/Selling a house as a for sale by owner (FSBO) is not for everyone, but for those who can weather the storm, I've created a step-by-step guide to help you be successful.
Selling a home is an exhausting undertaking. As a Realtor, it is the hardest part of my job. When I list someone’s house for sale, I spend hours thinking about the best way to market the property. Every house has a story to tell and buyers love to see and hear this story in an online property listing. Selling a house as a for sale by owner (FSBO) is extra hard because, in order to net the highest possible sales price, you must take on the job of a Realtor to market the house online and solicit the most attention from buyers possible. You also have the responsibilities as a homeowner to get your house ready, from the yard to every corner of your house. With all that said, it’s very possible to sell your house as a FSBO and be successful at it if you have the time and know the challenges ahead.
My wife and I sold our first house as for sale by owner. I was offered a job on the opposite side of town, so we decided to sell and move. We put our house on the market as a FSBO and waited for an offer. It took a few months to get an offer and when we finally did, it was a owner finance deal. This means that the owners (us) would keep our mortgage and then start a second mortgage with the buyer, with us as the 2nd lien holder. It was the only offer we had, so we took it. In hindsight, it was a terrible decision, but we had no experience selling a home. The owner defaulted on the 2nd mortgage with us after 10 years. I fixed it up and sold it as a Realtor and had a full price cash offer within 24 hours of listing it online. Knowing the right ways to sell, as a Realtor would, makes all the difference.
I’ve learned many things selling homes as a Realtor that I could never have known as a first time FSBO. In an effort to help people who earnestly want to give it a shot and list their home on their own, I wrote this article and infographic. It will help you understand the most important things to focus on, and be successful as a FSBO listing in Colorado Springs.
Step 1: Do Your Research
Study All Homes Currently Listed For Sale
Current listings in your neighborhood are very important because they are your main competition. The next house to sell in your neighborhood will be the best one, so you need to make sure that your house is the best. Study the price per square foot, upgrades/updating, and overall presentation of each active property. If all of the homes for sale in your neighborhood have nice hardwood floors and new carpet, make sure yours does too. If not, then make sure you price it to be able to compete.
Study All Sold Properties
Sold properties are your best source of data to determine an accurate listing price. Take notice to what the properties sold for in comparison to what they were listed for. Also, notice how many days each property took to sell. What made each home sell? Take into account the year built, upgrades, and layout. It's hard to objectively determine your real market value when you are the beneficiary of the sale. Try to step back and pretend that you are coaching a friend through the process. Be realistic and study the raw data to land at an accurate selling price.
Study The Amenities & Upgrades
Amenities and upgrades can completely change the way buyers feel about your house. If all of the recently sold homes in your neighborhood had granite countertops and you are trying to sell your home with 1980's formica countertops, then you've got a problem. Carpet that is worn out and/or carries pet odor, poorly landscaped lawns, and old paint are common issues that need to be dealt with before listing a house. Try your best to determine what upgrades are relevant for you to be a successful for sale by owner listing.
Research Selling & Closing Fees
You'll want to know what fees to expect at closing. This varies for certain areas. In Colorado Springs, it is common for the seller to pay for most title fees. You will also need to budget for possible repairs that can come up in a buyer's inspection report. Call your local title company, or ask a trusted Realtor to help you determine all the possible fees that you may incur when you sell your property. You can also research common real estate fees on Google to get a good idea of what to expect. Lastly, be prepared to pay your buyers Realtor 3%. FSBO's that don't want to work with a Buyers Agent will scare off potential Buyers. It's their right to be represented.
Know Your Mortgage Payoff
The most important monetary value you will need to know when selling your house as a FSBO is your mortgage payoff amount. If this number is not readily available on your mortgage statement, call your mortgage company to obtain the exact number. Make sure that your house can sell for enough to payoff your mortgage and pay for closing fees, or you will have to bring money to the closing table. This may seem like a no brainer, but you would be surprised at how many home sellers have not taken their mortgage payoff into account before considering listing.
Step 2: Get Your House Ready To Sell
Determine the Scope of Work
Every house will have a different scope of work to get it ready for selling. If you have simply lived in your house for years without adding or upgrading anything, it's likely that you will have a large scope of work to get your house ready for the market. Take the time to make a list of everything that needs to be done, and determine the things that you need to hire out. Once you know the total scope of work, you can begin to plan out the process of your home sale.
