Sellers

If you are reading this page then you are likely considering whether or not to try and sell your property yourself rather than hire a real estate professional. Many FSBO websites will tell you that selling your house yourself is easy. We are not here to convince you to sell your house yourself. There is no doubt that you can successfully sell your property. YOU CAN DO IT!

However, your property will not sell itself! It takes planning and follow through. Many of the things you should do to sell your house need to be done even if you list your house with a real estate professional. If you want to try and save the commission that you would pay to a real estate professional, then you need to do the work that the professional would do for you. You should be aware of the job you are taking on. We are here to give you the facts about selling your house yourself so that you can decide if it is something that you want to do. We can tell you that it is work and that you need to become knowledgeable about the process. If you decide to go down this path, we can help you and YOU CAN DO IT!

Considerations:
In 2003 only 14 percent of residential sales were done by the owner. Why doesn't everyone do it? There are pros and cons that you should be aware of before you make your decision. Some stresses of selling a home are there even if you use a real estate professional. All of the preparations for the house will be the same.

The most obvious pro is that you could save the commission that you would have to pay if you list with a real estate professional. This could be from 5 to 10 percent of the sale price. Also, you are the one most familiar with your house and can present it in the best light if you are comfortable doing it. The expanded use of the internet has increased the chances of getting a quality buyer for those who use the internet for advertising.

What are the cons? Well they are numerous and you should be aware of them. The most significant problem is that you are not able to get exposure to the total market that real estate professionals can. The good news is that you don't need exposure to the whole market in order to get a buyer. With newspaper advertising you probably get to a little more than a quarter of those who are looking for houses. Even worse, those who are shopping through the newspaper are the buyers that are looking for a bargain. They know you are not paying a commission so they expect the price of the house to be less. In other words, they want the same commission that you are trying to save!

By having signs and advertising on the internet, you significantly increase your market exposure.

A negative factor that you need to be aware of is that you statistically have a greater chance of being sued when you are selling your property yourself. We seem to be in the age of the lawyers! Everyone wants to sue for the slightest perceived injustice and the lawyers are more than willing to take cases that should never even have a chance of getting off the ground. The problem for you is that you don't really have to do anything wrong to get sued. How much greater are the chances if you actually make some slight error! Your best defense against having either a valid or a harassment lawsuit filed is to be very open and honest about your property. You should also consider having a lawyer review any papers that you sign.

You may find that some Buyers are uncomfortable dealing directly with a Seller. It is nothing personal. They may feel that they want a real estate professional or a lawyer to work for them. They will look at properties on their own, but will write an offer through an agent. You must decide if you are willing to pay their agent since they surely will ask.

The remaining cons have to do with the amount of work you must do. It will be your responsibility to plan advertising, make and distribute flyers, take phone calls, meet buyers to show the house, negotiate with the buyers, arrange for title insurance and make closing arrangements.

Discouraged yet? Don't be. YOU CAN DO IT! If you are willing to do the leg work, you can get the job done. If it turns out that you don't get a buyer, you always have the option of listing your property with a real estate professional.

You should be aware that if the majority of your advertising is with the newspaper, you will find considerable interest when you first run ads and that interest will drop off very quickly after the first couple of weeks. The reason is simple. Those who are watching the paper will see your ad as soon as it comes out. Within a couple of weeks everyone who is watching the paper will have seen your ad and after that only new buyers to the market who are looking at the paper will respond to your ads. You can help ease this curve by changing your ads so they look like a new property. You can stress different features each week in your ad.

Have you decided to tackle this job? Well, let's look at the job that is ahead.

Pricing:
There are five primary factors affecting the value of your property: location, condition, desirable features, price and terms. Of these factors, some you have control over and some you don't. Location is one that you have no control over; however, the better the location, the greater the value of the property. The condition of the house is a factor that you do have control over. The better the condition, the faster the house will sell and the more money it will bring. Desirable features are something that you have little control over. In general it is not worth doing any remodeling to upgrade amenities; however, if your property is missing something that most competing properties have such as a second bathroom, that may be worth adding to your property. Assuming you have some equity in your property, you do have some control over the price and could offer some terms to help a Buyer.

