Home / Home Selling Guide
The process of selling your home yourself can be a very intimidating, frustrating and time-consuming, but ultimately rewarding experience. This content will help you successfully sell your home, and we hope that you can accomplish this through your own efforts.
First off, we want to point out a few things to keep in mind as you begin your home-selling journey. We hope that this will prepare you for this trip and help you understand the highs and lows of the selling process.
The average For Sale By Owner home seller spends approximately $700.00 during their For Sale By Owner home selling process. This breaks down to $60.00 for their signs, $240.00 for paint and home preparation, and $400.00 for advertising. These statistics represent home sellers who successfully sold their home and those who did not successfully complete the sale of their home through the FSBO process. Keep in mind that 70% of all home sales occur because of the sign in the yard. The key is to get the potential homebuyer to YOUR yard!
What are your advertising/marketing plans? The absolute best and most cost-effective means of advertising your home are a combination of Internet Advertisement (Home Sell Network), local newspaper classified ads and brochures in your yard.
The total residential real estate home sales market was approximately 6.6-million homes in 2000 for North America, of which approximately 1-million was new construction and the remaining were pre-existing homes. This would mean that currently the FSBO-attempt market is approximately 1.5-million to 2-million homes and is expected to double over the next four years.
Did you know that the residential real estate market is the second largest market in North America? Second, only to the automobile industry, the residential real estate market has sales of approximately $1.3-trillion dollars per year. In 1999, home sellers paid over $35-billion in fees to real estate professionals for the sale of their home.
There is a sales and marketing analogy that states: “perception is reality.” An acceptance of this analogy as fact will help you greatly in the preparation of your home for sale. What’s good, what’s bad, what’s in, what’s not, what needs work, what needs help, etc., will most likely not be as apparent to you as you might think.
The reality is that your perception is jaded! You live here! You have grown accustomed, comfortable, accepting and most likely in love with your home. Now for reality: Your home to you is a house to a prospective buyer. This building of wood, cement, bricks, and shingles will only become the buyer’s home after they have taken possession of the property and invested their time, money and emotion into the house as you have done.
What have you done to prepare your home for sale? Let’s assume that you have done the basics of thoroughly cleaning your house and removing any unsightly junk from all rooms, closets, garage, basement, attics, storage buildings, etc.
Great, the basics are done. Now for the real challenge, what is the reality of your home’s readiness for sale? Are the carpets clean? Is the paint clean, un-chipped and in good shape? Is your landscaping well kept, trimmed and orderly? The reality is that the older your home, the more likely it is that certain things need to be done to get your home in selling condition.
We will briefly highlight a few key things you should consider and do prior to placing your home “on the market” for sale. A great way to prepare your home for sale is to ask someone that you know (a neighbor, a relative, a real estate professional) for her/his honest and objective opinion of your home’s cleanliness, appearance and overall attractiveness from their perception. (Perception is reality!)
Now, this will require you to thicken your skin and you MUST promise the person or persons you ask for this assessment that you will not take this personally nor will you in a way hold their opinion and suggestions against them. If you can not do this, you may not be a good candidate to sell your home yourself.
Things to keep in mind when preparing your home for sale:
Pricing your home correctly, or incorrectly as the case may be, is the most common reason for a home not selling. Priced correctly, your home will sell. Remember, information is power, and just like the information available to you regarding selling your home, there is an incredible amount of information available to the homebuyer about your home and homes like yours that are for sale. Always assume that you are dealing with a highly-informed buyer and you will avoid embarrassment or possible contradiction during your negotiation processes.
How Do I Price My Home Correctly?
There are several excellent ways to obtain good information about the value of your home relative to the marketplace.
You may also choose to do some legwork to find out what homes similar to yours are currently listed (priced) for sale in your neighborhood and surrounding areas. You can do this by looking at various realty company websites; directly calling and asking the home seller; collecting brochures from these homes and looking at Homes For Sale magazines or newspaper advertisements.
The bottom line is your home must be priced competitively. You know the hard work, upgrades, custom paint, wallpaper, window treatments, etc., that you have paid for during your time of ownership of your home. The question is, will the buyer recognize these upgrades and be willing to pay for them.