Declutter, Deep Clean, & Landscape
Take down all of your personal photos and make your house look like someone could move into it tomorrow. Pretend that you have already sold it and it's not yours anymore. Deep clean windows, baseboards, ceiling fans, stairs, handrails, cabinets, garages, and any area that accumulates dirt. Spend time applying new mulch, flowers, and cleaning up neglected yard areas. Try to make your house look as close to a new builder home as you can. Everyone loves new!
Change Out Old Fixtures
If you have old brass fixtures from the 80's and 90's, make sure to change all of these out to take the dating out of your home. There are a tiny percent of homes (Victorian, 1900's decor) that brass and gold is suitable in, but for most homes- it's not. Change door knobs and door hinges, old staircase banisters, old light cover switches, and possibly old doors. Make a list of all the fixtures and items in your house that are more than 5 years old. The more dated fixtures you change out, the more buyers will connect emotionally to your home, which will increase your odds for success.
Add Upgrades That Increase Value
Adding upgrades to a home is the easiest way to increase your chances of selling at a high price. Kitchen countertops, master bath tile, stainless steel appliances, new carpet and wood floors are all great upgrades that will increase value. New water heaters, garage door openers, and built in surround sound are upgrades that many homeowners aren't as interested in on their initial visit to your home. Stick with the upgrades that will emotionally hook your buyers. This will cause your house to stand out above the rest when buyers are comparing properties.
Professionally Stage Your Home
Staging is a big deal. Statistically, staged homes sell faster and for more money than those that aren't staged. Staging will present your home in the best possible way. It should look as though you no longer live there. Typically, homeowners will rent a storage unit for all their non necessities, and store large pieces of furniture, to increase the amount of floor space. If the home is vacant, they will hire stagers to fill the necessary areas to make the home flow well. Adding a few pieces of neutral art, drapes, and some floral arrangements can go a long way as well. If you try to stage on your own, be sure to get a second opinion. Staging is a gift and not everyone has it, so be honest with yourself.
Step 3: Get Your House Listed
Create A Professional Video Walkthrough
If a picture is worth a 1,000 words, then a video is worth a million. Video is the fastest growing form of marketing in real estate. I recommend hiring a real estate videographer who will use all sorts of camera tricks; from aerial drone footage, to 3-axis gimbals, to smooth slide rail shots. A good listing video is the strongest eye candy that you can present to a buyer. You may not see this marketing technique on every listing in your area, but it is the most effective form of marketing for selling real estate.
Here's an example of one of our listing videos. Marketing like this can increase the sale of your home by 5% to 15%.
Use Professional Photos
Once your house is ready to list, you'll need to have some professional photos taken. In my opinion, this is the #1 area where FSBO's go wrong. So many for sale by owner listings have terrible pictures. An expensive camera does not automatically mean that the photos are going to be good. You need photos using HDR image processing and at least a 10mm wide angle lens, along with great lighting and proper angles. Photos are your first impression for online homebuyers. Make sure to take advantage of them!
Get It Listed Everywhere Online
Once you have your photos and videos done, you'll want to market it everywhere. Start with the local MLS, as this is the most important place to list. Use a flat fee Realtor or ForSaleByOwner.com to get your property on the MLS. Then, make sure it is also on Zillow, Trulia, Facebook, and Craigslist. I advise running targeted Facebook Ads to potential homebuyers in your area. Also, write a blog about your listing and market your video all over YouTube. Most for sale by owner listings do a poor job of marketing.
Track Your Online Marketing Progress
With all of your listing efforts, make sure that you are tracking the amount of traffic you are receiving and compare it with other listings. Call listing agents on other properties in your neighborhood and see if they will share their data with you. Knowing whether your listing is working is extremely valuable to your selling success. You'll need to know the amount of showings expected in your area, the average time a home should be on the market in your area, and the average amount of traffic a listing in your area receives.
Adjust Strategy If Activity Is Low
If your marketing efforts are not receiving the amount of traffic that you expected, you need to evaluate your strategy to determine what's wrong. It could be that your listing itself needs to be adjusted with better marketing photos, videos, and materials. It could be that the condition of your home just can't compete with the other listings. I could also be that you have priced your home to high, which is very common with for sale by owner listings. The art of measuring and adjusting is one of the most complicated aspects of selling a home.
