A typical real estate commission on a $284,600 home (national median price for all existing homes as of May 2020) is more than $19,000. In many areas, the cut a real estate broker gets is much higher. A homeowner can easily save that money by selling on his own. All it takes is a basic understanding of the real estate market and a bit of marketing savvy. Here are the “Big Five” of selling any home.
1. Prices. Set a realistic sales price. While it can be tempting to inflate the sales price in case someone really loves the home or to make room for negotiations, the result is a home that can’t stand up to the competition. The market always sets the price. Find out what the competition has to offer and set your price accordingly.
The best way to do this is to have three or four real estate brokers provide a free market analysis. Yes, you will be wasting your time if you sell on your own. But do not worry; real estate brokers are used to wasting time. If we earned a $20,000 commission every time we went out, we’d drive to your house in a limo. The fact is that nine out of ten starts are a dud for us. It is the main reason why the commissions are so high. In either case, you may end up listing with one of them. The fact is, selling by owner really isn’t for everyone. But pricing your home correctly is the first step to a successful transaction.
If you choose not to have a market analysis from your local real estate agents, you will have to do your own calculations. To do this, you’ll need a new batch of comparable sales. The best place to get them is from your local assessor or municipal records. You will need between three and five recent comparable sales. Make sure they really are comparable. They must be in the same location (ideally within a half mile), they must be the same style and size as your home (number of bedrooms, bathrooms, garage, etc.), and they must be in the same condition as your home. Drive by each one. Take photos.
The hard part is when you can’t find exact comparables. Then you will have to make adjustments for the differences. The best way is to ask your advisor how much an additional bathroom influences, for example, the market value. Hopefully they provide an approximation.
If you can’t figure out an exact dollar amount, consider hiring a professional appraiser. They can be found in the yellow pages or online. And while the service costs several hundred dollars, that’s a small price compared to what you’ll save by successfully selling on your own.
Avoid pricing your home based on how much you paid, how much you owe, the amount of the municipal assessment, the cost of improvements you’ve added, or what a friend or neighbor thinks it’s worth. The market does not care one bit about these factors.
Regardless of how you arrive at a price, it will usually be expressed as a price range. Aim for the higher end of the range if your home is generally in better condition and has better amenities than the competition. Aim for the lower end if you need a quick sale. Otherwise, stay in the middle and be prepared to be flexible.
2. Appearance. My father always said, you never get a second chance to make a first impression. Nowhere is this more true than in the marketing of his house. Anything that isn’t right, including a strange smell, will send your prospects to the next house. Take a photo of the front. Compare your “external appeal” to the photos he took of the competition. Imagine that your house is going to be in House Beautiful magazine. Clean, paint, resurface, mow, weed, trim, plant, replace anything that looks worn or worn.
Now come in. See your home for the first time, just like buyers will. A fresh coat of paint, new drapes, and new carpeting (or a professional cleaning) will do wonders for your sales appeal. Again, consider what you would be paying a real estate agent. Remove all clutter and excess furniture. The only items in a bedroom should be a bed and dresser. Anything else makes rooms seem smaller.
Then assess the kitchen and bathrooms. These are the most important individual rooms in the house in terms of buyer appeal. Again, clean, paint, and consider replacing the floor with something light and bright. Wash the windows. If your appliances or fixtures are old, consider replacing them. Most buyers these days include a contingency in their purchase contract offer for a professional home inspection. If an appliance or accessory is a problem, it will be noted and the buyer will wait for it to be replaced or void the contract. You could also remove that part of the road when you can boost your marketing efforts. This applies to any structural, mechanical, electrical, foundation, roof deck, or plumbing system, etc. at home. If there is a problem, it is better to fix it beforehand. In many areas, state and federal disclosure laws require a landlord to disclose any problem of which he is aware, including the possible presence of lead paint, mold, radon, or asbestos. Please be aware of these laws. A good way is to hire your own inspector before the house is listed for sale.
3. Advertising. When the house is shiny and shiny to the point where you wonder if you really want to sell that treasure, it’s time to hit the market. This is the easy part. Run print ads in the major daily newspaper known for home classifieds. Consider Google ads. Consider the price, the location, the number of bedrooms and bathrooms, and the three most likable features of your home—the things that made you buy it in the first place. You don’t need to bother with monthly publications like For Sale By Owner magazines. Buyers quickly discover that when a good home is listed, it is already sold. If you use the Internet, make sure the site is very popular. The easiest way to do this is to enter a search term that a local shopper would use on Yahoo or Google. For example: you would search for “homes for sale in (your city)” or “home listings in (your city)”. Make sure the site you are considering appears on the first page. You may also want to forego open houses. Only 1% of homes are ever sold at an open house. What you mainly get are “Looky Lews” and nosy neighbors.
Use free word of mouth advertising. Tell everyone you know, neighbors, friends, relatives, co-workers that your house is for sale. Invest in a professional yard sign. Note the basic features of the house as in your ad, as well as “By appointment only”, but do not list the price. Be available to schedule appointments when your ads are posted. Don’t trust voice mail.
Consider a flat fee MLS listing. For a fee that typically ranges from $99 to $995, a broker will list your home on the Multiple Listing Service, where the vast majority of qualified buyers find their homes. Many flat fee brokers also syndicated the listing on the web on sites like Zillow, Trulie, Realtor.com, etc. The scope of this topic is best presented in depth elsewhere. Please see the link at the bottom of the page for additional information on the Fixed Fee Realtor.
When buyers arrive, give them a warm welcome. Have the dining room table set with your best china. Square fresh flowers. If you have a hot tub, bring out a bottle of champagne and two glasses. Bake bread or cookies, or just put some vanilla and cinnamon in the oven on low heat.
4. Negotiations. If you have followed the plan so far, you will soon receive offers. Be prepared for a low offer, but when any offer comes in, always insist on a pre-approval letter from the buyer’s lender. Review the offer with your attorney. You can counter the offer, but keep in mind that buyers are not required to accept your counter offer. And that anything short of full acceptance of your offer usually negates it. All contract terms are negotiable, not just the price.
Under no circumstances, get emotionally involved in the negotiations. This is the area where landlords are never as good as realtors (except when it comes to the property of the realtor in question). Consider only whether you can realistically do better and that the net amount you will get will allow you to continue with your move.
When the price and terms are agreed upon by getting everything in writing. Be sure to use a qualified real estate attorney.
5. Processing Period. The time between when a contract is fully executed and when you grant possession is when all contingencies of the contract are met. Different areas have different customs as to who does what and who pays the bill. But in general there will be a period of time for both the buyer and the seller to have the contract ratified by their lawyers. In addition, a mortgage contingency will allow the buyer to obtain financing based on their qualifications and the home’s appraisal value by the bank. There is usually a provision for a structural inspection, as noted above, for the buyer to assess the condition of the home. A closing deadline is also included when possession is handed over to the new owners. In general, this is an estimate of the transfer of ownership with common delays, unless a phrase such as “time is of the essence” is incorporated into the contract. Beyond the basics, there are many other possibilities for contingencies in a contract. Anything, in fact, that is legal can be included. That is why you should always use a real estate attorney.
Finally, closing day arrives and he heads to his next home. It’s been a rough road, much harder than most people expect, but the extra money you save will go a long way to ease your pain in your new home. Enjoy!