BEST PRACTICES FOR SELLING HOMES FOR TOP DOLLAR
• • • G.O. Sekyere, PhD, Broker
Published by Legacy Media Networks
Copyright ©2017 Legacy Media Networks
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Table of Contents
PART 1: About FSBO (For Sale by Owner)
One | 2 WHY PEOPLE SELL FSBO
Two | 10 THE MOST COMMON MISTAKES PEOPLE MAKE WHEN SELLING FSBO Three | 18 WHAT ARE THE COSTS OF FSBO?
PART 2: Tips to Prepare and Advertise
Four | 28 STAGING YOUR HOME WHEN TRYING TO SELL BY YOURSELF
Five | 38 DETERMINING THE RIGHT PRICE WHEN SELLING YOUR HOME BY YOURSELF
Six | 46 ADVERTISING YOUR HOUSE
Seven | 54
SHOWING YOUR HOME WHILE SELLING IT YOURSELF Eight | 60 USING CURB APPEAL TO SELL YOUR HOME FOR MORE Nine | 68 STAGING SOLUTIONS AND OPTIONS
PART 3: Negotiating and Closing the Deal
Ten | 76 PREPARATION FOR NEGOTIATION: SCREENING BUYERS Eleven | 82 NEGOTIATING ON YOUR OWN
Twelve | 90 HOW TO WRITE A CONTRACT AND SELL YOUR HOUSE WITHOUT AN AGENT Thirteen | 96 INSPECTIONS AND CLOSING: GETTING THINGS DONE WITHOUT AN AGENT
Foreword When Dr. Godwin Sekyere reached out to me to write an introduction to his book, I couldn’t say yes faster. He may not have been the first agent I talked to, but he was certainly the last. About six months ago, I had to let go my house for the fear of it going on a foreclosure. I needed to sell it quickly at a good price and find a place to rent so as to lighten my financial burden as the mortage on my house was very high. Through a friend, i reached to Dr. Godwin, who quickly rented a place for me at the price i wanted and put my house on the market. About three months before that time, i had wanted to sell the house through another agent for $490,000 but for some reasons the sale didn't materialize. Dr. Godwin listed and sold my house for $539,000 within a short time employing varied marketing strategies, and saved my house from foreclosing. I must admit, i was really impressed with Dr. Godwin, not only for his phone calls and the help he offered conveying my things to the house he rented for me, but because he never rushed me, and seemed to understand that it would take couple of time for me to find the house of my choice to rent. As time went on during the selling of my house, he never called too often, but always stayed in touch and offered his services. Because of simple little things like follow-up phone calls, patience, and eagerness to help his customers, he gets things done. I was totally amazed at the professionalism, expertise, and kindness I was shown from start to finish. Dr. Godwin will be my agent for as long as we need one,
and that does not happen often in this industry.
Trust Ndukwu, the seller of 13800 Burnished Wood Court, Upper Marlboro, MD 20774 dated
About Dr. Godwin Sekyere Dr. Godwin Sekyere is an immigrant from Ghana who has worked his way up through hard work. A husband and a father of three children, he had the modest upbringing because he was raised mostly by his mother in Ghanaian cities of Kumasi and Accra. He is the second of the three sons of his parents and was taught at a young age that if you want something in life, you have to work for it. As a child, he had aspirations of being a University Professor, and has accomplished that as adjunct professor of the school of Graduate and Professional Studies, Washington Adventist University. Never in a million years did he think he’d stumble into the real estate industry, but you can’t always predict where or when you’ll discover what you’re meant to do in life. Dr. Godwin Sekyere has been a real estate professional in the DMV area for over 13 years. He is the managing broker and the CEO of Comfort Realty, LLC, a company that aims at giving its clients a comfortable and a comforting real Estate experience so that they can achieve their real estate goals in a timely manner. Dr. Godwin has a PhD in finance, and currently teaches as an adjunct professor at Washington Adventist University. He has also taught several CE courses to real estate agents in the DMV area at Professional Development Institute (PDI) and most agents in his classes have found him to be very knowledgeable and fun to learn from. Dr. Godwin and his team of experienced and knowledgeable real estate professionals will give you nothing short of the best agency representation. Dr. Godwin Sekyere and his real estate Brokerage aim to provide the highest level of service to his clients and takes
deep pride in helping them achieve their real estate goals.
Testimonials & Reviews for Dr. Godwin Sekyere Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me:
Dr. Godwin had a tough job, but he did it!
