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For
Sale By Owner
From the
editors at WIFE |
In this year's hot real estate market, you may have considered
selling your home. Selling it through a real estate agent can be costly, because commissions usually run 6% of the
sales price. But if you are thinking of bypassing the agent and selling it yourself, think again. Though erecting
a For Sale by Owner sign in your front yard or window can save a considerable amount in commissions, be aware of the
potential problems in store.
Problem #1: Setting the price for your home.
- Solution: If you do not obtain a professional appraisal to
justify the price you set, ask a local real estate agent for a list of
comparable recently sold houses in your neighborhood, known as a
market analysis.
- Possible Drawbacks: It may take considerable research on
your part to contact owners and realtors to discern the trend, and
find out why particular properties sold for more or less than others.
Problem #2: Qualifying the buyer, to find out whether potential buyers can actually afford your house.
- Solution: At your local stationer or office supply store you
can purchase an application form to be completed by potential buyers,
requesting financial information about their income, the source of
their down payment, whether their purchase is contingent on selling
their present home, and their ability to obtain mortgage financing.
- Possible Drawbacks: Unless they are pre-qualified by a
mortgage lender, you will need to accurately assess each potential
buyer's ability to perform, so you don't latch onto unqualified buyers
while turning away potential buyers who will be better prospects.
Problem #3: Real estate agents on your doorstep who see your For Sale by Owner sign and promise an interested
buyer if you will sign a listing contract.
- Solution: Offer to sign a contract only for a named buyer.
In that way, the agent will get a commission if he or she brings that
buyer to you, but you need not pay a commission if the house is sold
to a buyer you find yourself.
- Possible Drawbacks: You can end up negotiating with a number
of real estate agents, none of whom you know or have developed a
trusting relationship. And it could cost you just as much in the end.
Problem #4: Bargain shoppers. If your house if for sale by owner, a prospective buyer may offer you a relatively
low amount, knowing you are saving a 6% commission.
- Solution: If your asking price is fair, hold out for a
qualified buyer at your price.
- Possible Drawbacks: Most of your time may be spent haggling
with bottom fishers who are interested in a deal, and potential buyers
who would pay your price may perceive you as greedy in asking for the
going market rate for your house when you are selling it yourself.
Problem #5: Advertising. Unless you use an agent, you will probably not have access to the Multiple Listing
Service, and you must pay for your own advertising expenses, which can be substantial.
- Solution: Locate an agency that belongs to MLS and will
agree to help you sell and advertise your property for a fixed fee or
discounted commission.
- Possible Drawbacks: If you contract with a discounting
agent, you'll end up disappointed unless you understand completely
what services the agent will and will not render in marketing your
home. For a cut-rate price, you are likely to get cut rate service.
Problem #6: Doorbell ringing day and night. Passersby who notice your sign may want to look through your
house at inconvenient times.
- Solution: Make sure your For Sale by Owner sign says
"By Appointment Only." This measure will lessen your
problem, but will still not entirely alleviate it.
- Possible Drawbacks:. Until your house is sold, you probably
will not have much of a life. Folks who can only look at it during the
day, or after work, or on weekends, will have to be accommodated if
you want to reach the most number of potential buyers.
Problem #7: Your advertising attracts far fewer potential buyers than a real estate agent could supply.
- Solution: You may decide that paying a commission is worth
it, and turn to an agent to sell your home. They will handle the
marketing, show it when you're not home, handle the negotiations with
potential buyers and their agents, and draw up the paperwork. A 6%
commission is a hefty fee, but for peace of mind (and possibly a
higher sales price) it may be worth it.
The Women's Institute
for Financial Education (WIFE) is a non-profit organization which
provides financial education, networking opportunities, seminars, and
workshops for women of all ages. |
