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How to Get the “For Sale by Owner” Right

Most people, when looking to sell their home, will employ the services of a realtor to guide them through the process. But then, you don't have to take this route, and increasing numbers of Americans are now choosing to do it themselves to avoid having to pay realtors’ fees.

Homes listed without a realtor are called 'for sale by owner' or 'FSBO.' They're increasingly common due to the proliferation of online FSBO websites and listing platforms. These make it easier for people to sell their own homes and avoid losing the 3% or so of the selling price they'd usually pay a realtor.

It's worth noting that of all first-time sellers who attempt to sell FSBO, a large percentage of them fail. It isn't as straightforward as simply listing your home and seeing what happens. It's a detailed legal process with several steps. Here’s how to make a success of it.

Becoming your own realtor

One of the realtor's most important contributions is knowledge of the housing market. Their experience in selling homes could help you set a realistic price that's appealing to both you and potential buyers. This experience also helps them give solid, useful advice on how to prepare and stage a home for maximum appeal and maintaining the home while it's listed for sale. They then sort out showings, take photographs for the listing, and just generally manage the entire process on your behalf.

There’s no denying that taking all this on by yourself is a lot of work, commitment, and time. You should start by taking an objective, detailed appraisal of the condition of your home, and begin preparing it for sale by decluttering. SoCal home buyers want homes that are cozy and lived-in, but they don’t want to see other people’s personal knick-knacks all over the place. Pack those photo frames away!

Once you’ve decluttered, it’s time to decorate. The best way to prepare your home is to paint any brightly-colored walls a neutral color such as grey or warm white. You should repaint the exterior, too, if needed, as curb appeal is super-important. Replace any appliances that look old or broken, and add cozy but generic accents such as lamps, rugs, and candles.

You also need to make sure your home is clean, and we don't just mean giving it a good vacuum. We mean it needs a deep, professional cleaning. Buyers won't be impressed by surface-only cleaning and will notice if you've cut corners.

Knowing your home’s worth

One of the most challenging things to get right is setting the value of your home. You can't just pull numbers out of the sky and expect a good result. The first step is to analyze the local housing market and determine where your home fits in, taking into account any specifics that might increase or decrease its market value.

Take a look at recent sales of comparable homes, but don't just compare the size of the home or the number of bedrooms. Also, take into account the finishes, any bonus features you've added, and anything that might decrease the value you don't plan to fix. Be objective. Buyers aren't going to pay more for your home just because you love it.

Once you're happy with your research, it's time to set your list price. There's still more to think about here. If you live in a particularly hot location, a list price that's slightly too low could work to trigger a bidding war. If you want to be out fast, a lower asking price could ensure you're able to. Take every factor into account when setting your price. Now, you're ready to list.

Setting up viewings

Once your home is listed, you need to start setting up viewings with interested buyers. How you do this is up to you. You can either go down the 'open house' route, which allows people to just show up at a time you determine, or you can provide a lockbox.

For open house viewings, you need to not only be present, but prepared to sell the features of your home positively and professionally to every single person who comes in. If you decide on a lockbox, make sure you place it somewhere not easily accessed by anyone who doesn't know it's there. Prospective buyers are given the code and can use the key to let themselves in the house.

Whatever you decide, make sure your home is correctly staged and sparkling clean before every viewing.

Understanding offers

The next logical step after viewings is taking offers. You need to understand that it's highly unlikely the first offers you receive will be the full list price, and that you're going up against highly experienced real estate agents working on behalf of potential buyers. Figure out what your terms are for any negotiation, and how flexible you're willing to be. Going in prepared and knowing what you want will really help. Be patient. Don't accept the first offer just for the sake of it. The right one will come along.

The legal bit

Once you've accepted an offer, you'll need to seek out professional help from an escrow agent to finalize the deal. You need an escrow agent as they will be the buyers’ contact for closing paperwork and any costs, which your buyer will usually cover. Any closing paperwork that's incorrect could put your sale in danger, so it's essential to manage it properly. If you don't want to hire an escrow agent, try fee-only representation for a cheaper option.

As with most things, real estate transactions completed through FSBO are subject to several laws at both state and federal level. Make sure you know all the statutes you need to comply with, and that the contract your buyer is signing covers all bases. This can be a tricky and complicated process, which is why it's a good idea to ask for expert help.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

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