Guest blog post: Brian DuBoff, a biomedical scientist with no formal background in real estate or anything related, shares his experience selling condos and single family homes in Boston and Brookline “for sale by owner” (FSBO). Brian’s reflection on being a DIY homebuyer is available by request.
In theory, buying a home can be as simple as identifying a place, visiting it once, and making the right offer. It’s all in your hands as the buyer. Selling a home is different story, since you’re dependent upon the right person coming to you, and accordingly, it can be a more labor-intensive process. So passing that work off might seem like an attractive option – until you take a closer look at the cost. Most traditional realtors will demand at least 2.5% in commission from the sale price, despite the fact that that price is determined almost entirely by market forces and a real estate agent can have only a minimal impact. Imagine you have a $500,000 home with a $12,500 commission. In a weak market where an agent devotes 100 hours to your sale, that’s a rate of $125/hour, perhaps not too bad. But in a strong market like the one we’re enjoying currently, with houses flying off the shelf in a few weeks, it’s likely your agent will spend closer to 25 hours on your home, getting the same commission, now at $500/hour. It seems like an odd system on the face of it, and downright crazy once you realize that every single thing the realtor is doing for a price, you can do yourself for free.
And those things you need to do are:
1. Make it nice
Sounds simple, right? But your realtor might spend as much time advising you on this as they will anything else, when it just comes down to common sense. If your house is in good shape, there’s not much to worry about, just make sure the lawn is mowed and sink emptied when buyers are coming through. But for homes that have seen better days, there are tangible steps you can take to increase the appeal. A full renovation for the purpose of selling is guaranteed to lose you money, but simple and manageable touches like fresh paint and new cabinet hardware will draw attention. More intensive improvements like new windows or refinished hardwood floors are going to cost a bit, but can really bring up otherwise outdated homes.
You might think this is the biggest disadvantage of the for-sale-by-owner (FSBO) route, but in reality it’s a minor one. True, you won’t have a listing agent to place your home on MLS, the umbrella network of real estate listing search engines. But getting listed on MLS doesn’t require paying a huge commission. There are many realty services that will list you on MLS for a modest flat fee and leave you in control of the sale. In addition, there are great search engines like Trulia.com and Zillow.com which allow you to list your own home, for free, with total control. And don’t forget the ubiquitous Craig’s List. As for the actual listing itself, Zillow and Trulia will put together a professional-looking listing based on the information and pictures you upload, and you should put together your own fliers in a similar style. Emphasize the positive features, like anything new or distinctive, and back this up with pictures wherever possible. That being said, what you don’t show can be just as important as what you do – for example, a 1.5-bath condo with no pictures of a bathroom pretty much screams that the bathrooms are terrible. So, try to show at least one picture of each major room in as positive a light a possible, but don’t be redundant. Always remember the primary purpose of the listing is to get a buyer to visit the home, so make yours as engaging and distinctive as possible.
3. Show your home
This is the true disadvantage of FSBO, because there’s no secret or shortcut – showing your home takes time. Open houses are your best bet since you can get the most bang for your buck in terms of visitors. The actual process is quite simple. First, you’ll need to publicize. This is another advantage of listing through Zillow, Trulia, or MLS, as they allow you to highlight your open houses. An “Open House” sign on the sidewalk is always a good idea, to make your home easy to find and also pull in foot traffic. On the day of, make the place as presentable as possible, print out a stack of listing sheets, and perhaps put out a sign-in sheet for names and contact info. You could spend all day on the little finishing touches, but key ones are minimizing clutter, especially on counters and flat surfaces, and your photos and other personal effects. You want the prospective buyers to be able to visualize this as their new home. All these tips go for individual showings as well. The biggest challenge there will be timing, especially if you have a full-time job that you can’t get away from for an 11am on a Tuesday. You just have to do what you can with your schedule, and leave plenty of time in the mornings, evenings, and weekends for appointments. Remember that the potential buyers likely have similar schedules, and if they are truly interested they’ll be flexible with timing.
Choosing the right price for your home is critical – go too low and you’re wasting money, but go too high and buyers won’t give you a second glance. There are no tricks a realtor can play to magically increase your home’s value – that is set by the market. Now, agents can encourage an inflated price, but all that will do is delay the sale. The single biggest determining factor for your home’s value is that of the homes around it. Fortunately, the sale prices and listing details of all recent sales are readily available, free and easy to access, at sites all over the internet, like Zillow.com and HomeSnap.com. Using this information, you can easily determine the general relationship in your neighborhood between home price and critical features like age, size, and recent updates, and then evaluate your own home along those lines to come up with an estimate of market value. What you must then decide is how quickly you need to make the sale. If you’re closing on a new home in 10 weeks and need to have your place sold yesterday that can simplify your decision – you’re going to want to price at or below market value, and hope for several offers to choose from. Is time not an issue? Then you can aim high for a while, and hope that there is a buyer out there who can meet your price. But remember that buyers are aware of the length of time a home has been on the market. If something’s been sitting out there for six months, it can raise questions in buyers’ minds about possible below-the-surface issues, weakening the seller’s bargaining position and driving down the price. And remember, everything in the offer is negotiable, including the sale price, closing date, and buyer’s agent commission, and a good FSBO seller will consider each of these factors to secure the best deal for their home. And as for details and paperwork, you can hire a real estate attorney will take responsibility for all the documentation and personally represent you at the closing, and will advise you on any necessary procedural steps you need to take along the way – all for a nice, transparent fee.
So basically, if you can handle a lot of internet searching and carving out time in your schedule for showings, you can sell your own home. Will you do a better job than a professional realtor? Probably not. Will going it alone add a bit of stress to your life? Almost certainly. But are those drawbacks worth the thousands upon thousands of dollars you’ll save selling your home yourself? My answer is yes!
Brian DuBoff, FSBO Success Story #1
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We were delighted to receive Brian’s unsolicited FSBO success story, admire his writing skills, and applaud the comprehensive strategy he used to save thousands of dollars. If he had asked Real Estate Cafe to provide services “a la carte,” we would have cautioned that sellers cannot change the buyer agency commission because it is an independent contract between the buyer and their agent. Instead, sellers can use their counteroffer to raise their asking price so buyers can finance their agent’s fee out of their mortgage as in a typical transaction.
If you’re a DIY homebuyer or seller and would like to tell your story on our blog, or participate in our FSBO Field Trip, please contact us.