We were tough clients, but Dr. Sekyere was tougher! We needed a place for our home and as a place for our business and didn’t have a lot of time to look at houses, having to deal with the demands of our business and family matters, and all of the other challenges that came along. But, Dr. Godwin went above and beyond to help us. He initially found a house, and we put a contract on it, but the inspection brought out several issues with the house. With his help, we pulled out of the contract without losing a dime. He didn't give up on us. With speed and grace, he quickly helped us look for this house we live now and call our home. Not only is this house gorgeous, but it is also located in the center of the City, which is good for our home business. He is a friend now we still call him for business and service recommendations in the area — he knows just about everyone, and is very happy to help. Bright Delali-Gagloh and wife Dr. Godwin Sekyere is the best agent in City! We’ve used Dr. Sekyere twice so far, and I was impressed both times. He was very instrumental in the acquisition of our first home, and with his assistance, we rented a portion of it to cut our monthly housing cost. He worked long and hard to find me the perfect home. Everything went quickly and smoothly. Both of my real estate deals were done very quickly and professionally. Dr. Sekyere is honestly the
BEST in his business. We would highly recommend him. Harold Ellis and wife Dr. Sekyere’s perseverance got me the house. My experience with Dr. Sekyere during the entire home- buying process, from start to finish, has been nothing short of exceptional. I have a unique work structure, and because of this, it was very difficult to find mortgage lenders that would approve me for a home. I was very frustrated and on the verge of giving up, but Dr. Sekyere insisted that we continue searching. Not only did we find a mortgage lender but also a mortgage that I felt great about. It took time and effort for the lender to approve the mortgage, and in all of it, Dr. Sekyere was involved making the phone calls. His perseverance is the reason I am now a homeowner. He is professional, punctual, knowledgeable, and straightforward to work with. With the highest regard, I will recommend him to all my friends and family. Barbara Biney Very attentive to concerns, details, and negotiations Dr. Godwin helped me find a house by literally picking it out for me. Every house I wanted to go to, I got there and didn’t love it. Dr. Godwin was busy taking note of the likes and dislikes I was stating and said: “I have a house that you’re going to love”... AND I DID! I went back 4 or 5 times to show other members of my family, and he accommodated me without complaint. I was a first-time homebuyer, and he walked me through the steps of everything, gave me advice, and constantly followed up to make sure I was doing OK. With his help, I was able to close on the house early, right before I started my new job. I would recommend Dr. Godwin to EVERYONE, buying, or selling.
Uncle Godwin knows the real estate business! Uncle Godwin made it so so easy for us to buy our first house. My mother was nervous initially, but he encouraged her and guided us through the entire process. He and his team worked with us throughout the entire process and kept us calm when we got anxious. He was available 24/7 to answer any questions we had. Uncle Godwin always made himself available to answer questions. With his high standards, expertise in the industry, and patience, we would recommend him as a Realtor to anyone looking! It was amazing! Beatrice Boateng Dr. Sekyere even advised me on how to prepare my house. Dr. Godwin was a gem. In addition to being highly knowledgeable about the real estate market, with many years of experience, he is a consummate professional. He was extremely easy to work with, gave me very good advice about preparing my house for sale, and was very responsive during the entire process of receiving offers, selling and closing. Being an expert in real estate, he was spot on in pricing of my property and getting this deal completed. Overall, I highly recommend him and his team. If I want to buy real estate, Dr. Godwin would be the first person I’d call. I would work with him again in a heartbeat. He’s that good. Chris Okorie Dr. Sekyere is the first agent I would call Dr. Godwin, and his team of real estate professionals at Comfort Realty, LLC, were able to rapidly show and help me to rent this place I stay now. He is very accommodating
and always available. Before meeting him, I had reached out to other agents to help me rent a house, and they declined because of my credit situation. Dr. Godwin looked beyond my credit issue and saw the need for my family to have a place to stay and helped us find and rent this place. When I am ready to buy a house, he is my agent. I will recommend him anytime because he's very nice. Peace Diggs Dr. Godwin is a unique agent Dr. Godwin and his staff were very helpful in buying our condo. He was recommended to me by Zillow, and when I contacted him, his response was immediate. He kept me informed frequently with email, sending reports on showings, offers, and feedback from potential buyers. We are delighted. Dr. Godwin was very efficient and helped us find our dream home within a few short months. He is professional and knowledgeable about everything. He is also always available — very smooth transaction from start to finish. I felt confident in his experience. He was able to negotiate the price that we wanted for the house. Overall, I would look for him again to help us look for a house if need be in the future, and I would definitely recommend him to anyone. Thank you so much! Kim Bryant Dr. Sekyere will get your house sold fast! Dr. Sekyere is great and has the expertise to get your house sold. The communications throughout our sale (from beginning to end) has been outstanding. Dr. Sekyere understands the stress involved in selling your house, and he updated our family consistently! This made us feel we
were in good hands. Dr. Sekyere was the consummate professional during our stressful and difficult process. In the midst of juggling a ‘failed’ marketing effort with another agent, he presented a well thought out plan and strategy to sell our home in short order. I needed to move quickly due to a threat of foreclosure. He helped alleviate that pressure by securing an acceptable offer within a week of listing. I put pressure on him, and he delivered. I couldn’t thank him enough. He was an absolute dream to work with. Professional, responsive, efficient, and my moral support. What else can you ask for? Grateful, grateful, grateful!!! I have worked with numerous agents, and I highly recommend him to represent you when it comes time to sell your home. Trust Ndukwu Excellent experience topped with a personal touch Excellent experience all around, not only knowledgeable, but Dr. Godwin and his team have a very personal touch. We felt like family throughout the entire process. He always took his time; we never felt rushed or like “just a number.” We bought our dream house with him standing with us every step of the way. We had lots of questions; he gladly answered them with no problem and guided us through the entire process, eliminating lots of stress. We truly appreciate that and would recommend him and his team to family and friends. Pastor and Mrs Asiedu-Akrofi
Part 1: About FSBO (For Sale by Owner)
WHY PEOPLE SELL FSBO The advancement of technology constantly boosts the market and improves our standard of living. However, with an increasingly flexible job market, we are often required to move in order to grow personally and to develop our professional careers. All too often, this means that while we are preparing for one big change in our lives, we also need to deal with selling our homes.
