If you’re planning to sell a piece of real estate – whether it’s a condo, single-family home, vacant land, or other type of property – chances are you’d prefer to do it quickly, and for the highest price possible. By offering your property as a “for sale by owner” (FSBO), you can save on real estate commissions and potentially net a higher amount.
Real estate transactions, however, can be tricky business. At Timely Contract, we support you through as many (or as few!) of the steps as you need — contract review, contract drafting, and more if you want — helping the transaction go smoothly and minimizing the chance of any outstanding liability at close.
Below are tips for selling real estate, as well as recommendations for when you could benefit from our real estate legal services.
Step 1: Make Your Property Look Good
Before you put a property on the market, it helps to clear it out and clean it up, inside and out. Anything personal that makes the home look like you needs to go. Buyers need to be able to picture themselves (not you) in the home. When you’re done, your home should look clean, shiny, and impersonal. You might consider hiring a staging professional who can offer recommendations regarding painting, repairing, and upgrading. Small investments in home improvements can pay big dividends.
Step 2: Get A Purchase And Sale Contract
Before you run headlong into marketing your home, you’ll want to get a purchase and sale contract. Read it. Familiarize yourself with the structure of the deal, timeframes, and terms. Make notes. Write down questions. Think about disclosure issues, contingencies, asking price, and what your bottom line is. Doing an awesome marketing job doesn’t mean much if you don’t understand the purchase and sale contract. If you need help drafting or modifying a real estate contract, we offer fast, expert legal help.
Step 3: Do A Home Inspection Yourself
Home inspections are generally done by buyers. However, FSBO sellers who have their properties inspected before putting them on the market gain valuable information. It’s helpful to know, ahead of time, any negative conditions that could potentially decrease the value of the property and/or discourage qualified buyers. Using the information you gain during a home inspection can help you make common-sense repairs that help solidify your asking price for your home. These repairs also make you less vulnerable to hard-nosed negotiating tactics on the part of a buyer. By knowing everything there is to know about your property, you can negotiate from strength.
Step 4: Know What Title Insurance Does And Doesn’t Cover
Many sellers (and buyers) assume, incorrectly, that title insurance on a property completely protects them. In fact, with many properties, there can be significant exceptions to title insurance, which, as a seller, could expose you to legal risk. Obtaining an opinion of your parcel’s legal risks can be one of the smartest things you can do before listing your property. The “exceptions documents” listed in Schedule II-B of a parcel’s preliminary title report list the conditions of the property that title insurers will NOT cover. These circumstances negatively affect the value of your property, yet often can be mitigated…something you’ll want to do before you list. At Timely Contract, we offer a title insurance exception review service, as well as research, due diligence and legal opinions for the risks associated with a property. Knowing exactly what you’re selling can help you get your maximum SOLD price.
Step 5: Choose The Price For Your Property
Pricing property is more science than art. There are three types of pricing for real estate: market price, list price, and sold price. A list price that’s within 10% of market price should get the attention of serious buyers. Depending on how hot the real estate market is, an accurate list price should draw an offer within four weeks. An asking price that’s within 5% of market price is most likely to draw a full-price offer within two weeks. Pricing your home higher than 10% of market price signals that you don’t know what your home is worth and/or that you aren’t serious about selling. If you don’t know what your property’s worth, then eventually the professional investors will circle your listing like sharks, waiting until they smell desperation. In this scenario, your sold price is likely to be much less than the market price.
Step 6: Market Your Property To Serious Buyers
When you’re doing a FSBO, it’s a good idea to market to serious buyers. Most serious buyers are already sold on the neighborhood or area by the time they find your home. In all likelihood, they’ve identified the schools and amenities they want, and your neighborhood or area meets their definition. They’ll be delighted when you put up your FOR SALE sign and usually are the first to respond as buyers. In addition to the yard sign, you can also hold open houses to attract neighbors looking for a step-up or step-down in the neighborhood or area they know as home.
Step 7: Consider Listing In The MLS
If Step 6 doesn’t draw an offer within a month, you might want to consider listing your parcel through a real estate agent who has access to the MLS (Multiple Listing Services). Inserting a real estate agent into the deal will lower your walk-away money. Best to do a bang-up job in Step 6 and stick with your FSBO approach.
Step 8: Be Ready And Available For Potential Buyers
If you’re committed to a FSBO deal, be prepared to field phone calls, mostly on weekends. The phone number posted on your yard sign (and any other marketing you’re doing) should ring directly to your cell phone. Know your pitch for your property. Be able to describe in a few words why someone will fall in love with your home. Be prepared for just about anything, and don’t get discouraged by negative feedback from buyers.
Step 9: Weigh The First Offer Carefully
Don’t necessarily rule out the first offer that comes your way. There’s a saying in real estate that the first offer is often the best offer. Remember that there are serious buyers who know what they want, have researched the market, and have been waiting for the exact right property to hit the market. They may have already been priced out of another home and don’t want to make that mistake again. Know what your ideal price is and what your bottom line price is. Then, work with what the current real estate market gives you.
Step 10: Prepare To Negotiate
Be prepared for negotiations and counter offers. This is where Steps 2, 3, and 4 give you the superior information to hold your ground. You know the market, you know your home and all of its relevant circumstances, and you’ve assigned an asking price that takes all of that into consideration. End of story. You should expect a straightforward offer and clean escrow as a result. Any shenanigans, and you’ve earned the right to send your buyer packing. If buyers submit their own contracts and/or want to make significant revisions to your contract, we can review the real estate contract or proposed amendments. We’ll do this quickly, so that it doesn’t impact your contract deadlines or closing date.
Step 11: Know The Deadlines In Escrow
Don’t blow a good deal by not keeping within the deadlines included in your real estate contract. Expect the same from your buyer. As long as all parties are acting in good faith, you should get through escrow without a hitch.
Step 12: Close The Deal
The final step in your FSBO deal is closing at the local title company. Real estate deals can fall apart at this point, so be on point. However, because you’ve done your homework, your escrow will most likely be shorter and cleaner, meaning that the likelihood of walking away with a big check is high.
At Timely Contract, our primary legal services include: real estate contract review, real estate contract drafting, legal opinions for title insurance exceptions, and research, due diligence, and legal opinions for properties.
At Timely Contract we have local real estate attorneys who have experience throughout Idaho, including: Boise, Post Falls, Coeur d’Alene, Lewiston, Moscow, and Sandpoint.
We also have local real estate attorneys who have experience throughout Montana, including: Missoula, Billings, Bozeman, and Kalispell.