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For Sale by Owner, How Hard Is It?

The Real Estate Industry has told us for years that any homeowner who attempts to sell his or her own home is foolish. They tell us that For Sale by Owner homes, also referred to as FSBO (pronounced Fizzbo), often sell at lower prices than those with agents. They tell us not to go it alone.

But is it possible to avoid those mistakes and sell without an agent? Absolutely. You just have to learn a few ground rules and have a lot of time.

The reason many homeowners choose a reputable, professional agent is time. It takes a lot of time and effort to sell a home. Time many homeowners just don't have. In those cases, it is worth the typical three to six percent commissions on the sale to have some professional help. However, you aren't required to have it.

For those of you who want post a FSBO sign, here are some things to keep in mind:

  • Nationwide, approximately 15% of sellers close the deal without an agent.

  • About half as many try to sell without an agent, but end up hiring professional help to find the buyer.

  • More than one-fourth of all sellers who go it alone sell to people they already know, for example, renters.

    If you have someone in the wings with a check, you don't need to call an agent. But you will want to call a real estate attorney. For a small fee, normally under $500, a real estate attorney can draft a sales contract for you and help you navigate the sale. The good news is that you can use the same attorney for settlement later. It will cost you far less than a real estate agent's commission.

    A real estate attorney can also help you be legal. All sellers are required to follow the same rules and laws, regardless of whether they are professional agents or not. This means that you will have to:

  • Disclose any significant defects with the home, including a leaky roof, asbestos, termites, etc.

  • If the home was built before 1978, you will have to provide an EPA brochure explaining lead paint hazards, available through the National Lead Information Center (1-800-424-5323).

  • Be completely impartial about your buyers. You cannot discriminate against any specific person or you will be in violation of the fair housing laws.

    An attorney can help you make sure you comply with your local, state and federal laws.

    If you are selling to friends or colleagues, you may want to consider purchasing a one-year home warranty policy. They are available for $335-$425 from various companies. This prevents any late night calls from friends who bought your home lamenting that the furnace is out. A warranty policy lets you off the hook, even with the best of buddies.

    But what if you don't know someone? Then you will need to do some marketing. Here are some ways to attract attention:

  • Price it right. You won't have a chance if the price isn't right. Hit the Internet to find out what homes like yours are selling for. Or go to the local recorder-of-deeds office and look up the information yourself, it should be public record.

  • Take an ad out in a community paper. Include a description of the property and your phone number. Leave out the specific address to protect your privacy. This lets you weed out potential buyers over the phone. And, for your safety, be sure to only meet with potential buyers when there are at least two adults at home.

  • Post flyers on community bulletin boards. If you make yours look professional, you will have a better chance. Stop by a real estate agency and pick up some flyers for samples.

  • Put up a lawn sign. Make sure it is professional. Many buyers are put off by FSBO's because they don't know how to make the first move. Make it easy on potential buyers by offering to negotiate your saved commission or offering some special deal.

  • Be willing to cooperate with agents. Offer them a three percent commission if they do land a sell. It couldn't hurt to have reinforcements.

  • Be ready with a contract from your attorney. You don't want a potential buyer to get away while you scramble to get the paperwork ready. Grab them while their interest is hot.

    Source: Based on information from Money Magazine and the Washington Post.

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