We all know that owning a home is preferable to and financially wiser than renting. However, when it comes to moving, selling a house might not always be as easy as it seems. While some people consider the convenience and ease of selling through an agent the absolute best way to go, others come to the conclusion that the thousands of extra dollars they might be
able to make by selling their house on their own are worth the time, effort, and trouble that selling on their own might entail. As one may expect, the complex real estate market has its own tips and tricks that people should abide by in
order to make the most out of their sale. Let’s see what makes people sell FSBO, as well as the pros and cons of this highly debated practice. #1—WHY DO PEOPLE CHOOSE TO SELL BY THEMSELVES? FSBO, or “For Sale by Owner,” happens when homeowners decide to put their house on the
market and advertise it without the help and support of a professional real estate agent. Going FSBOmeans that the owner must know how to professionally market and show the property, negotiate an advantageous selling price for the house, and, of course, be sure to get all the necessary paperwork completed for the eventual home sale. That last part usually includes finding an attorney to draft the necessary sale contract, as well as a title company to help complete the sale. Unsurprisingly, all these tasks can turn out to be pretty challenging for someone who is not fully prepared to take on such an imposing task. It’s also important to do extensive market research beforehand in order to avoid unwanted surprises. Based on reports and surveys, a substantial number of people who start out confident about going FSBO end up either losing the sale or giving in and hiring an agent. So, if you are determined to sell your home on your own, make sure you have the energy and the time necessary to perform all these tasks before setting out to sell your home all on your own. Given all the hassle it entails, why do people decide to do without an agent? The number one reason why people decide to sell their homes without an agent is to save money. A real estate agent usually charges about 4% to 6% of the selling value as commission, and that can give a lot of home sellers pause. Now, in exchange for that sum, the real estate agent brings vast experience and a wealth of market-specific knowledge that can truly benefit the seller. Agents also usually help owners set a fair, realistic market price for their house. A well-balanced price is crucial in order to sell the property successfully in a reasonable amount of time. Still, 4% to 6% of sale price can be a sizable sum, and many more self-reliant homeowners may decide it’s worth the extra effort and risk to handle the sale solo and pocket the extra funds. However, a lack of expertise among average homeowners looking to go FSBO has its consequences. The National Association of Realtors® and Bankrate.com have reported on their sites that most FSBO homes are overpriced. That is true, and is usually a natural effect of people not
knowing the actual cost of their property and the value of their hard- built equity, combined with a desire to draw as much profit as possible out of the sale. Unfortunately, overpriced properties are far less likely to be sold and have a much higher chance of scaring off potential buyers. While the issue of correct pricing can be bypassed with some solid real estate and community sales market research, the following negotiations cannot. It is a known fact that a lot of owners who lack professional presentation skills and/or developed negotiation skills end up selling their houses at far lower prices than they are actually worth. Statistically, a professional real estate agent manages to sell homes for a price that is, on average, about $27,000 higher than the prices private homeowners settle for. So, considering all of this, saving 4-6% of your house value in commission may be tempting at first glance, but is it really worth it considering the much larger percentage you might stand to lose on the final selling price? If you lack negotiating skills and you don’t know anything about the real estate housing market, hiring a high-performing professional real estate agent might be a small price to pay. You’ll also get a fast, sweet deal on your property and get the matter resolved with a nice profit— depending, of course, on what the market can offer. You get to work at your own pace, give the house a personal touch, and make all the decisions. Some of the other factors that frequently encourage homeowners to go the FSBO route are the privacy, knowledge, and decision-making elements of a sale. It is clear that the owner knows their house best, making it easy for them to focus on promoting the good aspects of the house and downplaying the bad. With this, however, comes the challenge of cleaning and preparing the house for a viewing. Cleaning and preparing means that the house needs to be thoroughly cleaned inside and out, and emptied of personal objects and unnecessary furniture in order to make the house look as cozy and comfortable as possible, while simultaneously making the space seem neutral and adaptable.
