So you want to sell your own house? Maybe you want to save money on commissions that will be paid to the broker. Maybe you’re one of those people who believe that selling a house is a simple process because it looks so easy on TV. I understand it may not be as difficult as doing a root canal on yourself, but if you try it without preparation it might feel like you are trying the ones mentioned above.
The first thing to consider when selling your own home is to determine what the current market is like in your area. This doesn’t mean you have to buy a copy of the Wall Street Journal and try to predict what your local market will look like based on national or worse, international trends. Some markets have never experienced a major rise or fall over the past decade despite what has happened elsewhere. So how can you find out information relevant to the local area? One way is to contact your local real estate agent and ask, but that can create unwanted pressure to register with them instead; which I actually recommend to most homeowners. Another way is to check local newspapers which may reveal certain statistics such as average days in the market, comparison of selling prices to list prices (rarely the same, except perhaps in hot markets), and local interest rates. Now what do you do with all this information? For now, save it, as we’ll use it to help price your home.
Once we’ve gathered some basic data, the next step is to start finding some comparable properties. Comparative market analysis is the most accurate way to determine the price of a “normal” home. This may not be the best way to assess the value of a new home, historic home, income property, or commercial property. What you want to do is collect the SOLD prices of at least SIX comparable homes that have sold in the last 6 months. If you use the sale of homes that are older than that, you run the risk of the comparison not being very accurate. Comparable homes should be as similar as possible to yours, but not necessarily identical. These homes must be in the same school district, zip code, and if possible the same housing complex if applicable. Explaining exactly how to go about this process can be very wordy, so what I will say is that for an amateur analysis make sure the price of your home is lower than homes offering larger and larger amenities and sizes than homes offering smaller or smaller sizes. not updated . Knowing exactly how much this difference affects the price of your home from the company requires market knowledge that most homeowners don’t have. Keep in mind that money spent on renovations is not 100% correlated with an increase in value.
Ok, so now we have an idea about the price list. The next thing we need to do is go back to what is happening in the local market. If the house is selling fast, I recommend staying close to your estimated price for a quick sale of your home. If homes are selling for an average of 3-6 months (again averages vary by location) I would consider sticking to your estimated list price or as much as ten percent less if you expect a quick sale. If a home doesn’t sell in less than 120 days on average, as a home for sale by an owner, you need to price yourself well below the competition by 10% or more. My reason for this is that homes that are marketed at high prices don’t sell, wherein your home will have a fraction of the advertising compared to those listed with the broker. You will need an edge to beat the competition.
Well, we complete the first step; the price of our house. This is actually one of the easier tasks we have to do. The second step is to determine our budget for marketing the house. This is actually the main reason I recommend hiring a broker, because advertising if done carelessly can cost MUCH MORE than hiring an agent. Now you can advertise on sites that cater to owner sales, but honestly the traffic they generate is pathetic compared to many of the better known sites. If you are serious about this, I suggest you sign up on a big name site. As far as advertising in the local paper goes, it certainly doesn’t hurt, but be aware that more buyers find their homes online than through local newspapers. Local newspapers though appeal to the older generation and can help with cross-generational marketing campaigns. Another consideration is that according to the national association REALTORS 89% of homebuyers surveyed in 2011 used an agent to buy. This means that, like it or not, you will most likely have to deal with and or pay an agent. As sold by the owner you can offer to pay an agent to bring the buyer to you. This can help you save money compared to having an agent list as well. A good number to start with is to offer a 2-3% commission to any buyer’s agent. This will ensure that the 89% of buyers looking for a home with the help of an agent will not completely avoid your home. Another marketing tool you can use is page tags. These can be obtained relatively inexpensively from local printers or online. If you’re brave enough to let strangers roam your home, you can also host an open house. It’s estimated that nearly 5% of home purchases are made on impulse, so they don’t interfere with your sales efforts. I want you to consider that bringing strangers into your home can be unsafe, so proceed with caution.
All right, we’re moving right to sell our house. We have the price, we know how we are going to market it, and we are ready to list right? No, sorry we still have some work to do. The next thing we have to do is complete the seller disclosure form to give to potential buyers. This form can be obtained from your local housing authority or online. Additionally, we need to provide potential buyers with lead-based paint disclosure action if your home was built in 1978 or earlier, thanks to a 1992 law. Also, it’s time to neutralize your home, fix peeling paint (trust me, fix it). peeling paint), and complete any other minor maintenance tasks that need to be done.
Ok, now we can go ahead and list the houses. The easy part is done, we move on to the hardest and most difficult part of selling a house. Now if you register it yourself, I recommend purchasing a landline phone number to use for advertising purposes. There are many places where you can find it cheaply. When your first perspective buyer calls, greet them politely and share any information they need. As tempting as it is, before they look at homes, make sure they’re pre-approved, or at least eligible for a loan; ask them to bring their pre-approval letter. People have no problem wasting your time. If they refuse to bring such documents with them, skip watching as they are likely not very interested in your home. In fact, they can’t even make a real offer at this point. Show nearby shoppers who have pre-qualified, but don’t ramble on about anything personalized in the home, as they will likely envision how they can transform your home to suit their needs. If they are interested in making an offer, please refrain from negotiating the price verbally. First, their offer is not legally enforceable by fraud laws and back-and-forth negotiations could elicit an emotional response on your part. Instead, insist on a written offer and a binding contract. Chances are they’ll be working with an agency, so this is usually a silent point. When the offer is presented, remain emotionless whether it is more than you expected, or less because most buyers will expect the savings you received from not paying commission will be passed on to them (Now if you use my advice to offer buyers a commission your agent may find that you received a more reasonable offer). You have two options; accept or reject the offer. If you decline the offer, you can always make a counter-offer. Some of the things to expect during this time are buyers wanting you to buy homeowners insurance coverage (which you should do to save yourself a headache 6 months from now when your water pipe breaks or your stove dies at just 4 years old). The second is that they are likely to put some odds on the offer, which is totally normal. These contingencies may include home inspections, land surveys, title insurance, dye tests, as well as several others.
Ok so you have found a buyer and your house is under contract. The next 30-90 days will be the toughest, but hang on because you’re almost there. During this time a home inspector after inspecting your home will list several hundred problems your home has. If you have disclosed these items in your seller disclosures, there should be little concern, as they will not be items your potential buyer can use to cancel a transaction. Now for the things you don’t realize, the buyer may try to bargain the price even lower. I recommend for small ticket items, hold on. Larger ticket items will likely require some concessions on your part. Your other option is not to make any concessions and try the whole process again, revealing the newly discovered problem. If things go past this point, be prepared for more spending at closing. You must pay transfer tax on property, as well as prorated property tax if you haven’t done so for the fiscal year. Again, there will be some other expenses and going into some detail here, I suggest you take a look at the HUD-1 form to get a solid understanding of what expenses are handled at closing. If the closure isn’t taken care of by their agent, I suggest you hire one of the transaction licensees or an attorney to handle the paperwork. DO NOT attempt to complete this stage yourself unless you are an agent or attorney.
Well if you make it past the shutdown, you’ve done what only a 15% owner can do! Congratulations, and when you go looking for your next home use an agent.
