FSBO (“For Sale By Owner”): Points to Ponder

I think that real estate agents can be very helpful in the sale of residential real estate. I used a realtor to help sell my last home, and I’d probably do so again. However, I understand that some people feel differently about this matter, and wish to try to sell their residence without the assistance of a realtor. But if you have indeed decided to try and sell your home via the FSBO (i.e. “For Sale By Owner”) approach, there are some things you’ll need to consider.

You should start by thinking about the different aspects of a realtor’s job, and how you as a FSBO seller are going to accomplish these things:

1. Pre-listing advice and preparation. Before your home is placed on the market, a good realtor will talk extensively with you about setting a listing price, taking into account things like sales of comparable homes and the state of the local real estate market. To this end, I think it’s a great idea for FSBO sellers to spend $300 or $400 to obtain an appraisal of their home by a licensed Illinois appraiser. People using the FSBO approach are notorious for listing their homes at a price that’s unrealistically high; instead of letting your ego or lack of market knowledge get in the way, find out what your home is really worth. You will also want to put yourself in a prospective buyer’s shoes, and think about what repairs and/or improvements should be done to the home before it’s put up for sale.

2. Broad-based marketing. A good realtor has a marketing plan for your home that includes elements like listing the property in the Multiple Listing Service (MLS), print advertising, and open houses. As a FSBO seller, you’ll have to think carefully about how to formulate your own marketing plan (one hint: just planting a “for sale” sign in your front yard probably won’t cut it). At this point you may want to consider the middle road between FSBO and hiring a realtor – there are lots of services out there that will list your property in the MLS (or on a FSBO website) for a flat fee. You may also wish to consider whether you’d be willing to pay a commission (usually 2.5% or 3%) to a buyer’s agent – this will get buyer’s agents interested in showing your home to their clients.

3. Showing the home. Most realtors place a “lock box” on your door when your home hits the market – this allows your realtor (and other realtors) to show your home without you needing to be present. If you are a FSBO seller, you won’t have a “lock box,” so you will need to be available to let potential buyers look at your home. Needless to say, this can be a tremendous time commitment – if you’re never at home, you might want to rethink FSBO as a possibility.

4. Contract Negotiation. In most residential deals, the realtor handles the initial contract negotiation (over things like price and the closing date), and then the seller’s attorney does contract review and negotiation for other issues. Your attorney can help with all aspects of contract negotiation, but you’ll need to get her or him involved in the process very early, to advise on contract issues and to give you the necessary statutory disclosure forms (which you should give to buyers before they make an offer).

Finally, it’s a good idea to formulate an exit strategy, so that you have other options if a FSBO sale doesn’t work out. How long are you willing to let your home sit on the market with little or no interest from potential buyers? Give yourself a deadline for selling your home FSBO, and if the deadline hasn’t been met, don’t be afraid to bring in a realtor to help you.

Comments

[Jayson Hannings]

Part one of this blog, about obtaining pre-listing advise is 100% correct. We hired an independent appraiser, something that had been recommended to us as the appraiser would have no connection to a bank or realtor, lender, broker and whoever else has a hand in the selling of a house and were able to receive the vaule of our home along with with data that provided what other homes in our area and surrounding cities sold and were selling for, which gave us the ability to price our home accordingly. We had been searching on the web for "local appraisers" and came across www.uappraiseit.com and that is who we ended up using. They had an experienced appraiser right in our area. They handled all the paperwork and contacting, we didn't have to do a thing. Just an FYI that if you are planning a FSBO to make sure you take every step you can to understanding of how the market works because in the end it will save you quite a few headaches!!

[Amanda R]

My father had a house that was under contract to sell and was to close next week. I had power of attorney to sale and close the sale of the house. He died last week. Is the power of attorney still valid? Is the contract still valid?