If you’re planning to sell real estate – whether 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. By offering your property “For Sale By Owner” (FSBO), you save on real estate commissions and potentially net a higher amount.
12 Tips for your FSBO Listing and How Timely Contract Solutions can Help
Step 1: Make Your Property Look Good. Before you put a property on the market, clear it out and clean it up. Buyers need to be able to picture themselves in the home. When you’re done, your home should look clean, shiny, and impersonal. 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, 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. Use TC Drafting for the drafting of a purchase and sale agreement.
Step 3: Get a Home Inspection. Home inspections are generally done by buyers. However, sellers who have their properties professionally inspected before putting them on the market gain valuable information. It’s helpful to know of negative conditions that could potentially decrease the value of the property and discourage qualified buyers. Use the information you gain during a home inspection can make common-sense repairs that solidify your asking price. These repairs also make you less vulnerable to hard-nosed negotiating tactics on the part of a buyer.
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 a legal opinion of your parcel’s legal risks can be one of the smartest things you do before listing your property. The “exceptions documents” listed in Schedule II-B of a parcel’s preliminary title report lists 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 the property for sale. Use TIER for a legal opinion of the public document record located at the County Recorder’s Office. Knowing exactly what you’re selling helps you price correctly and 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 List 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, eventually 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 Market price.
Step 6: Market Your Property to Serious Buyers. Most serious buyers are already sold on the neighborhood by the time they find your home. In all likelihood, they’ve identified the schools and amenities they want, and your area meets their requriements. 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 consider listing your parcel through a real estate agent who has access to the Multiple Listing Services (MLS). 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 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 information 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, TC Review is available for signed contracts and TC Drafting is available if the contract is not yet signed.
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.
This information in this Post is not legal advice. Legal advice is based on specific facts. This information is necessarily general in nature.