The seller must not only be able to present the house in an appealing, professional way, but must also help the buyer imagine himself living there—all while negotiating the best possible price. As for decision-making, FSBO does indeed grant the owner the authority to make all the decisions involved in the sale without having them brokered by an agent. That brings a definite plus as far as individual privacy goes, considering that the owner can schedule any and all viewings according to their own availability and preferences. The final price negotiation will also take place between the owner and the buyer, without an extra person in between. That sounds nice enough in theory, but in practice, it has its downsides. Making all the decisions and negotiating the final price yourself entail a huge amount of responsibility. That responsibility is particularly hard to bear for those with no real estate experience and/or no extensive house market pricing knowledge, and is a major contributing factor to just howmany FSBO sellers end up agreeing to sell their house for less than the listed market value. #2—THE UNEXPECTED CONS OF FSBO The debate over real estate agent vs. FSBO sales has been getting more and more heated over the past several years. However, even if
the necessity for and role of real estate agents have been seriously questioned, they remain America’s favorite means to sell and buy homes. Statistically, approximately 80% of American home sales are brokered by professional real estate agents. Numbers don’t lie—most people prefer to use an agent. With such a huge majority, it’s worth looking into just why so many sellers choose not to
go the FSBO route. To that end, let’s review some of the cons of FSBO in the attempt to further understand why so many people choose professional support when it comes to selling their homes.
Selling the property as FSBO takes longer than an agent sale and requires extensive time and effort from the owner. Selling a home on your own is no easy task. On the contrary, it requires specialized knowledge, hard work, time, skill, and dedication to make it happen. Simply cleaning and preparing the house for a showing can be a challenge in and of itself without professional help and counseling. A home that has not been properly cleaned and prepared for sale will give the buyer the impression that the owner has been slacking off on basic home maintenance, and will be reluctant to pay as high a price as they might have if they had seen the house looking its best. Too little cleaning, or too clumsy a staging, and you could wind up with a substantially lower price when you finally do make the sale. The owner must also consider that real estate agents present and sell homes as a full-time job and, therefore, must be prepared to devote a considerable amount of time to presenting and marketing the house they aim to sell if they aim to do so without professional help and support. Trying to find the hours and energy to handle a real estate agent’s job, as well as whatever other obligations you might have can be a serious challenge, especially for the unprepared. Moreover, the owner of an FSBO house might find themselves stuck with those extra duties for a lot longer than they expect: it is a well- documented fact that houses take considerably longer to sell through FSBO than they do when handled by a professional real estate agent. At the end of the day, when choosing between FSBO and a real estate agent, one must be prepared to make a realistic assessment of just how much effort they are ready to invest in this endeavor, and how much their time is worth. Listing a house as FSBO enjoys better support nowadays, but is still a far cry from the real estate agent pool. FSBO listing now enjoys far better online support than it did a few years ago.There are several networks that specifically support FSBOproperties and their owners, and offer nationwide listing services and marketing tools, all at low or flat rate prices. However, they struggle to compare to themore extensive, more established resource pools that real estate agents
usually tap into. This more restricted support structure also contributes to the house spending more time on the market before selling, further inconveniencing the owner. FSBOs are usually overpriced—but still end up selling belowmarket price. Very few of the owners who opt for FSBO have extensive knowledge of the housing market or finely honed skills in the real estate trade. Between that and the emotional factor of a homeowner’s bias, combined with a natural desire to profit from the sale, causes owners to overprice their homes. Overpricing frequently scares off potential buyers, leaving the house on the market for, yet again, a longer period—which can be a real disadvantage to those who want a fast sale or actually need the money. When these houses actually get interested customers, the owner is likely to end up accepting a lower price than a real estate agent would have— either because they are in a hurry and growing desperate, or because they simply lack the negotiating skill and experience needed to successfully navigate such an involved process. Overpricing at the start only to end up accepting a final selling price well below the real market value of a property are two of the most common mistakes people make when selling FSBO. Many buyers don’t trust FSBO and prefer to work with a real estate agent. With a transaction as costly and important as selling and buying a home, trust is of paramount importance. Sometimes out of fear of getting scammed, sometimes just because they think it will offer a smoother bureaucratic process, buyers usually prefer to work with real estate agents. The professionalism and experience of a high-performing agent inspires confidence in buyers that they’ll be able to sail effortlessly through the sea of paperwork that comes with the real estate market. This puts FSBO homes at a clear disadvantage, no matter how you look at it. As the cliché goes, after all, it is a buyers’ world out there.
