Many people are tempted to try to sell their own home, bypassing the services—and fees—of a realtor. Realtors usually charge between 6 and 7 percent commission on the sale of your home, which can add up to a lot of money, depending on the value of your property.
If houses in your neighborhood are so much in demand that potential buyers line up outside every time a for sale sign goes up, you may have little trouble selling your home yourself. Just be sure you adhere to all the legal and financial guidelines.
The National Association of Realtors reports that about 13 percent of homes are sold by owners, without benefit of a professional realtor. A theory behind owner selling is that, because you're saving the realtor's fees, you can sell the house for a few thousand dollars less, and that will cause it to sell more quickly.
Some people have had great success selling their own home and swear they'd never do it any other way. And maybe you will, too. Before you decide to go the FSBO route (realtor lingo meaning “for sale by owner”), carefully read the information that follows, and think long and hard about what you may be getting yourself into.
If you're going to sell your own home, you'll need to invest significant time to do so. You'll have to be around to show the house when it's convenient for potential buyers. You'll probably need to do some work on the home to make it as attractive and sellable as possible. You'll need to arrange for advertising, open houses, and research your selling price.
The first question to ask yourself is if the time and energy required to sell your own home is worth the money you'll save.
If you have many obligations at work or otherwise, you might simply not have the time required to market and sell your own home. Or you may not have the personality to do it. Remember that you have a lot of yourself invested in your home. How will you feel when a potential buyer criticizes your decorating scheme or sniffs at the size of the kitchen? You've got to be able to remain calm and impassive, as though you're a third party instead of the owner of the house.
The biggest mistake that FSBOs make, according to professional realtors, occurs with pricing the home. Almost everybody thinks their home is worth more than it is, and why wouldn't you? You're emotionally connected with your home, which greatly increases its value in your mind.
Somebody walking through your home for the first time, however, probably isn't going to feel the emotional connection that you do.
Determining a Price for Your Home
Don't Go There
Trying to get an extra couple of thousands of dollars out of your home by setting your asking price higher than the appraised value can backfire on you, especially if you're selling the home yourself. Savvy buyers know you're avoiding a realtor's fee by selling yourself and may resent that you're still asking a higher price than other sellers.
You've got to know the value of your home if you're going to put it on the market. The following are some ideas for determining what your house is worth:
Check out the real estate transactions. Look in the real estate section of your local paper and see what houses in your neighborhood are selling for or have sold for. Remember not to price your house too much higher than those around you, even if you've made improvements the others don't have. You want to get your money back from the work you've done, but you don't want to price your home out of competition.
Talk to your neighbors. In every neighborhood, there are some folks who know exactly what's going on. And they're usually willing to share the news. Find out what the Smiths got for their house last fall, or what the Joneses are asking for theirs. Just be sure that your information is reliable.
Hire a professional appraiser. This is the best way to determine the value of your home, because he's trained to know exactly what it's worth. Many people assume the value reported on their tax assessments is correct, but you shouldn't rely on it, even if it's been done recently.
Once you know what your house is worth, consider special circumstances that might affect what you ask for it. If the market is particularly strong, you might add 5 or 10 percent of your home's value to its appraised price. Don't get too greedy, though. Overpriced homes don't sell. Likewise, if the housing market is at a crawl in your area, you may have to shave a percentage of its appraised value off your asking price.