Step 4: Get Your House Sold
Research Documents Necessary To Sell
The first document to familiarize yourself with is a sales contract. Take the time to research the correct sales contract for your area. Then you'll want to find a Seller's Disclosure to fill out for your buyer. This form is one of the most important parts of selling. if your home was built before 1978, you'll also need to have a Lead Based Paint Addendum, as required by the EPA. You'll also need to determine which other disclosures are necessary for your local area. This is important to know before signing a contract.
Review, Negotiate, and Sign An Offer
Once you receive an offer, you'll want to review it carefully to fully understand the details. There is much more to a sales contract than simply the sales price. Know what kind of financing your buyer is using, whether or not they are asking for closing cost assistance, and if your property meets the guidelines of the type of financing they are using. These are all common details to search for in the contract. You'll also want to review their earnest money amount, desired closing date, and any contingencies that are placed in the contract. Once you have reviewed it (preferrably with a real estate professional or attorney) and signed, you're almost there!
Resolve Inspection & Appraisal Issues
Your buyer is most likely going to hire a home inspector to inspect the property for defects and repairs. You can personally hire a home inspector at the beginning of the selling process to keep from being surprised. Home inspectors almost always find something that needs to be repaired or replaced. Common issues are roofing, foundation, appliances, window problems, and HVAC servicing. Once your buyers have submitted a list of repairs, negotiate to keep them on track to buy. The next step is the appraisal, which can cause problems if it comes in below value.
Continually Follow Up on Your Buyer’s Lender
When a contract falls apart, it is often due to mortgage issues. There are many issues that can cause a buyer's financing to fall through. Make sure that you are constantly checking in with the buyer's lender to discover any issues up front. Don't assume that they will be proactive in updating you on your buyer's progress. This is usually not the case. Make sure that you communicate often to make sure that your deal is still on track and is going to make it to the closing table on time.
Schedule Closing and Close the Deal
Once you are passed the inspection and appraisal process, you are almost there. Coordinate a time with the title company to close your transaction and make sure that they have all the proper documentation in time. Bring your driver's license to closing, all house keys and garage door openers, and any necessary documents for your buyers (manuals, warranties, receipts, etc.). Once you and your buyers have signed all the necessary docs to close, the loan will fund and you will have successfully sold your house on your own!
Important FSBO Statistics to Know
Here are some statistics on For Sale By Owner listings from the National Association of Realtors:
- FSBO's accounted for 9% of home sales in 2013
- The #1 method for FSBO's to sell their house was a yard sign (36%)
- FSBO's said that the most difficult part was the paperwork and getting the price right
- The average FSBO sales price was $184,000 in 2013, compared to Realtor sales at $230,000
- Total number of FSBO sales has dropped from 20% to 9% in the last decade.
- 70% of FSBO's said they had difficulty selling
- More than 80% of FSBOs end up listing with a Realtor
Important Things To Consider
If the only reason you want to sell your home "by owner" is to save money on Realtor fees, you really need to think it through and determine whether it's truly the best path for you. Here are some questions to consider:
- Do you have plenty of time to do everything listed in the infographic?
- Do you plan on paying a buyer's agent 3% of the sales price if they bring you a buyer?
- Have you talked to a flexible Realtor about working with you on the commission based on your scope of work?
- Are you confident in your online marketing skills?
- Are you comfortable showing your home to strangers?
- Are you comfortable navigating all the documents involved?
If you can answer "yes" to all of the above questions, then you may be the perfect candidate for a successful for sale by owner listing. Now that you have a step-by-step guide, current FSBO statistics, and the list of important questions above, are you still interested in listing your house as a for sale by owner? If so, then embrace it and put everything you've got into it. If you earnestly follow the steps in this article, you can make it happen on your own.
If the answer is "no" and you would like help selling your house in colorado springs, please let me know. Our company will work with you on our commission, based on the level of service you need. We understand that Realtor fees can seem like a lot and we always want our clients to feel like they are getting every penny worth when they list their home with us. We have rave reviews from other home sellers who have hired us. Just take a moment to talk to us and see if we would be a good fit for you.
Hi There! I'm the founder of Great Colorado Homes and the creator of much of the content on this website. Thanks for taking the time to read this article. Please feel free to leave a comment in the message box below, or to share this article on social media with someone who might benefit from it. I appreciate your time here on this site and am always open to suggestions and ideas from our readers. Feel free to contact me anytime at firstname.lastname@example.org.
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