Selling Your Own Home Guide
It’s important to weigh all options and scenarios whenever you plan on selling a house.
Far too often people think that their home will sell just by slapping a “For Sale” sign in the window or on the front lawn. Or they list their home with a real estate agent only to be unsatisfied by the efforts of their chosen realtor.
I’ve been there and I’m in constant communication with others online regarding their experiences in real estate transactions. I’m always amazed that I never stop learning.
For instance, did you know that when it’s time to sell, it’s important to remember three things:
- You want the right price
- At the right terms
- In the right amount of time
And, to reach these goals, there are three important objectives that every homeowner must always remember if they want their property to sell quickly:
- Make your home look good.
- Price it at market value right away.
- Use real estate professionals.
I picked up a few of these tips through my friends at the Foreclosure Insiders Club. I’d strongly recommend joining the Foreclosure Insiders Club if you’re a homebuyer or investor looking to find properties at bargain. Members to the site have access to a list of pre-foreclosures in their area that the owners are desperate to sell to avoid bank foreclosure. You never know what offer they will accept to escape their situation!
I’m going to summarize a few specifics that I’ve learned that could help you sell your home.
How To Make Your Home Look Good
It’s important you make your home look presentable before you put it on the market. Exterior and interior paint will give you the best return on your money. Clean up the yard, fertilize and add some flowers for that most important first impression.
Have an agent preview your house to give you suggestions. If yours is an older house, your agent should recommend a termite and or property inspection at the beginning. This can work to your advantage in a couple of ways.
For one, negotiations will go much smoother if you are aware of problems at the beginning. This will allow you time to fix or correct things before an offer is brought to the table. This will
also give the buyer confidence to offer more money. Being aware
of the problems early on will allow you and your agent more time to come up with ways to negotiate around them, should you choose not to fix them.
How To Price It Right
Pricing your house at market value from the start will typically result in getting the best price for the property in the least amount of time. Immediately listing your property too high will only help sell other houses in your market that are comparable to your own.
It’s important to remember that buyers preview a lot of homes and will have a general idea as to whether or not something is overpriced. The sales price also has to appraise at market value in order for them to get their loan. If your asking price can’t be justified by comparable sales in your area and can’t be justified by an appraisal, you are looking at months and months of going nowhere.
Pricing a Home is Key When you figure extra mortgage payments, property tax, insurance, the time and energy to keep your home looking good and the inconvenience of having your home on the market a couple extra months, overpricing isn’t practical.
How To Find Real Estate Professionals
Real estate today has become a business that is very labor intensive on many fronts. Continuing education is required to stay up with all the changes and requirements for a real estate transaction.
Most home owners, despite the persuasion to sell their property without a middle man, don’t have the time or knowledge to successfully market and sell their home or get the best price.
To save a commission, some people start marketing their home by FSBO (for sale by owner). Some are successful but most will eventually find that it’s crucial to list the house with an agent.
Most buyers will work with an agent because they have no desire of going through the buying process without the assistance of a knowledgeable professional. After all, they are essentially getting this service and expertise for free.
Since the commission on a listed house is typically the source of income for the buyers agent, FSBOs get far less market exposure.
Agents typically prefer not to work with FSBOs as they wind up doing much more work.
The reason for this is FSBOs typically don’t have the knowledge and required forms needed to sell a home. The agent winds up providing for and consulting with the owner, in addition to the buyer, creating more work for them.
Real estate professionals have the needed information to arrive at market value. A real estate agent will conduct a Comparative Market Analysis (CMA) using the Multiple Listing Service (MLS). This involves a survey of homes that are on the market or have recently sold that are similar to yours. The agent will advise you on the additional value (or deficit) of your home’s unique features and factor that into the equation.
Going with the agent who recommends the highest price isn’t always the best decision. This technique is used to get the listing.