Remember, one of the first actions that occur when a homeowner moves their home from a FSBO sale format to a real estate professional is that they are instructed to lower the price of the home. A double whammy; the reduction in the sale price of your home and a commission to be paid on top of the reduced price. Take your time and get the pricing right, it may save you thousands of dollars in the long run.
A final thought regarding the pricing of your home is to determine the length of time you are willing to take in selling your home. If you’re looking to sell your home more quickly, then your pricing will need to be more competitive than if you have no time constraints. Potential buyers will find your home if you actively advertise your home and provide access to good information about your home, but the buyer will quickly lose interest if they see that your home is priced too high relative to the market competition.
Marketing your home is your chance to differentiate your home from the dozens and potentially hundreds of other homes like yours for sale in your area. The questions you need to address in the marketing of your home are; Why your house; What makes your house the better option; What caused you to love this house; and What are the key features and benefits of your house. We have quickly addressed each of these questions below, which will help you develop a good marketing plan to use in your advertising strategies. The idea is to get the best “bang” for your buck and most effective response from potential homebuyers.
A sound marketing plan will significantly improve the effectiveness of your advertising and greatly increase the likelihood of a successful home sale. Just like pricing your home, the marketing plan you develop should be carefully thought out and make sense to you. Run your marketing plan by some of your friends and peers to get their thoughts about the story you plan to tell. What seems to make sense to you may not be received in the same manner by others, so input from outside sources will greatly help you develop an effective marketing plan that helps you achieve your goal.
There is a multitude of advertising options available to you to tell the potential homebuyer that your home is for sale. The key to your advertising is to have the various advertising outlets you are using work in concert with one another to result in the sale of your home. Please keep in mind that not all options, or possibly even the best options, for the advertising of your home are discussed here. What we have tried to focus on are the advertising outlets that seem to be almost universally used with the greatest results.
The most commonly used and most costly of the three advertising avenue discussed in this memo, the newspaper classified advertisement is an effective way to let people know your home is for sale. The key is to use it for that purpose and then direct the potential buyer to your other advertising venues to save money and ensure that you are getting the best bang for your buck while providing the most information possible to the potential buyer.
When placing your newspaper classified advertisement, consider putting the least amount of information possible with a guiding phrase. Remember, you are charged a per-line charge for your classified ad, so limit the amount of space you use.
Vary your ads. If you are going to run ads for a number of weeks, change your ad so that it causes the person scanning the ads to read your ad again. Static ads will be overlooked after one or two times and your ad effectiveness will be significantly diminished.
The Multiple Listing Service is a database of homes for sale Run by the local Board of Realtors, the MLS is the traditional method agents use to find homes for their buyers or advertise their listings to other agents. MLS listings include detailed information about the property. Besides address and selling price, a listing generally includes the number and size of rooms, annual property taxes, local schools, selling agent and more. Most include an exterior photo of the home.
To MLS or Not To MLS; Separating Fact From Hype
The Multiple Listing Service (MLS) was and is a fantastic way for real estate brokers to provide information to one another, allowing each broker’s agents to cross-sell all properties for sale in a given market, greatly expanding the sales force of all properties for sale in a given market. The Internet has greatly reduced the need for a printed MLS book due to the availability of this information in real-time on the Internet to brokers, agents, home sellers, and homebuyers. Brokers have unfortunately not grasped and accepted the fantastic opportunity that the Internet has created to provide the consumer with much more information about each home listed for sale. The MLS still does have application in that it is looked at by potentially thousands of real estate agents in your market each month that might have a prospective buyer for your home.
1. Benefits of MLS Advertisement: There is one very significant benefit to having your home listed in the MLS listing…EXPOSURE! The fact that you have your home for sale will now be known to the hundreds, if not thousands of real estate brokers and agents in your market. To benefit from this exposure, you will need to be willing to “co-op” a real estate agent if they bring a buyer to purchase your home. Co-op means that you will cooperate in a commission incentive to the real estate agent. Typically buyer’s agents will make between 2% and 3% of the sale price of the home. If you are willing to do this, you should indicate this clearly in your Internet and classified advertising as well as your yard brochures.
