Do and Don’ts of Selling By Owner
Nobody knows better than you how to make the most of the features and benefits of your house. When you’re considering selling your house and utilizing ForSaleByOwner.com, here are some things to keep in mind.
Do make the most of the internet. The National Association of Realtors reports that 93% of buyers start househunting online. ForSaleByOwner.com is the largest by-owner site on the web by far.
Do offer a commission to buyers’ agents. Many buyers contract with agents to represent their interests. (A contract is important because without a contract, agents represent the seller’s interests and are under no obligation to negotiate for the best deal for their buyers.) The buyer’s agent will coach them through the transactions. First-timers – who accounted for 47% of sales in 2010 – need lots of hand-holding. Let their agent earn her commission and make your life easier in the process.
Don’t assume that you can ‘add back’ part of the 6% commission as an extra cushion the ‘by owner’ asking price. Buyers (and their agents) will see right through that.
Do calculate the cost of time-on-market. Independent studies verify that you’ll capture more money by selling yourself, but it will likely take a little longer. Add up the monthly cost of continuing to own your house. That will include the mortgage, property taxes, utilities, fees and seasonal maintenance costs. That is how much equity you lose each month by sticking with a too-high price. Chances are it won’t take long to run down your equity. Price your house to sell swiftly and you won’t erode your equity.
Don’t be surprised when agents claim to have the perfect buyers—if you list with them. Ask the agent if they have a signed a contract to be the buyer’s agent. If so, then the agent is entitled to the buy-side of the commission and should be showing the house as part of her responsibility to that buyer. If not, you can request a “single party listing,” which means that the agent gets a commission only for selling your house to that buyer. The agent may specify a 6% commission, trying to nab both the buyer’s and seller’s side. Instead, negotiate the total commission to a more reasonable 2% to 3%.
Don’t be surprised when agents start calling as soon as your house is on the market by owner. They will assume that you are already exhausted by the effort of marketing the house. Ask them to tour your house on behalf of buyers they represent—and with whom they have signed contracts.
Do expect neighbors, friends and co-workers to help you spread the word about your house. Work your on-line and off-line social networks, include Facebook, neighborhood associations, clubs, and workplace bulletin boards, to get the word out.
Do expect to pay up to $1,000 for a real estate attorney. Agents are not attorneys. They can handle some paperwork, but your state laws might require you to hire an attorney anyway. Even if your state does not dictate that an attorney handle your closing, it can be a good idea to hire one anyway. This will help ensure that your closing goes smoothly.