What does all this boil down to?
At the end of the day, with all factors considered, FSBO can be a great strategy—but only for good negotiators who have great real estate trading skills and a lot of market knowledge, are in no hurry to complete the sale, and are willing to dedicate a considerable amount of time and work to the process.
Selling a home FSBO represents a huge responsibility for the owner. Having control of everything also puts all the decisions and all of their consequences on the owner’s shoulders. However, if you feel up to the challenge and are in search of an adventurous new experience, selling your own house is definitely the way to go. On the other hand, if you find yourself busy, have no time to put in the required research, or cannot afford to take the required time, it is strongly recommended that you opt for a real estate agent instead. The same applies if you find it difficult to expend the effort needed to prepare the house for showing, or think with dread about the numerous home presentations you will have to make, or are simply not confident in your negotiating skills. While some might not have the necessary skills to handle negotiating or the hassle of the paperwork, others might simply value their time enough to choose a real estate agent and the benefits that come with this choice. Whatever you choose, make sure you take the time to consider all the details of your different options. Your house is a life investment, and selling it is a big decision. Make it count! • • •
THE MOST COMMON MISTAKES PEOPLE MAKE WHEN SELLING FSBO
So, why do people want to sell their own homes without relying on the help and support of professional real estate agents? It keeps coming up time and time again: to save money. Depending on the service used, the commission fee for a real estate agent’s services generally ranges from 4% to 6% of the total property sale amount. In order to avoid this, some people try to sell their property on their own in the hope that it will allow them to save some money. Unfortunately, they forget that agents are trained to do this for a living and know all the special tricks and skills to do it right. It is their job, and at the end of the day you’d be hard-pressed to find an amateur—no matter how enthusiastic—who can be relied upon to outdo a trained, experienced professional. The untrained owner risks stumbling, along the way to a sale, upon a host of unclear, seemingly minor bureaucratic tangles and marketing difficulties. Fees and fines are obvious drains on profitability,
but just as costly are delays, postponements, and missteps when it comes to courting buyers and negotiating with—in all likelihood—someone who is in fact a real estate agent. This puts the owner at a disadvantage, preventing him from making the property sale efficient, smooth, and most importantly, lucrative. Let’s look at the most common things people tend to overlook when spurning professional real estate agents and their extensive experience.
MISTAKE #1—MISUNDERSTANDING THE CORRECT MARKET VALUE OF THEIR PROPERTY You should always know the proper market value of your property as early as possible when you decide to sell. An overpriced listing of the property will end up scaring off potential buyers; underpricing will net you a fast sale and a much smaller profit than you could have had. On the other hand, selling at the correct market value can cost you some of your hard earned equity. In order to get just the right listing price, the property needs to be evaluated carefully, from a neutral perspective. Influenced by their emotional attachment to the property in which they have spent so many days and nights, many sellers tend to add value to some distinguishing aspects of the house, its character, its quirks—not realizing that a potential buyer might consider those same things a hindrance. It might be anything from room decorations, or tapestries, or wall painting, to more substantial structural changes—whatever the case, anything that requires renovations or costs money to remove might not appeal to the client. That is why a neutral evaluation is an important thing to do before listing the property on the market—take a step back, try to detach yourself from your home and look at it as just a house. Ignore all your experiences there, and try to see it as a buyer will. There are lots of variables that can affect house’s pricing. These aspects include size, location, number and quality of services in the area, availability of reliable public transportation services, and neighborhood reputation, among many others. Pricing will also be subject to the regular house market pricing levels of the area, of course—no house is an island (or at least, not for the average buyer or seller!). Homeowners lacking real estate agent-specific training and experience are faced with the almost impossible task of evaluating all the aspects that affect the market price and the variables within that—many of which change with the seasons, sometimes literally, as one fad or trend waxes and another wanes. Real estate agents have extensive, current knowledge of the setting trends of the marketplace, and the contacts and resources to make sure that
knowledge stays up-to-date. They are also experts in pricing, and all the little details that affect it. They have the professional skills to evaluate the selling property neutrally, as they do not let their emotions affect the quality of their work.