To have your home listed on the MLS in your area, you will need to contract with a real estate broker or agent in your area that is a member of the local real estate association that prints and manages the MLS for that area. If your interest is purely to have your home listed on the MLS, you can contract with the real estate broker or agent for a one-time fee to cover the cost of them listing your home in the MLS. This is a fairly new concept in real estate and not all agents and brokers will be anxious to provide this service.
In many areas of North America, when a home is listed on the local MLS, the property appears on aggregator websites like MSN HomeAdvisor, Yahoo! Real Estate, Realtor.com, and local state websites. Many of the multiple listing services send their inventory directly to these sites to enable even more exposure for the homeowner.
In today’s transient society, people from all over the U.S. use these various websites to search for homes far in advance of their actual transfer taking place. Many people research and identify homes they would like to see from the Internet. They supply the list to the buyer’s agent located in the area to which they are relocating so that the agent can set up showing appointments. When relocating buyers are in town for the purpose of finding a home, time is limited and every minute counts. Buyer’s agents quickly become critical to the transferee’s home search. Homebuyers relocating to new areas rely heavily on assistance from a buyer’s agent. Moving to a new area usually calls for help from a local real estate professional, therefore the MLS can be key to exposing your home to relocating buyers.
2. “Hype” of the MLS:
3. Considerations: The MLS is a wonderful way to expand your advertising reach and certainly has value. If your goal is to make real estate professionals in your area aware that your home is for sale and that you are willing to pay them a buyer’s agent commission if they bring a buyer to you, there are other means of accomplishing this that may be more effective and less expensive.Your Home Sell Network advertisement is ready to print in brochure form that will indicate your willingness to pay a real estate agent if they bring a qualified buyer to you. Consider printing the brochure from your advertisement on Home Sell Network and mail this advertisement directly to the dominant real estate brokerage agencies and the top real estate professionals in your area. You may get more personalized attention through this direct-mail program. When you involve the MLS or a direct mail program in the sale of your home, prepare to have the real estate brokers and agents in your area contact you about selling your home for you. Don’t be surprised or offended, it’s their job! To minimize this, consider indicating on your advertisements and brochures a statement that says: “No listing agent solicitations please.” This will likely limit the number of calls you will receive.
If you decide to pursue placing your home on the MLS, think of this as a part of your overall selling strategy, not in place of your advertising program. With proper understanding and reasonable expectations, the MLS can be another excellent part of your overall home selling process.
Real estate professionals have compelling arguments for and against the Open House concept. Keeping in mind that your goal is to sell your home, you should make your decision whether to hold an Open House based on the activity that you’re seeing from your advertising efforts and the strength of the market in which your home is for sale.
Open House Dates and Advertising
Open House Strategies
When you’ve made it this far, it’s exciting. But don’t celebrate quite yet. Having a prospective buyer is the first goal of every home seller. Whether you’re selling your home yourself, using a full-service real estate professional or some variation of the two aforementioned methods, the objective is to find serious, able and willing prospective buyers.
Your responsibility at The Prospective Buyer phase of your home selling journey is to qualify the interested buyer. Say this over and over again: “Interested may not mean able! Serious may not equal willing!” The point we’re trying to make here is that you must get past the enthusiasm of the prospective buyer and ensure that he or she can actually meet the criteria to purchase your home.
Near the beginning of this guide, we discussed the sales term “tire-kicker,” referring to those people that will inquire about your home, attend your Open House events and even call for a private showing of your home, with no real interest in buying your home. First, understand we’re not suggesting there is anything wrong with someone doing the things we just mentioned. Rather we are trying to help you separate the interested from the informational. What you want to be able to quickly and effectively do is to determine the inquirer’s real interest and does he or she justify classification from you as a good, interested and serious prospective buyer. To help you “pre-approved” the inquirer, we have listed some questions below that you might consider integrating into your initial conversation.
The questions you ask simply help you understand the quality and intent of the inquirer. You have to ultimately make the list of criteria that you will accept for a prospective buyer and the amount of time you are willing to commit to this person.