Your motive for selling affects the price you should ask for your house. There is no definite price that your house is worth or will sell for. There is a price range for your house. If you need to sell in a hurry, then you need to be on the low end of that price range. If you do not have to sell or if you have a unique property, then you could be on the upper end of the range. Assuming you are serious about selling, it is important to not over price your house. It is difficult to get potential Buyers back to your house once they have previewed it. Also, if your property is really overpriced, you may find a willing Buyer but if it does not appraise for the selling price, you have a problem. Financing will only be available up to the appraisal. The Buyer could pay the extra amount out of their pocket but usually that will not happen. Normally you would have to lower your selling price to the appraisal amount so why not keep the price lower and get a Buyer sooner?

The price for your house will actually be determined by the Buyer. What you can do is to try and determine what a Buyer should be willing to pay. The Buyer will make a decision about your house based on the other houses like yours on the market. Your job, if you are selling your house yourself, is to determine the likely price a Buyer would be willing to pay for your house.

You need to find out what properties like yours have sold for in the last six months and the asking price of those on the market now. Both numbers are important. The ones that sold are the best indicator of what a Buyer is willing to pay but the ones currently on the market are your direct competition. You can canvass your neighborhood for properties similar to yours and find out the asking price from the owner or from their real estate agent. The problem you will have is determining the selling prices of properties like yours over the last six months. In Montana you need to get this information from the Multiple Listing Services. You can monitor the asking price of the properties that have been on the market in your area but you will not know what they actually sold for.

There are basically three ways of determining a realistic market value for your house: 1) simply compare your house with those currently on the market; 2) get a real estate professional (or two) to give you a Current Market Analysys (CMA); or 3) get an appraisal from a professional appraiser. If you are familiar with your market and have been watching housing prices, you might be comfortable basing your sales price on that of properties currently on the market. Even though you are not planning on listing your house, you will be able to get real estate professionals to do a CMA for you. Most real estate professionals will do this at no charge because they anticipate being able to list your house for you if you are not able to sell it yourself. The third option is to pay a professional appraiser to value your property. This will cost between $350 and $450 but can be money well spent. You should still do your own homework as to what you think is the value of your property; however, if the appraisal comes in higher, then you can ask a higher price or use the higher appraisal as a selling point. It is possible that the Buyer could use the appraisal that you get with their lender. You should check with a lender ahead of time to see if they could use your appraisal for a Buyer. This can be a great negotiating tool with a Buyer.

Another factor that you must consider in setting your asking price (whether through a professional or on your own) is how much you owe on your property. If you have a mortgage, the remaining principle balance may be on your payment coupon. However, that amount may not really be your balance due to such things as late payment charges. Your payment coupon should be close but only your lender can give an exact payoff. Two other significant costs for a Seller are title insurance and prorated taxes. In Montana the Seller must provide title insurance for the buyer. For a $100,000 sale the cost is about $557 and for a $200,000 sale the cost is about $807. Any delinquent taxes will have to be paid and current taxes will be prorated up to the day of closing. Because we pay taxes towards the end of the year (November) for the current year in Montana, when you close you will have to give the Buyer the taxes from January 1 st to the day of closing. In other words, if you close on July 1st you will need to give the Buyer 6 months of taxes because the Buyer will have to pay those taxes in November. You should also check to see if there are any liens on your property such as for state or local taxes. Totaling these costs gives you your break even point.

You can sell your property for less than what you owe, but you will have to make up the difference out of your pocket when you close – not a good situation. Obviously, if at all possible, the break even point is the least you should sell your property for.

The bottom line for setting your asking price is to be realistic.

Curb appeal:
Buyers are notorious for looking at fluff over substance. They will turn away from a house with bad carpet but a cracked foundation doesn't disturb them. What this means to you is that the appearance of your house is very important. The better your property looks, the faster you will sell it and the more money you will get.

In selling your house you need to look at it as the Buyer would. The impression they get of your house begins (literally) at the curb. The first thing they will see is the outside of the front of the house. They will have already formed an opinion of the house before they ever step inside. Having the yard well manicured is the starting point. You do not have to do extra landscaping but whatever you have needs to be neat. Does the front of the house need any painting touchup? Are the gutters in good condition? The front door area is especially important because the buyer will necessarily be drawn there. Is the door in good condition? Is the weather stripping in good condition?

As you look at the rest of the house, keep in mind what the Buyer will be looking at. Take a clipboard as you go through the house with a fine tooth comb to list all of the little things that would make the house look better. There are three categories of items to list. First are major repairs such as a new roof, windows needing replacing, kitchen upgrade, painting, flooring, etc. Second are maintenance things like washing walls, fixing dripping faucets, making sure all doors, drawers and windows are working correctly. Frequently it is desirable to at least touch up trim if not repaint it. Third, everything should be cleaned. It is especially important for bathroom and kitchen fixtures to be kept clean.

