Do you really need a real estate agent’s help to sell your home?
Selling your house on your own is definitely an attractive selling strategy worth your consideration if you are thinking of selling.
If you ask anyone who has ever tried to sell their own home themselves they’ll tell you that from the moment the “For Sale By Owner” sign goes up, the phone begins to ring. Unfortunately, many of those calls will not be from prospective buyers, but rather from real estate agents trying to obtain your listing. Obviously, the idea of not having to pay commission to a real estate agent is attractive to any home-seller, but because of all the issues involved in the process, selling a home on your own can be quite the challenge.
Being Properly Prepared is Key
FSBO is no walk in the park. A 2017 Zillow report found that 36% of homeowners attempt to sell their homes without an agent, but only 11% actually complete sales themselves. Not to mention the legal liability of representing yourself in a huge financial transaction.
The key is to be properly prepared. If you’re not, your home could remain on the market longer than you expect because you are not attracting and getting offers from qualified buyers. This can be the point where many homeowners become frustrated and consider giving up their dream of selling their home themselves. However, there are sellers who successfully accomplish selling their own homes. You can be one of them!
Here’s what you need to know about selling your home without an agent — and how to determine whether it makes sense for you.
What Do Real Estate Agents Do?
Before you decide to forgo representation, understand what you’re giving up. The principal duties of professional listing agents include:
- Helping the Seller Set a Realistic Price. Your agent should know the local market well. They should also know how to interpret comps (recent comparable sales) and recent sales patterns. They can then take into account your objectives and motivations, such as how fast you want to sell, and help you set a realistic list price.
- Preparing the Home for Sale. An agent casts an objective, even critical eye over your home, identifying issues to address before listing. As homeowners, we tend to not notice certain things in our own homes, so having a new eye can be very helpful in getting it ready to show.
- Staging the Home. Your agent should help you prepare your home for listing. That usually involves a thorough, systematic cleaning and decluttering process and tips for maintaining order while the home is on the market.
- Listing and Marketing the Home. Before listing, your agent should hire a photographer to take professional photos of the home’s interior and exterior (some agents even use drone photography and VR tours), produce a comprehensive description of the property, and add the home to the MLS. In sellers’ markets, your agent may shop the home around to buyers’ agents and potentially attract offers before it officially hits the market.
- Facilitating Home Showings. Your agent is the primary organizer and point of contact for all home showings and open houses. This is a huge benefit since home showings and working with prospective buyers is extremely time consuming. They act as an intermediary for buyers’ agents and in most cases, you will never even have to see a prospective buyer or buyer’s agent until closing day.
- Facilitating Negotiations. Your agent also receives prospective buyers’ offers and acts as an intermediary in negotiations. Sales experience and local market expertise come in handy here; a competent agent can help you sort long-shot offers from quality ones. This is a crucial part that Real Estate Professionals play. They are well equipped and versed in all of the legalities of real estate transactions and will take the legal liability off of you and put it on themselves.
- Assisting With the Closing Process. Your agent will accompany you to closing, which is usually organized by a settlement agent or title company. For inexperienced sellers, the presence of an agent at closing is a major confidence-booster that may mitigate last-minute disputes or legal issues.
That said, well-organized sellers who are willing to put in significant time and effort are more than capable of assuming these duties themselves.
Enough rambling already. Let’s get to how to actually sell your house by owner!
Step 1 — Get Your Home Ready
First impressions are crucial. Make sure your home makes a positive statement by carefully inspecting all details and viewing it through the objective eyes of a buyer. Decluttering is key here. Don’t gloss over needed repairs and fix-ups, as your prospective buyers won’t.
Common projects to tackle before listing include:
- Repainting any bold or bright interior walls in neutral colors
- Rearranging furniture to fill large spaces and accentuate smaller ones
- Replacing outdated appliances or fixtures — only if it’s cost effective to do so —
- Adding homey but impersonal accents, such as area rugs and decorative candles
- A freshly mowed lawn and up kept flower beds are a must
Next, scrub the place till it shines, and try your best to keep it neat and clean. Your job is to ensure that your home stands out favorably from the competition. Don’t forget, many buyers will use financing that requires certain conditions.
Step 2 — Research the Market & Set Your Price
Setting your price too high can be as costly as setting it too low. An overpriced home that sits on the market for too long creates concern for potential buyers.
Review recent sales of comparable homes in your area to get a sense of list price. Look for sale prices for homes with similar features, condition, finished square footage, bedroom and bathroom count, and lot size.
It is also important for you to be familiar with the terms of each potential sale. Terms are often as important as price in today’s market. Terms could be things like closing costs or concessions that a buyer may request.
Step 3 — Gather Information & Draft Your Listing
Next, gather the information you’ll need to create your listing, including:
- Home Data. This includes quantitative information such as year built, finished interior square footage, lot size, and bedroom and bathroom count, plus details such as heating and cooling, parking, HOA dues and Covenants and Restrictions, occupancy zoning, easements, and anything relevant to the property.
- Photos. Your home’s photos can make or break your listing. If you’d prefer not to shell out several hundred dollars for a professional photographer, do your best to replicate it. Try to incorporate as much natural light as possible, take the photos at chest level making sure to keep all lines vertical, and get equal amounts of the floor and ceiling. Take more photos than you intend to post and minimally use editing software to touch up the photos you plan to use. You’ll want at least one shot of every room and hallway, plus multiple exterior and outbuilding photos.