“Bad” may be too strong a classification for this inquirer. Unable means that this person either does not have the means (ability) to qualify to purchase your home, the timeframe for purchase that meets your expectations or the desire to purchase your home. You’re looking for a buyer, not a friend. Remember our discussion early on in your selling journey. You must remove the emotion of selling your home and approach this as the business transaction that it truly is. Your time is valuable. You’re paying the mortgage, utilities, upkeep, etc. of the home you are trying to sell, so you need to separate the good from the unable. If the inquirer is unwilling, no problem. The purchase of a home is very much about emotion and if the inquirer doesn’t click with your home, better to find this out as early as possible so that you can focus your time and energy on finding the right and willing buyer. Wish the inquirer well and move on.
This is the prospect you want! This is your “target” customer and you should make yourself available to meet their schedule, answer their questions, supply them with the additional information that they request and work to sell them on why your home should become their home. This is what you’ve prepared for and your goal should now be to secure an offer from this GREAT prospect. The willing inquirer now graduates to serious prospect status and is deserving of your time and energy. The able inquirer should not be ignored because they have the financial means to buy your home. Patiently answer their questions, find the information they are requesting and remember, your goal is to secure an offer! The basic idea to remember here is simple: ASK THE PROSPECT IF THEY WOULD LIKE TO BUY YOUR HOME! ASK FOR THE OFFER! The difference between a good salesperson and a sales “wannabe” is that the good salesperson asks for the offer.
Get ready, put away your defenses, expect a “low-ball” offer, understand that the faults of your home will be exploited and realize that through all this, you may actually get your home sold. When the offer comes, the fun begins!
You’ve come a long way baby! For those of you old enough to remember the cigarette ads of the 70’s, you’ll appreciate that statement. For those of you not old enough to remember these ads, congratulations for being at this point so early in your life. You really have come a long way if you’re at the point of the offer. The game is on and the negotiations have begun.
There are excellent books, tapes, training seminars and just about anything you can imagine about negotiation and “winning.” We will offer some thoughts and ideas to you, but please understand, every person has a style all their own and what works for one person may not work for another. There are basic things about the offer and subsequent negotiation process that you should keep in mind and prepare for that will likely help you achieve your goal and meet your expectations.
Probably the most important thing to decide as you move into the negotiation phase is to determine your absolute bottom line price you are willing to accept and how much longer you are willing to keep your home on the market. The best negotiators are not afraid to walk away from a deal. Master this and you master the art of negotiation.
Expect it to be lower than what you hoped and asked for. If you’re prepared for this scenario, then you can’t or won’t be caught off guard and put on the defensive. Having said this, if someone is truly interested in your home, they will offer a reasonable price as a basis to begin the negotiation. If the offer is off the wall, then look the offering party in the eye and ask them point blank if they’re really interested in buying your home or are they simply “tire-kicking.”
What constitutes a reasonable offer? This is somewhat determined by the market your home is located in and the tradition of pricing versus final sale price. Do some research and find out what “percentage of the original asking price” is typical for homes sold in your area. Remember, you’ve done research to determine what your home is worth, so your final sale price should be a similar percentage below the asking price relative to market tradition.
First, don’t show your hand through emotional outbursts of joy or aggravation when you receive the initial offer. A good negotiator will recognize that they may have offered too much if you show too much enthusiasm and not allow any upward movement of the offer price. Conversely, show a good negotiator that you’re aggravated and they may move on to another home feeling like there is no way they will reach a mutually agreeable price with you, or they will feel that you’re up against a wall and “needing” to sell your home, which will immediately prevent upward movement on the price of your home.
Second, don’t respond to the offer immediately unless the amount offered is exactly what your asking price is or above. There are several reasons why you shouldn’t respond immediately. First, it’s best to have a cooling-off period to let your emotions get in check, allowing your calmer head to prevail. Next, there’s no harm in making the prospective buyer sweat a little about the offer they submitted. Remember, if the prospect has gone so far as to see your home, qualify for a mortgage and make an offer, then it’s a safe bet to assume that they want your house! The key here is to respond within 24 to 48 hours so you keep the process moving forward.
