So does the prospect of
keeping the 6% to 7% realtor commission in your own pocket
appeal to you? FSBO sellers say if you decide to sell your home
on your own, knowing the following sales tactics will increase
the likelihood that it will sell easily and swiftly at the price
you want.
1. Your home must be priced
correctly. You
can't just pull a price out of thin air, as I did initially for
my townhouse. It may be either too high or too low. Consider
paying for an independent real-estate appraisal or do a survey
of the actual prices comparable homes ("comps," in realtor
lingo) in your area have sold for recently. This information is
public and available in county courthouses. It's also published
on Web sites such as
domania.com
and
homegain.com and in local newspapers or the newspapers' Web
sites, although these don't offer square-footage information and
other details. You can have this information ready to show
buyers who question your asking price.
Ms. Jones reviewed such
"comps" when pricing and selling her home. Within two months,
Ms. Jones' house went for her asking price -- $282,000.
Mr. Schleuning also uses
comps to determine the price of his homes. For him, it's
important to price his homes correctly so he doesn't have to
hold them long and keep paying carrying costs. "Don't be
greedy," he says. "I never assume that my home is worth more
than the top price of a similar house in the neighborhood just
because it's fixed up."
Boise, Idaho, real-estate
attorney Barry Peters recalls an owner who bought a Boise home
for $28,000 years ago and decided to sell it herself in 1998.
She decided on her own to price it at $110,000, and thought she
had gouged a buyer, who agreed to pay it, says Mr. Peters. But
an appraiser hired after the deal went through valued the home
for $20,000 more than the purchase price. The original owner
wanted to cancel the deal and ask for more but couldn't because
she had signed a contract, Mr. Peters says. "This was a tragic
situation," he says. To avoid it, "you need to get your home
appraised if you have owned it for more than two years," he
says.
2. You can get the price you
want. Some
buyers assume that owners selling homes themselves should deduct
the amount of an agent's commission from their asking price.
FSBO experts disagree. They say that homes sold by real-estate
agents have prices that are marked up to cover their
commissions.
"Whether you sell it or an
agent sells it, a property is worth what it's worth," says Dale
Pearson, publisher of Pearson's For Sale By Owner Services. "You
make money by not paying the commission, not by discounting the
property."
Some FSBO sellers think they
need to start with a high price and then lower it during
negotiations, says Mr. Pearson. But their initial price is too
high or isn't based on the home's actual worth, and they
typically don't get it or can't sell their homes, he says. He
tells owners they should ask for a little more than what they
want. For instance, if your home is appraised for $400,000, and
you'd like to sell it for that amount, start by asking $410,000.
Then, during negotiations, if a buyer makes a $390,000
counteroffer, "you bring them back up to the price you want," he
says.
3. Enough people must know
your home is on the market.
You can't plunk a "For Sale By
Owner" sign in your yard and expect buyers to show up if your
house is located off the beaten track. Have a plan for marketing
your home to a wide audience.
FSBO services publish
monthly magazines distributed free with all the homes they're
helping owners to sell in the area. A Boise FSBO service,
Property By Owner, distributes 29,000 copies of its magazine
advertising about 250 to 350 homes monthly, says publisher Rudy
Weisshaupt. Pearson's contains about 400 to 500 advertised homes
and about 30,000 copies are distributed each month in the Kansas
City area.
Another option is to
advertise in local newspapers or on a Web site listing homes for
sale in your area. Ms. Jones did both, but says that no one
responded to the Web-site listing and only a few people called
after reading the newspaper ad. Her yard sign was her best
marketing device, she says.
"The main thing that helped
us sell our house so quickly was that there were several houses
in the neighborhood for sale through realtors," she says.
"People would drive through and then give us a call."
4. You must be aggressive
about weeding out unqualified buyers.
If you accept an offer from an unqualified buyer, you'll delay
the sale of your home and need to start the sale process over
again. But you can prevent this by asking potential buyers to
contact a lender and become prequalified before accepting their
offer and taking your home off the market. If a potential buyer
claims to be prequalified already, contact the lender and verify
the terms of the approval.
When buyers already have
letters of approval from lenders, determine if they're
preapproved -- meaning a lender has examined their finances and
believes they can secure a loan -- or prequalified, which means
the lender has agreed to finance a certain amount, says Ms.
Jones.
Mr. Schleuning says he had a
sale fall through because a buyer wasn't prequalified. Other
buyers have so many conditions attached to their loan approvals
that they can't get financing for certain homes, he says. For
instance, one buyer had been preapproved for a mortgage, but not
if the home was an A-frame, which Mr. Schleuning was selling. In
others cases, buyers have been required to make down payments
they couldn't afford.
"I had some deals falter
because I took [buyers] at their word" about their preapprovals,
he says. "You need to really get involved with the sale and call
the lender and find out what they're qualified for."
Mr. Schleuning also cautions
owners to find out if lenders are legitimate. "With the low
rates, a lot of fly-by-night lenders are out there," he says.
5. You can show your home at
your convenience.
To avoid the headache of having to straighten up your house and
show it at a moment's notice, FSBO experts advise deciding which
days and times of the week you want buyers to view your home and
take appointments for only those times. "We say you can sell
your home in two hours and people say, 'What do you mean?' "
says Mr. Pearson. "It means telling buyers you're showing the
home on Saturday between 1 p.m. and 3 p.m. and asking, 'What
time would you like to come?' "
Ms. Jones also showed her
home by appointment only. Putting this condition on your "For
Sale By Owner" sign is important, she says, "or you could have
people ringing your doorbell at 10 p.m. wanting to see your
house." If you're leery of having strangers in your home, you
can increase your security by arranging to have another person
in your house with you during appointments, adds Ms. Jones. She
says she learned a lot about the process from "How to Sell Your
Home Without a Broker" by Bill Carey (John Wiley & Sons, 2000),
which includes tips for first-time FSBO sellers.
6. You can't be in a hurry.
It takes time to sell a home yourself, but be patient, both Ms.
Jones and Mr. Schleuning say. Otherwise you may not get the
price you want or you'll be tempted to give up.
Ms. Jones says real-estate
agents who saw her "For Sale By Owner" sign dropped by her house
and asked if she'd be willing to work with them. "I said I'd
consider it, but I wouldn't pay a commission, which settled the
matter," she says. "If my house had been on the market a long
time, I might have considered it, but we were in no hurry."
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