- Description. Your description should grab the buyers’ attention while being short and factual. Try to keep the description objective while using descriptive adjectives. Never include why you’re selling.
Step 4 — Market Your Home
Beyond the sign you will put on your lawn, you will want to find ways to spread the word about your home. Something that you will definitely want to include in your advertising is if you are offering a buyer’s agent’s commission (usually 3%).
- Real Estate Sites. The best consumer-facing real estate sites are Zillow and Trulia. It’s free to post FSBO listings on both of these sites, which collectively reach millions of prospective buyers.
- Local Classified Websites. Craigslist and Nextdoor are both free, heavily trafficked classified websites popular with home sellers and buyers — although Nextdoor’s real estate listings aren’t available everywhere.
- Facebook Marketplace. Facebook Marketplace has become a go-to above Craigslist for listing anything you want to sell, even real estate. List your home in the Marketplace and also share to local buy/sell groups, such as Columbia MO Real Estate For Sale.
Step 5 — Hold an Open House
Hold an open house soon after your home officially hits the market. Schedule your open house for a weekend in the late morning or early afternoon. The typical run time is two to three hours, but feel free to go longer if you want. Assuming your home is already cleaned, decluttered, and staged, your primary responsibility before the open house is spreading the word. Consider:
- Putting up an ad on Craigslist, Nextdoor, and Facebook Marketplace even if you don’t have listings on those sites
- Posting the details on your social media channels and asking your followers to spread the word
- Sending out a mass email to your contacts
- Posting flyers in community spaces around town
You need to be present and “on” for the duration of your open house. Dress professionally and devote your full attention to everyone who walks through the door, no matter how serious they seem about actually buying the place. Answer questions patiently and thoroughly.
Remember, the goal of your open house is to give the market a positive first impression of your home, and you’re competing against professional agents who do this for a living.
Step 6 — Show Your Home
Once your open house is in the books, it’s open season for private showings. Buy a combination lockbox (usually around $20) to keep spare keys secure or install a numeric keypad lock on your front door.
If a buyer’s agent is showing your home, that agent should have you sign ‘Authorization To Show’, which is a document outlining the agent’s permission to show the home and whether you are willing to pay the buyer’s agent’s commission should their buyer decide to purchase.
Pre-qualify your prospects. Don’t waste your time entertaining buyers who aren’t already pre-qualified for a mortgage loan. It is a big time-waster, and the experience of showing your home to unqualified buyers can be very frustrating. FSBO homes are often approached by prospects who want to Rent-to-Own or take advantage of Seller Financing. If you don’t plan to offer these services, let prospective buyers know ahead of time.
Step 7 — Be Prepared to Field & Negotiate Offers
When you go FSBO, you commit to acting as your own agent. That means fielding and negotiating offers with buyers’ agents who negotiate real estate deals for a living.
There will be many details to resolve before a sale can be considered final, such as price, terms, inspections, possession date, buyer concerns and objections. Make sure you fully understand the contract you have drawn up so you can explain details and ramifications to the buyer, and make any amendments to the sale that are necessary.
- The contract you use should be thoroughly examined by your real estate attorney. While this is going on, manage the buyer’s interest in your home so that it doesn’t wane during negotiations.
- Pay attention to contract deadlines. If a buyer’s agent submits a contract, there are many deadlines that if aren’t met, make the contract void. Make sure to pay close attention to all of these.
- Missouri requires certain disclosures to be completed, such as a Seller’s Disclosure and Lead-Based Paint disclosure (if the home was built prior to 1978). You are legally liable for the information you have provided in these disclosures (even after the sale has closed), so it is imperative to be completely truthful.
- Since you are not represented by an agent, you will need to direct all questions regarding the legal paperwork to your real estate attorney. If your buyer has a real estate agent, that agent is looking out for their best interest, not yours; so they are not your best point of contact.
Step 8 — Complete all the Necessary Legal Documents
Not surprisingly, there are many important legal contracts and documents which you must assemble, complete and understand. A partial checklist of forms that you will require for prospective buyers and for legal documentation is as follows:
- Seller’s Disclosure
- Purchase Contract
- Lead-based Paint Disclosure (if built prior to 1978)
- Occupancy Disclosure (if located in Columbia city limits)
- Mortgage Payoff
- Property Survery/Plot Plan
- Inspection Notice and Report
- Title Commitment
- Closing and Settlement Documents
Step 9 — Retain a Title Company or Settlement Agent
Listing and marketing your home is straightforward enough to handle on your own, but you’ll need professional help to close the sale.
Specifically, you’ll need an escrow agent to help facilitate the process. In Missouri, your escrow agent will usually be a Title Company. Your escrow agent will be your main point of contact for all closing paperwork and associated closing costs. They will also be the one to schedule and facilitate the final steps to close.
Step 10 — Complete the Legal Paperwork & Close the Sale
A patchwork of state and federal laws govern real estate transactions in the United States. No matter where your home is located, you’ll be bound by federal statutes such as the Fair Housing Act, which prohibits sellers from discriminating against members of certain protected classes.
Your state real estate regulator — the Missouri Real Estate Commission — is the controlling authority for state-specific legal issues.
Your escrow agent and real estate attorney, if you have one, must ensure that all closing paperwork is in order, as anything out of order could delay or jeopardize the sale. If you’re not comfortable managing everything, consider hiring a flat-fee broker to wrap up the sale.
If you run into any obstacles, have questions, or decide to use the services of a Realtor, we would love to be that person, and we are here to help!