MISTAKE #2—NOT MAKING THE PROPERTY AS ATTRACTIVE AS IT CAN BE MEANS FAILING TO MARKET IT PROPERLY
One of the most common mistakes in FSBO comes up in property marketing. When the private seller starts to advertise his or her property, it is important to provide pictures that make the house seem as attractive as possible, paired with a detailed and professional description. Failing to give all necessary information—or, worse, giving outright incorrect information—to a potential buyer is a quick and surefire way to torpedo a possible sale. Unfortunately, it is exceptionally easy to give too little or too much information on the details of your house. Making professional and tempting property ads is a challenging job, and like most other aspects of home sales, it requires either experience or extensive research and preparation to get it just right. Part of that preparation lies in understanding that, with a little work and investment, many aspects of the house—even things you might have considered its weak points—can be positively presented. Carefully and thoroughly cleaning and arranging the house is essential before any showing. Investing in a few plants and storing away personal items and unnecessary pieces of furniture can make the
house look cozy without being too personalized to appeal to someone with different tastes than you. Failing to do so, on the other hand, can imply sloppy maintenance and a general lack of care, and can reduce the earnest interest
of potential buyers. If your property has them, taking good care of gardens and walkways can do wonders for the first impression you give to potential buyers; even the front door can make a difference, so clean up the whole face of the house in particular! It’s also imperative to fix all the minor potential flaws of the house. A little renovation can go a long way and really boost the property value. When it comes to the furniture and details, consider getting help! If you aren’t absolutely confident in your own ability to walk the fine line between a neutral and inviting home and a bland, sterile one, using the services of a professional staging expert can do wonders. There are trained service professionals whose only job is to make your house look just right for a showing. It is important to remember that potential buyers will have every little detail under a magnifying glass, since they are preparing to invest a lot of money in whatever property they decide to buy. In contrast to owners, real estate agents are professionally trained when it comes to property presentations. They will make sure the house looks as presentable as it can ever be. They will use every trick in the book to make the presentation as pleasant and convincing as possible. They might change the lighting of the rooms, rearrange some pieces of furniture, or offer refreshments and snacks to visiting buyers. They will do whatever is needed to make the premises look as cozy and comfortable as it can be in order to persuade the potential buyer that this is the perfect place for them. Anything beyond their expertise can be handled by one of the specialized professionals mentioned earlier— professionals with whommost agents maintain contacts, often allowing you to get a better deal on a reputable expert. Real estate agents also have full training on how to “seal the deal,” leveraging all that cleaning and staging and detail work to create the strongest possible negotiating stance from which to bargain. After all, no matter howmuch you spruce your home, there’s a limit to howmuch that alone can help you if you aren’t a skillful negotiator when the time comes. Professional agents can easily weed out the most promising leads among a crowd of potential buyers or a long list of visitors from a series of showings, and know how to coax them to the table and then to the contract.
MISTAKE #3—MARKETING IN THE WRONG PLACE: FAILING TO USE THE RIGHT CHANNELS A Multiple Listing Service (MLS) is, simply put, the way to go. Many property owners who want to sell their home—be it a house, an apartment, a condo, anything—fail to market their property as well as they could because they don’t want to spend hundreds of “extra” dollars to list their property on the MLS. This is one of the greatest mistakes people can make when selling FSBO. An MLS is basically a huge, comprehensive database of homes for sale, connections to real estate agents and other buyers and sellers, and market information, which is routinely used by real estate brokers. It’s a very good way to attract the interest of many potential buyers, as well as their buying agents. Even if you decide to go FSBO, working with buying agents is the way to go in order to obtain a fast sale. Real estate agents have access to MLS. That is a big part of how they are able to find potential buyers for any and all of their clients. They usually also have tons of personal and professional contacts to refer back to when needed, though, which is more difficult to replicate than MLS access. Unlike owners, an agent trying to sell a home is working on commission. Striving to obtain a hot deal at the highest possible price is in the agent’s best interest—even more than it would be for the owner. Someone looking to sell their house FSBO certainly wants the best deal, but an agent needs it. They will throw all their skills and experience into getting that perfect price because, at the end of the day, agents make their living this way, and being able to uphold a good reputation for high sales prices is crucial to a good real estate business. MISTAKE #4—NOT UNDERSTANDING THE NECESSARY PAPERWORK Not knowing what papers you need to sell your property can cost owners opting for FSBO dearly. There are lots of documents and many disclosures that need to be signed and submitted for filing throughout the home sales process.