The single most important rule for the inside of the house is to have it sparkling clean including windows and window treatments. If what they see is clean, Buyers will assume that the rest of the house has been taken care of. All appliances and plumbing fixtures should be in working condition. Painting may be necessary if a room really needs it but be aware that the Buyers will probably want to paint anyhow, so maybe washing down the walls would be sufficient. A decision to update the flooring is difficult to make because it is not cheap and it is very unlikely that whatever upgrade you do will be what the Buyer would have selected. The problem is that a Buyer may take one look at the flooring and it will completely turn them off from the house if you leave the bad carpet on the floor!

Cleanup and repairs should be done before you start advertising. You don't want to turn off any potential Buyer because of the condition of the property. Once they have seen the house and are turned off, they will not be back. In order to make the house look more spacious, consider moving some things in to storage. If there is too much “stuff”, the house looks smaller and the Buyer cannot picture their “stuff” in the house.

The next step for the presentation of your house is to remove as much clutter as possible. This applies to walls, furniture, closets, kitchen counters, laundry room, etc. The more “stuff” in the house, the smaller it looks and the harder it is for the Buyers to picture their “stuff” in it. If you are selling your house, you are planning on moving. Get started early! Pack up those things you are not regularly using and store them. If you do not have storage in your house such as a garage or storage area in a basement, rent a storage unit. Many say that you should not store things in the house at all but as long as boxes are neatly stacked in a corner of the garage or basement, it is much better than having the clutter in the house.

Another thing you might consider is to get a home inspection. This would cost about $350 but would serve two purposes. One is to help identify problems that Buyers would be concerned about and you might be able to take care of before you start advertising. The other is to be able to show the report to potential Buyers so they don't have to spend the money for an inspection.

Other Preparations:
You should gather records concerning your property that buyers would be interested in such as utilities totals for the year including electric, gas, oil, wood, water, sewer, and trash. You should also include taxes, insurance and any homeowner association fees. As you are gathering paperwork, don't forget manuals for appliances that will be staying with the house – furnace, stove, refrigerator, washer, dryer, microwave, air conditioner, garage door opener, etc.

Disclosures:
One of the most significant factors that a owner must be aware of is that they are more likely to wind up in court over their sale than a sale done through a real estate professional. Why? The most likely area for a problem is for the Buyer to find a problem with the house after they purchase it and feel (rightly or wrongly) that the Seller hid the problem. The very best defense from such an action is to be very upfront with what you know about the property. This includes current problems that you are aware of and even past problems that have been repaired. You might be concerned that you will "scare off" Buyers but it is more likely that they will appreciate your honesty. Not only that, the Buyer you “scare off” may be the one more likely to sue you over something.

There are also lead based paint, radon and mold disclosures that may be required by state and/or federal law.

Marketing:
A study conducted in 2000 by the National Association of Realtors gives insight into the methods that Buyers used in locating their properties. The percentages represent the portion of Buyers that used the source as part of their property search in 1999.

Newspaper 43%
Internet 37%
Yard Sign 36%
Home Book or Magazine 29%
Open House 28%
Word of Mouth 24%

Notice that it shows 43% of Buyers using the newspaper; however, this means that they used the newspaper at some time during their search, not necessarily on a regular basis. In order for you to get them as a Buyer, they would have had to find your ad amongst the hundreds they were looking at. This is why your real exposure with newspaper advertising is closer to 25% of the potential Buyers.

One thing for sure is that the percentage using the internet is rising. As the internet percentage rises, the others will shrink some.

You will find that using these sources vary greatly in cost. These statistics give you some guidelines as to where to spend your advertising budget. You will need to weigh the effectiveness of the advertising media against its cost.

Newspaper:
Newspapers have traditionally been the primary advertising media for FSBOs. The exposure is still significant but the problem is the cost. Even for real estate professionals it is a very pricy advertising medium. There are a couple of ways to manage your newspaper dollars. One is to see if your paper has any specials program for FSBO Sellers. Another is to advertise only on Sundays after the first week or to advertise every other week. Two ideas to keep in mind when placing your ads is to add some kind of highlighting to draw attention to your ad and to change them so you are emphasizing different points and they look like different ads to prospective Buyers.