Third, be honest, responsive and fair. If you’re willing to work with the prospect, tell them in your response. If you’re miles apart, tell them! The idea here is to simply do unto others as you would have them do unto you. Remember, this is a stressful time for the buyer as well and the last thing you want is a cold-feet situation where you lose the buyer.
Write down your response to the offer you have received outlining why you are responding to your counter-offer. You should counter-offer if the original offer received is in any way less than your asking price.
Be direct and firm with your counter-offer. Now is the time to tell the prospective buyer your bottom-line. The last thing you should do at this point is ambiguous. If the offer is ridiculous, thank them for the offer and simply say you’re not interested. If the offer is in the ballpark, state that you appreciate the offer, want to sell your home to them and the amount on your counter-offer is the bottom. Don’t drag this out.
Take into consideration the timing of the deal. Is it worth something to you if you close quickly?
Outline in your counter-offer the specifics of the deal that you are willing to accept: earnest money (1% is a good benchmark) at the time the contract is signed, closing date, time that you have to move out after closing (usually 30-days or less), etc. The more you take control of the transaction at this point, the better odds you have of closing the deal.
The offer stage is a very interesting time during the home selling process. The fun, friendly banter and excitement are replaced by serious conversation and negotiation. The more you recognize this and are prepared for this scenario, the better this part of the transaction will be for you.
If you are concerned about the negotiation phase of selling your home, you may want to consider having a real estate attorney or real estate professional (broker or agent) help you with this process. There will obviously be fees involved if you use the services of an outside resource, but they might negotiate a higher sale price of your home resulting in more money for you. The other consideration about using an outside resource for negotiation is that this might cause your prospective buyer to now use a third party to help them as well, which could cost you more money and time. If we seem to be somewhat ambiguous here, it’s because this is not a simple process and there are innumerable possible scenarios that you may encounter.
Be patient, relax your defenses and always keep your end goal of successfully completing the sale of your home in the forefront of your mind and you will do great. You’re almost homeless, which is a good thing when you’re selling a home.
Did you get IT? Is IT in your hands? Really? And they said it couldn’t be done! Just for fun, let’s think of IT as “I Triumphed.” What you got through IT was a commitment from a prospective buyer to buy your home! Now, transform the commitment into a signed, legal document committing the prospective buyer to complete the purchase of your home.
Reiterating our theme throughout that selling your home is not easy, but that it is doable, the completion of the Real Estate Contract can be a fairly systematic process if you have done the initial work to have a good contract that meets the state and local requirements of your area and that you have a working understanding of this document.
The Real Estate Contract
Step 1: Have a real estate contract that meets the requirements for the area that your home is located. Probably the best resource for this contract is a local attorney in your area with experience in residential real estate sales transactions. Another excellent resource is a local Title or Escrow Company that can also serve as the closing agent for this transaction.
Quick Note: There are many attorneys who specialize in helping owners selling their homes themselves by offering a Contract Package to the home seller that includes the required forms and a commitment to review the documents for a modest fee. It might be in your best interest to look for this type of service. The key here is to ask the attorney if he or she offers this type of service or would be willing to perform these functions for a pre-determined, set fee. You’ll find many attorneys will be happy to do this for you.
Step 2: Understand what the real estate contract, disclosure statement, escrow form, etc. for your area contains and what you need to do to fill these documents out completely and accurately. Again, a real estate attorney can be very helpful here as well as Title and Escrow companies.
As a part of your research and preparation, explore the responsibilities of the homebuyer and the home seller within the market that your home is located. As an example, the party who bears the burden of the closing costs of the transaction may vary by market, as well as responsibility for appraisal, inspection, etc. A good title/escrow company can likely provide this information to you.
Step 3: Review the contract, disclosure statement and application forms with the buyer. Assuming that the information is acceptable to both you and the buyer, sign the contract and all accompanying forms. It’s a good idea and may be required, to have a witness to this signing, so you’ll want to have a third party present or complete the signing of the contract in the presence of another person. A Notary Public is a great resource to serve as your witness. Upon reaching this point, it’s time to start the closing process in motion.
