9 Steps
to Selling your Home
“For Sale by Owner”
Introduction
Have you ever thought about selling
your home “For Sale by Owner”, without the help of a
licensed Real Estate Professional?
At current home prices, not paying an
Agent the usual 2%-6% commission
(real estate commission is negotiable and not set by law),
can mean a saving of 10’s of thousands of Dollars. However, you will
have to do the work that an Agent would normally do: Determining the
current market value of your home, proper marketing and handling all
required paperwork are just a few tasks of what’s involved. Thanks
to the Internet, consumers have access to pretty much the same
information that used to be only available to Real Estate
professionals. With this in mind, it is easier to sell your property
“For Sale by Owner”, than you may think. Just follow
these 9 steps.
9 Steps to sell your home “For Sale
by Owner”
1. Price your home to sell
Start with selecting a price range of
what your home is worth. Many homebuyers attach a sentimental value
to their home. However, it is unlikely that you will find a buyer
who places the same value on those items. Overpricing the property
will have a negative effect on your sales effort. On the other hand
though, you don’t want to leave money on the table. Start out by
obtaining a FREE home evaluation at:
http://www.appraiseahome.com/addleads.asp?customerId=525
Take this information, and compare it
to your immediate neighborhood. What homes are currently listed and
for how much? Make the necessary adjustments for differences in the
square footage, amenities (Pool, Spa, etc)
You can also contact a local appraiser
who will determine the Fair Value of your home. This will cost you
probably around $375-$500, depending on the size and value of your
home. For most residential properties the Appraiser will use the
Sales Comparison Approach, by comparing recent sales of
similar properties in the vicinity of the subject property. The cost
approach will be able to substantiate the value by taking into
consideration the replacement value of the structure.
At a time of appreciating home values,
you may want to start out about 5% ABOVE the appraised value.
Keep in mind however that you will not
be paying a real estate commission, therefore enabling you to price
your property more aggressively, just below currently listed
properties in your neighborhood.
Follow the same technique Gas Stations
use and pick an amount just below a “round number”: Choose a price
of $349,900, instead of $350,000.
2. Prepare your home to sell
The first impression a prospective
buyer has is very important. Start on the outside. Does your home
have curb-appeal? Does your fence need a new coat of paint? Does
your front yard look clean and inviting, or do you need to trim your
trees and bushes? How about the grass and flowers? Follow the same
steps in your backyard. If you don’t have a gardener, you may want
to get one who can help you with getting the property ready. Inside,
make sure your house is clean AND tidy. That does include the
garage. You want to be able to show the buyers what your home looks
like, not just imagine what it could look like. Make sure surfaces
are clean (floor, carpets, kitchen counter tops, stove, bathroom,
bathtub, toilet, etc). Your house should smell nice and there should
be enough daylight coming through the windows.
When everything is done, ask a friend
or neighbor to come over and take a look. Ask them what they think,
and tell them to be honest! Honesty here may mean more money in your
pocket.
3. Find Professionals who can help you complete the sale
Although you are selling your home
For Sale by Owner, you still need the assistance of
certain professionals! These professionals would even be needed, if
you would be selling your home with the help of a Real Estate Agent.
Locate a
Mortgage Professional who can help your buyer with a Mortgage, if
they don’t already have one. Go to
www.valley-mortgage.biz to help you with the mortgage and
loan process. You want to know fairly soon if your buyer will
qualify for a Mortgage. A local Escrow Company can handle the
paperwork for you and the buyer. The earnest money can be deposited
in their escrow account and they will also be able to help you with
the Title Insurance (a lender requirement) etc. Keep in mind though
that they will not be able to give you legal advice. You may want to
consult with your attorney who can help you protect your interests.
You need to disclose certain items about your property to the buyer!
Make sure you don’t omit any of the required disclosures. The
California Department of Real Estate has the Booklet
Disclosures in Real Property Transactions available online
at:
http://www.dre.ca.gov/disclosures.htm.
Standard Real Estate Contracts can be
found in local stationary stores, online, or through your attorney.
