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Three Pitfalls To Avoid When Selling By Owner

Perhaps you've thought about the magnificent savings of 3-6% of the final selling price of your property and have decided to look into selling as "for sale by owner" (FSBO). Or perhaps you've already tried selling by owner, but like many sellers, weren't able to get the property sold without finally enlisting the services of a real estate agent. This article deals with a few common stumbling blocks faced by FSBO sellers, and ways in which to address them.

The Numbers Game

The first challenge you face is advertising. Unless you are extremely lucky (or in an extremely hot seller's market), you will need to advertise that your property is for sale in front of as many potential buyers as possible. The reason for this is simple common sense; not everyone will be interested in the features and qualities of your property that make it unique, but really all it takes is one qualified buyer to get the real estate sold.

Most FSBO sellers that end up listing with a real estate agent underestimate what is required in the advertising department. They think posting a sign in the front yard and making some flyers to hang in local grocery stores will be sufficient. Some even think posting an ad in the local newspaper for a weekend will do the trick. While these are all good things and highly recommended, they should not be the only things done.

Around 75% of all buyers begin their home search on the internet now. In case you weren't paying attention let me just say that again. Around 75%, or three-fourths, of all buyers look on the internet first when shopping for a new house. How should that statistic be interpreted? Well, it seems fairly obvious that placing an ad on the internet is pretty much an absolute must. There are a number of web sites where for sale by owners can advertise their home for sale with a mountain of details along with a variety of photographs. Buyers love information, so provide as much as you can.

The bottom line is that wise sellers will promote their house for sale in as many ways and to as many potential buyers as possible.

Setting The Right Price

Pricing real estate is not as easy as one might think. Houses come in all shapes and sizes, as do their accompanying neighborhoods. FSBO sellers often make the mistake of pricing their property either too high or too low, simply because they don't do their homework.

If a for sale by owner prices their property too high, there is a good chance of little or no buyer response - no matter how much advertising is done by the seller. Contrarily, if a house is priced too low, there will likely be an enormous response and the seller may end up taking $1000's less than they should. Pricing too low isn't as common as pricing too high, however.

The problem is that most FSBO sellers overprice their homes, and as a result they get little response. With little response, the seller grows tired and/or loses confidence that they can sell on their own, and they eventually hire a real estate agent. Often, the real estate agent will simply help the home owner price the home better and a buyer suddenly appears.

Wise FSBO sellers get help when assessing the value of their home. Some begin by find out out for how much nearby homes recently sold. To use this as a gauge, the house must be similar with similar size, features, and location. Other sellers will order a professional appraisal, which usually costs $300 to $500. An appraisal can also help satisfy buyers that the asking price is fair. Using an electronic appraisal system from a reputable web site is yet another option for some sellers. And last but not least, some sellers take advantage of a free service offered by most local real estate agents - a Comparative Market Analysis (CMA).

The bottom line here is that housing prices can vary quite a bit from home to home even within a neighborhood. Just because your next-door neighbor sold her house for $350,000 doesn't mean you'll be able to sell yours for that much. Do your homework if you want to be a successful for sale by owner.

Old Fashioned Know-How

Let's face it: the average homeowner doesn't know squat about the real estate industry. Buying and selling assets worth hundreds of thousands of dollars isn't the same as buying and selling your Grandmother's china on eBay. But, that doesn't mean independent sellers can't be resourceful and enlist the help of professionals who have both experience and useful know-how to get the job done.

Real estate agents charge between 3-6% of the final sales price of a property. Avoiding this cost is one of the major incentives for most FSBO sellers. But by avoiding the Realtor, the home seller also forfeits the agent's experience and know-how. This void causes many FSBO sellers such heartache and distress that a successful sale is often not achieved, resulting in the eventual hire of the agent.

Wise FSBO sellers fill the void created by the lack of a real estate agent. Some do this by using their own experience and doing their own research. Others do it by building a team of professionals who will be involved in the transaction anyway: a mortgage broker, a title company, an appraiser and possibly an attorney. These professionals have oodles of experience when it comes to completing the transfer of real estate from one person to another. They know what is required in their particular niche and they can often point a seller in the right direction when a question arises.

The bottom line here is to reach out to people you will be dealing with, whether or not you hire a real estate agent. And even then some real estate agents will look over your paperwork for a small consulting fee, which might not be a bad idea.

Be Smart, Be Successful

It has been said that a wise person learns from the mistakes of others. As a for sale by owner, you have ample opportunity to learn from other people's mistakes and approach the sale of your home differently. Advertise like crazy, price your real estate competitively, and surround yourself with people who know more than you do about the real estate transaction.

Posted 6/11/2006