A seller needs to consider scheduling appraisers, arranging necessary inspections, and meeting a whole host of other conditions. Failing to meet requirements in terms of accuracy and timelines might cost the owner and buyer extra money and time—quite possibly in the courtroom. That is why all official documents and agreements involved in the sales contract must have been cleared and executed within a set, legally binding time frame. Real estate agents have thorough training when it comes to the timely handling of all the necessary paperwork related to a property sale. When it comes to contract terms and necessary documents, real estate agents hardly ever make mistakes; it’s part of their job to do the paperwork right. They have their reputation to uphold because without it they don’t have a job, so they are going to do their part to finish everything in an accurate and timely manner. MISTAKE #5—NOT KNOWING THE TERMINOLOGY OF PROPERTY RIGHTS It is easy enough to welcome potential buyers inside your house and give them a tour, but when they start to ask about escrow, oil-, gas-, and water-rights, maybe even about the possibility of leasing the property, do you know what to say to them? Most people don’t, another mistake many people make when selling FSBO. This is also a reason people use real estate agents, as they are trained to easily respond to questions the average person would never have any reason to even think about. Unlike private owners, real estate agents are trained and experienced at considering all of the details buyers may want to know more about. Agents will often have a checklist of any and all matters that could affect the property, and they will have answers prepared for all of them, just in case, as a professional should. Again, it’s their reputation and expertise on the line, so mistakes and misinformation are something they are
motivated to avoid at any cost. MISTAKE #6—SLIP-UPS IN THE HOUSE PRESENTATION
Selling a house is an art. It’s all too easy to make a mistake describing something with sentimental value to someone who doesn’t see it the same way. It’s easy to use the wrong kind of adjectives, or to exaggerate and
say the wrong things at the wrong time. What seems like wholehearted and innocent praise to you might actually be annoying to a stranger. It is often quite hard for an owner to present his or her property neutrally, simply because of the emotional attachments linked to it. That can be a hindrance to the sales process and is another common mistake made by people who sell FSBO. On the other hand, real estate agents have the advantage of professionalism and detachment when it comes to property presentations. They know exactly what words to use to make the sale happen. They can show less desirable traits of the property in a better light. They don’t have emotional biases that drive owners to focus on the wrong elements of a home. To repeat, selling is an art, and no one makes for a better artist than an agent when comes to selling property. MISTAKE #7—DETAILS There are plenty of blunders to be made when selling your own property without professional support. You need to be available for all contacts, set up all of the home showings, and answer a host of questions. There is much to do. The house itself needs to be clean and free of unnecessary furniture, pets, and personal objects. It might even be a good idea, if you have any, to find somewhere else for the kids to be.
Real estate agents have experience dealing with all of that. They present houses on a daily basis, all year long. Where you, as a private owner/seller, might stumble, they will succeed. Again, they have extensive training and long histories of experience in the field. As a rule, they are familiar with all of the mistakes and problems that might occur to complicate the process. They know how to dress up the risks, take advantage of the loopholes, and avoid the downsides of the deal, since it’s in their best interest to do so. Real housing market knowledge and professionalism is something you can only achieve through training and experience.
That being said, selling For Sale by Owner really is a perfectly good option for those with real estate experience and good negotiating skills. For anyone else, though, selling FSBO is not recommended unless accompanied by thorough research on the subject and a great deal of free time and patience. Try to avoid the most common mistakes people make when selling FSBO and refer back to a professional real estate agent if you feel overwhelmed; it is usually possible to consult with one for advice, even if you refuse to retain one to handle the proceedings themselves. Selling your house is important. Make sure your home gets the attention it deserves as your most important financial investment. The result will be well worth it. • • •
WHAT ARE THE COSTS OF FSBO?
When engaged in a transaction, it can be difficult to understand all of the costs. Regardless of whether an agent is involved or you are selling the property on your own, you are going to have costs. This chapter will help break down the different costs involved so you can easily understand the expenses associated with selling your house—while putting more money in your pocket with these proven strategies. BREAKING DOWN THE BOTTOM LINE Included in this section is a list of the most common costs that you may incur while selling your property. Some items may not be relevant to your specific situation, but if they are, you may find it helpful to write in the amount for each section.
Back Payments and Taxes = $________________ When you go to sell your house, if you have missed any payments, or if your house is in foreclosure, there may be back payments that you will be required to catch up on. There may be other liens on your house as well, including Home Owners Association (HOA) fees, taxes, or other payments.
One important thing to keep inmind is that there may be penalties tied to these back payments, liens, or taxes. These extra costs are important to factor in from the start because you will not be able to sell your house until they are paid.
Loan Pre-Payment Penalties = $_________________ Some loans, usually non-government loans, have a pre-payment penalty. A pre-payment penalty means that if you pay off your mortgage too quickly—typically within the first five years—there is a penalty. If you are unsure if this applies to you, track down your paperwork and see if you have a “pre-payment penalty” or “pre-payment rider” attached to your loan. If you do, that section of the paperwork should outline the terms and conditions surrounding it. Sometimes, there is also a penalty for settling the loan within a set period, regardless of the circumstances. Other times, there is only a penalty for specific situations. FHA, VA, and USDA loans never have a pre-payment penalty, but other non-government (or “conventional”) loans often do. This penalty can impact your bottom line, so it is important to know if you have a pre-payment penalty and what its terms are. Holding Costs = $ _________________ Holding costs are the expenses that you still incur while you wait for your house to sell. Most real estate experts suggest you will need to pay about 4-6 months of payments even after you have listed your house. Some of these costs include: + + Monthly mortgage payments + + Monthly taxes and insurance + + Utility bills: electricity, water, gas, trash, etc. + + Maintenance: lawn care or snow removal and the like + + Pest control Research statistics fromRealtor.com indicate that nationally, homes are on the market for an average of about 86 days. Looking at your area’s average days on market, or their “inventory age,” gives you a good idea of how long your house might stay on the market before a sale actually goes through. This information is accessible either through Realtor. com or through Zillow.com.