Note: Make sure you have the Buyer’s earnest money prior to your signing the contract. The amount of earnest money received should be noted in the contract.
The closing can be handed off to the title/escrow company. Depending on your market’s policies or tradition, the mortgage company that your buyer is using to finance the home purchase (assuming that your buyer is not paying cash for the home purchase) may dictate the title company that is to be used. If your buyer is paying cash, you simply need to agree upon a mutually acceptable Title/Escrow company or real estate attorney to handle the title transfer.
Key points to address are:
Whew, you’ve got to be feeling very good when you’ve made it to this point in your home selling process. The points we’re going to discuss here may be apparent to you and we simply are offering this information for your consideration and use if needed.
Title/Escrow: The Title/Escrow Company’s role in the home selling transaction is really one of the more important parts of the process. The Title/Escrow company can greatly help you navigate through the closing transaction process. We suggest that you contact a reputable Title/Escrow company before you finalize your contract. Ask the Title/Escrow company for a list of items that you need to gather for the closing, for suggestions relating to the real estate contract and any other pertinent information to complete the real estate transfer.
The role of the Title Company is to do exactly what the name suggests, to handle the transfer of the real estate title and all the legal filings that are part of the real estate sale. Depending on the state in which you live, the Escrow company may or may not handle the title work. The Escrow Company’s role is to handle the holding and transferring of funds, such as earnest money, during the transaction.
You should research the local and state laws of your community to determine which of these types of companies you need to work with. Remember, we suggest that you involve the Title/Escrow companies in your home selling process as early as possible because of the invaluable support and guidance they offer. It’s likely one or more Title/Escrow businesses in your area that specializes in helping homeowners selling their homes themselves. Ask the companies you contact if they have a program such as this to help you.
Note: If the title policy on your home is less than five years old, then ask the Title Company if they will do the new title search for a discounted rate. Some companies will discount the cost of this service when the title search is a follow-up to a more recently completed prior search.
Inspection: Your home will require an inspection prior to the closing and transfer of ownership. The bank or mortgage company that is handling the loan for the property typically schedules the inspection. In the event that there is no lender involved, the buyer of the property may or may not require an inspection to be performed.
You might consider having an inspection performed on your home prior to or during the selling process in order to have this information available for the potential buyer. Also, having an inspection completed prior to the contract being agreed upon may expedite the completion of the sale.
The party who bears the cost of the home inspection will vary by area. This may be defined in your final real estate contract. If you are not willing to bear the cost of the inspection, be sure to outline this point in your sales contract.
Appraisal: Like the home inspection, an appraisal of your home will be required prior to the completion of the sale. The bank or mortgage company involved in the loan will require this as well. If no lender is involved, the buyer will likely not require an appraisal. If the buyer does want an appraisal of the property without lender involvement, we suggest that you have the buyer bear the burden of this cost if at all possible.
Having an appraisal of your property completed when you are beginning the selling process makes sense. This is the best way to establish a competitive price for your home and an excellent way to defend your asking price when a potential buyer begins negotiating the purchase price of your home. Another benefit to having an appraisal done early in the home selling process is that it allows you to establish a fair price. If you use this strategy, it will be more difficult for potential buyers to argue the price you’re asking. Be sure that you have a certified appraiser perform an appraisal that you have completed so that you know proper customs and ethics are being maintained.
Who bears the cost of a home appraisal once again depends upon your area and the purpose. In all likelihood, the lender will bear this cost and factor it into the closing costs assigned to the buyer.
Mortgage: The mortgage company or bank lending your buyer the money may ask for information about your home directly from you as well as access to your home. Help them! Make the lender your best friend by helping them gather all needed information and documents to complete the loan to your buyer.
Hey, how are you feeling? You’re in the home stretch and you’ve saved yourself potentially thousands of dollars by selling your home yourself. Great job! We’re proud of your effort and tenacity and hopefully, we have been helpful to you during this process. In the meantime, relax and enjoy the process. It’s all about time, patience and good planning.
Thank you very much for allowing us to work with you. We’re here for you and are rooting for you to succeed in selling your home. Please let us know what we can do to help.