Weekly advertising papers are cheaper than newspapers and are worth at least a couple weeks worth of advertising. They have the advantage of being picked up all week but they also have the disadvantage of having readers that are even more likely to be looking for bargains. It is just another tool in your marketing campaign.

Internet:
This is the age of the internet. More and more commerce, including real estate, is taking place through this modern media. If you are selling your property yourself, you must be on the internet. However, there is no reason to be in this media if Buyers can't find you! There are two ways Buyers will see your property. One is if they see your advertising pointing them to your ad on the web. The other is if they see your property when generically searching for properties.

Time for some blatant commercial promotion! How many signs have you seen on a FSBO property directing Buyers to a website? How many web sites have you looked at that have ads popping up, flashing, dancing, free this, free that! e-FSBOs.com is your local specialist. You get a sign with your phone number on it and property identification on it that points to our web site. Our site only has properties that are for sale by the owner. You are not competing with properties listed by real estate professionals. The more local listings on a web site, the more traffic that will be using that site. In short order, e-FSBOs.com will have more local FSBO properties on our site than all other web sites combined!

Yard Signs:
Yard signs give you the best bang for your buck by far - especially in the prime season of March through August. In the spring many people start driving the neighborhoods in which they are interested looking for new “for sale” signs. It is also good to have directional signs at major cross streets pointing to your property.

Flyers:
You must have flyers to hand out to anyone who looks at your house. You should also post them wherever you can. Local businesses, work places, universities, etc. generally have bulletin boards where you can post. Be sure to make sure it is okay before posting a flyer. This is one of the most effective ways to spend your advertising dollars. One decision you must make about the flyers is whether or not to include the price on the flyer. Real estate professionals frequently don't put the price on because they are as interested in getting Buyer clients as they are in selling the property being advertised. By not putting the price on a flyer they are making the Buyer call to get more information. Where you have only one property to sell, you don't care about the Buyer unless they are interested in your house. By having the price on the flyer you will get fewer calls from Buyers that aren't qualified to buy your house.

You should use the best picture of your house that you can find. If it is winter, find a spring or summer picture with the grass green and the flowers flowering. You can get copies of flyers from other properties to get ideas about how to format the flyer.

Follow Up:
You should keep a record of all potential Buyers that contact you. Get at least their name and phone number. You should have a guest register for anyone that looks at your house including those that come to an open house. This serves two purposes. One is that you have a record in case you have things missing after a showing. Just taking the name will discourage those who might think of ripping you off. The second reason is so that you can follow up with the potential Buyer. You obviously could call and ask if the potential Buyer has any questions about your property and if they have an interest at the current time. You could also ask them what they liked and what they found not so likeable about your house. Asking these questions could point out things that you should address in staging your house for the public.

Discrimination:
Be sure to keep in mind that it is illegal to discriminate based on race, color, religion, sex or marital status. If you discriminate in advertising, showing or selling the house you really open yourself to both civil lawsuits and possible criminal prosecution.

Showing:
There should be two ways that people can see your house. One is if you have an open house at a set time. The other is if they call and make an appointment. All of your advertising that has the address should also have a notice that viewings are by appointment only.

If possible, you should do some baking before any showing of the house. Nothing makes a house homier than the aroma of fresh baking. Remember the earlier advice about keeping the clutter down and keeping the house clean and be sure to keep a record of those coming into your house.

Negotiations:
You have someone who has expressed an interest in your house. Now what? If they have an agent or a lawyer, they may bring a their offer to you as a contract. If not, then you may sit down with them and verbally agree to the terms of the sale; however, you must then put those terms on paper. You can sell a car or a boat to someone on a handshake. In real estate it has to be in writing.

A sale entails agreeing on both price and terms. Terms would include such things as whether or not the washer and dryer are included in the sale. It could also include the seller “carrying back” a second mortgage or assisting the Buyer by giving them a credit towards their closing costs. If the Buyer has a real estate agent, the Buyer will most likely ask that you pay the real estate agent a commission. This commission could be worked into the price by raising the price by the amount of the commission or you may have already built that much leeway in your asking price. It is not uncommon that a Seller actually puts in their advertising that they are willing to pay a Buyer's agent.