To gain a better idea of what your holding costs may be, we will use the national average of 86 days, or about three months. Once an offer is put in on your house, the buyer’s lender usually takes about 45 to 60 days to close; however, that process can be even longer, depending on the circumstances. Keep in mind that until you officially sign the closing documents, you are still responsible for paying your monthly mortgage payments, no matter how sure the sale seems. So, if your house is on the market for three months, and then you have to spend at least two months in the contract, you will end up with a minimum of five monthly payments. Regardless of whether you are living in your house or not, you will still be responsible for its monthly mortgage payment and holding costs. You may run into a situation where you accept an offer from the buyer, start the closing paperwork, and then—at the last minute!—the contract falls through. According to Realtor Magazine, about one-third of all real estate transactions fall through at one point or another in the process. If this is the position you find yourself in, you may need to fix whatever problems caused the failure and start the whole process over again—adding more months of holding costs to the picture. Transaction Expenses = $ ______________ Commonly referred to as “closing costs,” these expenses may account for 2-3% of the total amount of the loan. If you live in a high-cost region like California or New York, closing costs may be much higher, and can account for roughly 5-6%. If you are unsure of the average closing costs for your area, you can talk to a lender who specializes in your county or state. Fortunately, transaction expenses are typically negotiable between the buyer and seller, so if you can negotiate for a higher selling price in return for paying some of the closing costs, it can go a long way toward helping the sale, as the buyer will not have to bring as much to the table. Cosmetic Fix-Ups = $ __________________ Most houses need some kind of cosmetic improvements, whether that means new carpet, fresh paint, or yard work. If you want to sell your
house for top dollar, your house needs to be in excellent, move-in-ready condition. When buyers view your property, they will always be mentally assessing what they will need to change or update—and how much it’s going to cost them to do it. If they choose to put in an offer, they take these changes into consideration, which may lower the purchase price they are willing to propose. Properties that are in move-in-ready condition generally sell faster and for a higher price than properties that have not made any renovations or changes. In today’s market, a FOR SALE sign is simply not enough to sell your house. If your house needs more than just paint, carpet, or yard work, you may need to consider selling it as a fixer-upper or adjusting the price to include the cost of any more involved renovations needed. Remember: this can limit your potential buyers, but if you invest in those minor cosmetic changes, you will definitely see a faster selling time and a higher purchase price. THE BOTTOM LINE Selling a house without a real estate agent can save you thousands of dollars in sales fees; that much is true. However, the savings might not be as dramatic as you would expect. The fee charged by an agent usually covers many of the costs associated with selling a house, rolling those other fees into the agent’s commission. Furthermore, the time involved in selling a house is transferred to the FSBO seller, and if that person is working, that can translate tomore money lost in time taken off work. A meaningful amount of time and money are involved in selling a home, even when you sell it FSBO. Other costs involved in selling a house without a real estate agent include: Determining the Sales Price of the Property The seller can do this by comparing recent sales prices of similar properties in the area and adjusting their price to match those, hoping to hit the market sweet spot, or they can employ the services of a professional appraiser (which usually cost $350 and up).
Writing a Sales Contract You can get a real estate attorney to write one up for you, or you can purchase a boilerplate contract or find one free online (overall, this process usually costs $200 and up). MLS Listing You can purchase a listing on an MLS, but will have to do so from a real estate agent, as agents are the only ones that can list on MLS. If you use this option, you must also stipulate a commission fee that you are willing to pay a buyer’s real estate agent ($200-$500 for the MLS service, plus a 2-3% final sales price commission fee). Advertising the Property Advertising costs can vary widely, depending on what methods you want to use. Several websites, like Craigslist, will list a house for no cost; others, like eBay, can charge for a fixed-price listing. Advertising materials such as FOR SALE signs, brochures, pictures, or classified advertisements can become costly aswell (anywhere between $50-$2,000 on average, depending on which methods are chosen). Home Inspection Requesting a professional home inspection is strongly recommended for many FSBO sellers. Most buyers will hire a professional inspector to find any flaws or deficiencies in the house they are considering purchasing. A seller is held liable for any deficiencies in the house that they know about, or that they reasonably should know about. Having a home inspection done on their terms gives the seller guidance on what a buyer will find in the house, and offers the seller a chance to repair any deficiencies before listing the house for sale ($200-$500). Surveying the Property Having the property surveyed is important in order to define the exact scope of the property being sold. Usually, you can find this information in a local tax office and, for a small fee, you can get a copy of the official documentation of the property’s boundaries ($15-$200 or more).
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