Are You Really Ready to Sell Your Home Yourself?
Everybody likes the idea of a little DIY. Whether that means unclogging your own sink drain or putting in a few shelves in your pantry, there's a lot of satisfaction that goes along with doing it yourself. Maybe this is why homeowners often seriously consider selling their homes on their own. Although going FSBO has the potential to save a few bucks, there's a lot to know before jumping in.
What is a FSBO?
In real estate agent speak, "Fiz-Bows" are homes that are being sold and marketed by their owners: it's short for For Sale By Owner. These sellers may negotiate with Buyer's Agents to sell their house, but more often negotiate with the buyer directly. The buyer is either someone that the seller knows or it could be a complete stranger who called off some type of advertising for the home. As you can imagine, this situation is peachy, until it's not...
A Few Points to Ponder Before Going FSBO
The decision to sell your home yourself is not one that you should make lightly. There are a lot of things that must be done in order to execute a real estate contract, and even seasoned real estate agents sometimes make serious mistakes, So before you take the leap to sell your home yourself, take these things into consideration, just for starters:
- Real estate agents carry errors and ommissions insurance for a reason. There is no perfect contract and the more complicated the contract, the higher the risk of something accidentally being recorded incorrectly. When the mistake is a high dollar issue, E&O insurance can help resolve this. Generally speaking, when selling your own home, your errors and ommissions are on you.
- Marketing matters. Even in a seller's market, it is highly unlikely that just plopping a "For Sale" sign on your lawn will attract the right buyers. Sure, you may get nosy neighbors popping by for a look, but they're really just comparing their home to yours, they're generally not serious buyers. This is going to be one of your biggest expenses if you are serious about selling your home, and marketing does not come cheap. You can't just list your home on one website, you need to market where the people are, which means social media, local FSBO sites, and other media outlets. This is where knowing your audience (your buyers) becomes really important. It will help you narrow your focus so you don't spend as much on marketing as you would if you took a scattershot approach.
- Contracts. You can't sell your home with a handshake agreement. Well, in most states you can, but it is not advised. It makes it really hard for the bank to finance. First things first, do you have a contract you can use or a lawyer who will draft one for you? Any existing contract should be reviewed by a real estate attorney to ensure you are protected.
- Handling offers. We all expect offers will come in at full price and also include nice notes about how our kitchen is amazing and the buyer can already smell the bubble bath in the master suite. However, that's not always reality. What will you do when an offer comes in that's insultingly low? The emotional weight can be massive. Most of the time, these things go off without a hitch, but there are some trouble contracts here and there. Can you negotate closing costs that the buyer may need? Are you ready to negotiate inspection repairs and credits with the buyer? Are you confident enough to stake the equity in your home on this gamble?
There's nothing wrong with selling your home yourself, but if you chose to do this, you have to realize that it's a huge committment and responsibility, as well as essentially becoming a second job. You have to be ready to show your home any time a potential buyer (who is a stranger) appears at your front door. You need to monitor the market so you can see when a price change is going to be necessary. Most importantly, you have to know how to respond to a problem.
There are No Perfect Houses
Anybody can sell a house that's perfect, no question about it. But in the real world, all homes have some flaws. They're structures made of thousands of different parts after all., That one knotty stud with the bent nail under the drywall makes your home totally unique, even when compared with other homes that are the same floor plan.
The thing with all this uniqueness is that when a home inspector comes to inspect the home, they're likely to find something wrong. As a homeowner, not having a lot of experience looking at inspection reports, you may think you're being unfiarly attacked or just feel generally insulted by the findings. After all, you wired up that outlet or plumbed that tub yourself.
If you can see your home the way a potential buyer does, you may have the stomach for selling it yourself. You have to be fair-minded, otherwise everything will blow up during the inspection period, if you make it that far.