If you'd like to downsize to a smaller home or apartment, you may be evaluating all the minor (and sometimes major) fixes you'll want to make before listing your home on the market. While a real estate agent can help you stage your home and advertise your listing to the widest potential audience, in a tight sales market you may be tempted to save yourself the commission costs and list your home yourself through a For Sale By Owner (FSBO) sale. When is an FSBO sale a good idea, and when is the payment of a modest commission well worth it in the long run? Read on to learn more about what you'll need to do before listing FSBO, as well as a few situations in which this can be a risky idea.
What is FSBO?
Most jurisdictions allow homeowners to list their homes for sale without the use of a real estate agent to handle transactional issues and deal with mortgage brokers and underwriters. However, depending upon how title is transferred in your state, you may still need the services of a real estate attorney employed by the title agency at the time of closing. This attorney or agent's fee will be built into the closing costs of your transaction, and you may be able to negotiate your home's sale so that the purchaser pays these costs on your behalf.
When you're selling FSBO, you'll save around 6 percent commission cost you would otherwise have paid to a real estate agent. This can mean that on a $200,000 house, selling FSBO and pocketing the money you would have put toward commission could save you up to $12,000. However, these savings can often come at a price when you find yourself devoting nearly every weekend to getting your home in list-ready condition.
What should you do to your home before listing it FSBO?
As an FSBO seller, you'll often need to perform even more work than a represented seller to make your home attractive to potential buyers. This can begin with decluttering, painting, and staging and end with major repairs and even remodels. Before taking photographs of your home to post on popular listing sites or opening it to buyers at an open house, you'll want to have a brutally honest friend walk through your home with you and let you know about any cluttered, unattractive, or simply outdated areas you may no longer notice.
At a minimum, you'll want to go through and deep clean your home, mopping floors, vacuuming carpets, and wiping down stoves and ovens with antibacterial cloths designed to kill germs before they spread. The cleaner and fresher your home looks, the more potential buyers will be able to picture themselves living there and may even increase the price above asking price.
When should you consult a real estate agent or lawyer?
For those with simple transactions or homes that will sell easily for around the list price, a real estate agent may not be needed. However, in many cases, an FSBO sale can be prime breeding grounds for financial disaster, and you may be leaving a substantial amount of money on the table by not employing a real estate agent.
If you're in a part of the country where available land is at a premium (like San Francisco), you may be prepared for a bidding war when it comes time to list your home for sale. Even though you'll have the guarantee of selling your house quickly for at or above the list price, by using a real estate agent you should be able to pit potential buyers against each other to drive the price up quickly. If this is the case, using a real estate agent from an agency like The Gresham Group to help you list your home and evaluate various offers can be well worth the commission cost.