Are You Selling a Home By Yourself? Avoid Common FSBO Mistakes
For Sale By Owner - FSBO for Short
You've decided to be a for sale by owner seller, so you've done your market analysis and you've determined a good asking price for the house. You've worked on your curb appeal spiffed up the home’s interior and handled minor repairs. So now you're ready to let buyers take a look... or are you?
There are a few more things you should prepare for before you run your first for sale by owner ad.
Property Disclosures
Does your state law require that you give potential buyers one or more property disclosures when you sell a home? Disclosures typically deal with the condition of the property or facts about its location, such as:
- The age of the home and its components
- Whether problems exist with any component
- Whether you (or a neighbor) have built something (fence, shed, road, pool) that extends past property boundaries
- If the house is in an airport flight path
- If the house is in a flood zone
- If the house is on earthquake fault
- Other issues important to your specific location
Don't assume that disclosures are only necessary for homes listed with real estate agents, because most for sale by owner sellers must usually furnish them, too.
Even if a formal disclosure isn't mandatory, you are probably required by law to tell your buyers about known problems, often referred to as material facts.
Learn your obligations by contacting the agency that oversees real estate sales in your state. Many offer disclosure forms online in PDF format.
Lead Paint Disclosures
If your house was built prior to 1978, federal law requires that you disclose that the home could contain lead based paint give buyers details about past tests for lead paints. You must also offer buyers the opportunity to do their own lead paint testing. Most people don't perform the tests, but you must furnish them witha a lead paint pamphlet, which is available free online from the EPA.
Fair Housing Laws
Individual sellers aren't subject to as many fair housing guidelines as agents are, but it's smart to follow the guidelines, just to make sure you don't encounter legal problems later.
Showing the House
Showing the house isn't difficult, but you should plan to follow a few basic showing guidelines.
Geting Ready to Show Your House to Potential Home Buyers
You've completed all of the tasks associated with selling your home. Now it's time for buyers to come and take a look. With a few adaptations, basic showing how tos are the same, no matter whether you are selling the home by owner or using a real estate agent.
Be Ready to Show
Same-day and even last-minute requests for showings are not uncommon, so having a '24 hour notice to show' stipulation can cut you out of a good chunk of the buying market. The only standard hefty lag time that should be necessary to show a home is when you must give ample notice to a tenant.
If a house is considered difficult to show by agents, you won't receive as many calls to show it. Not good, because fewer potential buyers equals a decreased chance for offers.
Be Flexible
Most agents try to arrive within the scheduled showing time, but sometimes it isn't possible.
They may get stuck in traffic, or the house they saw prior to your showing took longer than expected. It happens, and sometimes it happens too late to be fixed by a phone call.
If an agent is coming with buyers, stay away from home a little longer than you think is necessary, just to make sure they you interrupt a showing. If you're showig the home yourself, don't get too excited if your buyers are a little late.
Don't Stay Home if an Agent is Showing
Sellers think agents and buyers won't be able to find everything, that they must be there to point out the home's important features. Truthfully, most want to be present to see buyer reaction firsthand.
Understand that, at the very least, buyers feel uncomfortable when you are present, and that it can actually kill a sale. Buyers often won't even open closet or cabinet doors when a seller is home, because they feel they are intruding. When they can't view a house completely and comfortably they often hurry up and move on to the next one.
If you're selling by owner you must be present. Open cabinet and closet doors yourself to make them feel more at home. Answer their questions, but don't hover over them all the time they are in the house. Buyers will appreciate it if you give them some space to wander on their own.
Don't Get Too Personal
You never know when a buyer will be turned off by your mood or by a statement you make. Buyers are there to look at the house, not chit chat about hobbies or the weather or worse--politics and other controversial topics.
If you must stay home while an agent is showing the house, keep to yourself. Don't wander around talking to the agent and buyers. If you are showing the house yourself, be pleasant and answer questions, but stay away from controversial topics.
Don't Ask Your Agent to Be Present for All Showings
It's not necessary for your agent to be present for all showings of a typical house.
Other agents generally feel uncomfortable with the selling agent hanging around, listening to and participating in conversations with potential buyers. If the showing agent is representing the buyers as a buyer's agent, she won't be free to have open discussions about the house in front of you or your agent.
Busy agents don't have time to work around your agent's schedule, so requiring a listing agent to be present for all showings is another way to give the house that difficult to show reputation.
If you are worried about theft of small items, put them away. Packing up collections and small personal items is part of the process you should have already gone through to prepare the house for showings.
Safety Concerns
Real estate agents have developed a set of safety guidelines in recent years to protect themselves from predators posing as home buyers. Their safety steps sometimes include making photocopies of buyer driver's licenses, showing homes in teams, letting someone know their schedule and calling the office regularly.
A for sale by owner seller can help enhance safety by:
- Getting as much info as possible about a buyer before the showing, then confirming the data (such as making a return call to the phone number or email address provided)
- Having at least two people present for showings
- Letting buyers enter a room first, while you stay by the door to make a quick exit if necessary
Analyze your situation to determine which safety practices are best for you.
Control Your Pets
Pets should be out of the house during showings, especially large dogs, since many people are afraid of them. A gruff bark coming from inside the house is enough to make some home buyers turn around at the front door.
If there are pet odors, get rid of them before the first buyer walks in the door so that your property isn't known as the house that smells.
Getting it Sold
It's true that some buyers can be rude and intrusive. You do not have to deal with people like that and you don't have to let showings dictate your life--but you do want to sell the house, so try to be as flexible and accommodating as possible when potential buyers knock on the door.
Can the Buyer Really Buy?
A good real estate agent verifies a buyer's pre-approval status before he shows them property. When you sell by owner you'll deal with many people, including those who are qualified to buy a home and those who don't have a chance of getting a home financed.
People who know they cannot buy sometimes think that for sale by owner homes offer a better opportunity, because they're hoping to find a seller who will finance the transaction.
Ask these questions to get a better feel for someone's buying power:
- Have you been pre- approved by a lender for an amount in this price range? (Then require that proof of pre-approval be submitted with their offer.)
- Can you buy a house now, or do you have to sell your current home first? (Then decide if you are willing to tie up your house until they sell.)
Contract Forms
Who will provide the contract forms that will be used for an offer to purchase your house, you or the buyer? You can write a contract yourself on a piece of paper, but it probably wouldn't offer much protection for either your or your buyer. The forms you use should be valid for your state's real estae laws and cover issues that are important for your location.
If you aren't contract savvy, have a real estate attorney review any offer before you sign it. Don't cut corners here, neglecting to get advice from an attorney or other knowledgeable person will cost you money, not save it.
The Buyer's Deposit
The contract should spell out what happens to the buyer's deposit money, called earnest money, if the deal falls through:
- Under what conditions would the buyer get it back? (unable to get financing, too many repair issues, etc.)
- Under what conditions would you expect to keep it? (buyer backs out with no cause)
The deposit money is NOT yours until the house sells or the buyer breaks the contract in such a way that it becomes yours by prior agreement. It must be credited to the buyer's funds on closing day and ideally should be held in someone's trust account until then.
Bottom Line
Real estate laws and customs differ in nearly every state in the US, so it's essential that you do some research on a state and local level to be sure you are complying with all laws associated with the sale of your home. This is why you should hire a Real Estate Professional and your house will be Sold in a professional way. |