Myself, and most of the sellers I’ve communicated with through the Foreclosure Insiders Club, will dismiss any agent who can’t justify a high price estimate. Sellers mistakenly believe that they should price their house higher knowing that they can come down in price if it doesn’t sell. Buyers shop around before buying and recognize value in a specific price range because of comparison shopping.
Homes that end up on the market too long will typically sell below market value.
Commission
A quick word about commissions. Commissions are negotiable. They can vary between 4%-10%, depending on the type of property, current market conditions, and the seller’s motivation. 6% seems to be most typical. Many people wrongly assume the whole commission goes to one person. Typically it is divided four ways: the listing agent, the listing agent’s broker, the buyer’s agent and the buyer’s agent’s broker. Referral fees and franchise fees many times are a factor also.
Getting your home listed at 5% may not net you more then if you listed at 6%. When a home is listed, the commission is split between the listing office and the buyer’s agent’s office. When agents show properties to potential buyers, one thing they
generally look at is how much commission is being offered.
Agents typically will show homes offering 3% before the ones offering 2.5%. If your home is offering 2.5% to the other agents, it will get fewer showings meaning fewer people will even look at your house.
The result: you will be helping other sellers get their homes sold first. If the listing office offers 3% to buyer agents on a 5.5% or less listing contract
- this is the best of both worlds. This scenario reduces costs to you along with good marketing incentives for other agents. MLS fees, insurance and membership dues can run thousands of dollars a year for each agent. There is the cost of overhead, computers, office equipment, transportation, signs, and advertisement and so on. It’s a business with many expenses without a weekly paycheck.
Marketing Real Estate
MLS
The MLS is still the best effective way to market your home to the public. The Internet is fast becoming the preferred method for finding homes.
Internet
More and more potential buyers start looking for homes on the Internet. A tremendous amount of information can be found online. Soon the Internet is expected to be the norm for buying and selling real estate.
Prospective buyers can take a virtual tour of any home advertised online with the click of a mouse. More and more homes will be marketed this way, especially high end homes or special property.
Real estate companies that use this technology will be serving their clients better. Flyers on a “For Sale” sign are common today, virtual tours will be common tomorrow.
Signs
A FOR SALE sign should be placed on your front yard. Not allowing a sign on you property will greatly decrease your marketing power.
Use signs that have a box for flyers about the property.
It’s important that you have a lock box so agents can preview and show the property during the day. Not allowing a lock box will dramatically reduce the needed exposure to properly market your home. Lock boxes are very secure devices that records who uses it.
Agents don’t like to show property if access is an inconvenience.
Bottom line: Use a lock box!
Talking Houses, is a new effective marketing device, allowing potential buyers driving by, to tune in a radio station to hear about your home’s features. It also allows the agent to get a phone number to that person for further marketing.
Advertising in property magazines, newspapers and open houses are additional methods used and probably the least effective ways to market real estate.
Does the size of a realty company matter? Is a bigger real estate company better? Most large franchises want sellers and their agents to believe that. Which Company is the Best? Larger companies can’t be as flexible on commission because they have more layers to feed. Smaller companies have less overhead with less or no other ownership involved to feed. As a result, a lower commission can be agreed upon with the same effective marketing a large company offers. Talk with agents from different companies to find out what services they can provide and decide what is the best value for getting your property sold.
Based on what we’ve already discussed, I typically advise people to consider the following when choosing the Real Estate Agent or Company they’d like to use.
You want your real estate agent to have:
- Good local market knowledge
- The ability to market through the MLS
- A quality, easy to navigate web site – Internet marketing is becoming more and more important!
- The best value for commission rate.
I always suggest using a local real estate agent with a proven expertise and experience marketing homes in your specific
neighborhood. Someone familiar with your area will have a more
accurate sense of how much your home is likely to sell for based on their familiarity with your neighborhood and knowledge of comparable sales.
I hope this breakdown simplifies some of these steps for you. I can recall stories from friends and family members about nightmare scenarios where a property they needed to sell didn’t move and their frustrations with realtors. Hopefully I can spare a few people such torment!
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