You need to be sure that you are not too attached to your property. This can become a problem if potential Buyers make negative comments about the property. Don't take any comments by the Buyers personally. They don't mean to offend you but they might be making a case for offering less money. Another attachment to avoid is to the appliances. Frequently the Buyers really need the appliances, possibly including such things as the riding lawn mower. If the Buyer really wants them, let them have it. Used appliances are not that valuable and they can be costly to move especially if you are moving a long distance.

The Sale:
Ernest money checks should be written to whomever will be the escrow agent for the transaction. This could be a title company, bank, lawyer, etc.

It is important that you clearly understand everything that is in the contract. When both parties have signed it, both parties are obligated to do whatever the contract says. If you are not sure, don't sign it without having a lawyer review it. Some Buyers will be very shrewd or even crooked and could try and pull a fast one in the contract. If the contract is not clear, there could be misunderstandings after the sale that result in you being sued. Unless you are very familiar with what you are doing, you should always have a lawyer review the paperwork unless you have a real estate professional helping you. This potential for being sued is the biggest single factor that those who are selling their properties themselves must be aware of. The potential loss if you are not careful is far greater than the cost of using a real estate professional, so make sure you are not penny wise and pound foolish.

Having a blank real estate “Buy/Sell” available in case the Buyer does not have one is one way to minimize potential problems. You should also have a “Counter Offer” form to make any changes from the original “Buy/Sell”. If you and your Buyer verbally agree to terms, a lawyer can draw up a “Buy/Sell” spelling out the details of your agreement. If you are using a standard, fill-in-the-blanks form, make sure none of the blanks are left blank. If something doesn't apply to your sale write “N/A” (Not Applicable) or draw a line through it. If for some reason there is a change made on the contract at a later time, all parties should initial and date wherever the change was made.

Most Buyers will have contingencies to their offer such as having a property inspection or even possibly needing to sell their house before buying yours. The Buy/Sell should detail all contingencies and the dates that they will be released by. There will probably be a contingency that the property appraises for the selling price.

Contingencies are important for Buyers so that they know they are getting what they think they are getting when they buy the property. If there is a problem with any of the contingencies, the Buyer usually has the option of accepting the problem, asking the Seller to fix the problem, asking the Seller to adjust the price to compensate for the problem or backing out of the sale. Some items may have to be done in order for the Buyer to get a loan such as repairing or replacing a leaky roof or updating the wiring.

One contingency that has multiple solutions is if the appraisal is less than the selling price. There are several solutions to this problem assuming that the Buyer still wants the property. The best for you is if the Buyer simply pays the extra amount over the appraisal. Another is for you to sell for the appraised amount. A third would be to meet somewhere in the middle. Still another possibility, if the Buyer does not have enough extra cash, is that the Buyer pays the contract price but you carry back a short term second mortgage for the amount over the appraisal. The Buyer can get a loan based on the appraisal and he pays you the extra amount over a period of time as the value of the property increases.

Closing:
This is place you've worked to get to! You get your money and the Buyer gets his new house. Just a little more work to get done. Before closing you need to arrange to have all utilities transferred into the Buyer's name. This includes gas, electric, water, sewer and garbage. Also cancel other services such as telephone, cable, and property insurance.

In Montana the Seller must provide the Buyer with title insurance. You should have identified the title company you want to use when you first started advertising. As soon as soon as you have a purchase contract, you need to let the title company know so that they can start preparing documents. It will take the title company up to a week to prepare the title commitment. Buyers should have a contingency that they review the title commitment before finalizing the purchase agreement.

The closing is done through an escrow agent. This could be the title company, a lawyer, a bank, etc. The closing agent sees that all of the documents for the sale are properly signed including deeds and loan papers. They collect and disburse all of the funds and generally see that all of the appropriate papers including the deeds are recorded with the county. Both the Buyer and the Seller should get a HUD Statement before closing that explains all of the disbursements of funds. You need to turn over your keys, garage door openers, instruction manuals, warranty papers, etc. to the new Buyers.

Bottom Line:
If you have read this far, then you are a candidate to sell your own house.

We have given you the best information we can so that you can make an informed decision about selling your property yourself. If you try it and aren't successful, you still have the option of listing with a real estate professional. If you are on a tight schedule for getting your property sold, then try it for only a week or two. By that time you have reached the Buyers currently in the market. If you have more time, don't be discouraged when inquiries drop off dramatically after the first couple of weeks but you must get on the internet at that time if you didn't in the beginning. Click here *to get more information on how we can help you.

YOU CAN DO IT!

Search by Property ID :