If you feel overwhelmed with the
paperwork of the sale, you can always consult with a local Real
Estate Agent, who can help you with the paperwork. You should be
able to negotiate a flat fee at this time since the buyer has
already been found.
4. Market your home the right way
Now, it’s time to tell the world that
you are selling your home. Don’t be shy telling people about your
intentions. List your property for FREE at
www.valleylist.com and expose your home online to people
who are looking to purchase a home in the San Fernando Valley, and
adjacent areas (Simi Valley and Conejo Valley). You are able to
upload pictures, select property features and list other pertinent
information about your home. That way, anyone contacting you will
have a pretty good idea, instead of you being asked the same
questions over and over again.
Take out an ad in the newspaper. To
keep it short and inexpensive, refer buyers to the website
www.valleylist.com to obtain additional information about
your property.
Create a flyer for prospective buyers.
Don’t forget to include a picture, address and contact info, as well
as property amenities. We can prepare a flyer for you, if you email
us a picture and text. We will do the rest, convert it into a “PDF”
document and email it back to you so that you can print it at your
convenience.
Place a sign in your yard, to attract
people who are driving/walking through your neighborhood. Attaching
flyers to the sign lets buyers take the information with them. Use
the disclaimer “Shown by appointment only”. You don’t
want to be surprised by prospective buyers unprepared.
Prior to showing your home, you may
want to ask the buyer a few questions as: Are you pre-qualified for
a home loan, will a purchase be contingent upon the sale of another
property, are you familiar with the area, how soon do you plan to
buy, etc. You will then be able to address some of these points
during the showing.
Do what every Real Estate Agent would
do, hold an Open House.
Real Estate Agents hold open houses to
attract buyers for their properties. Even though you only have one
house to sell, it is important for you to hold an open house in
order to show the property to prospective buyers. Let them take a
flyer and ask them to mention your home to other buyers who they may
run into during other open house visits. This gives you additional
FREE exposure.
Using a sign in sheet (name, phone, email) at your open house is not
only a safety precaution but also a powerful marketing tool.
Following up with interested buyers after the open house is an
important part of your sales process. Find out if they are
interested in making an offer on your home. Listen to what they have
to say. Ask them what they liked about your home and what they did
not like about it. Use that information to improve your online ad,
flyer, or newspaper ad.
Sell your home, as well as the
Neighborhood, but keep your personal memories about the home to
yourself (watching your kids take the first steps in your backyard,
will NOT increase the value of your property). However, being able
to watch your children playing in the backyard through the kitchen
window/patio door, may appeal to some buyers. When being contacted
about your home, don’t forget to mention the neighborhood (quiet
street, close to schools, shopping, etc).
5. Review an offer on your home and negotiate the terms
When an offer is presented to you,
make sure you understand all terms and conditions. Consult with your
attorney if you have any question about the offer, prior to
accepting it.
It’s not just the price offered for
your property. Nowadays, offers include many contingencies -“Subject
to” conditions. Is the offer subject to a loan approval?
Subject to the sale of another home? Subject to a specific closing
date? Although those terms and conditions are understandable from a
buyer’s perspective, make sure they don’t interfere with your ideas
of a sale. If the buyer insists on these conditions, make sure you
also have an “easy” way out, in case your plans change or a “cash
offer” comes along. Also, how long was your home on the market when
the offer made? If your asking price was not offered, do you have
time to counter at a higher price, or wait until a “better” offer
comes along? Monitor your local Real Estate market for changing
conditions up or down.
Step 6. Home inspections
Standard real estate contracts allow
for the buyer to inspect your home. Understandably, certain things
are not easy to detect such as termites, building code violations,
roof, electrical, heating & cooling, as well as plumbing conditions.
Moreover, no lender will lend money for a property that is not up to
a certain standard!
Prepare yourself for these
inspections. Most of them can be completed within about 10-14 days,
after which the buyer should either accept the property conditions,
or “withdraw” the offer.
Consider paying for a one year “Home
Warranty”. This will cost you about $200-$500, and will give the
buyer peace of mind in case an appliance breaks during the time
period. Make sure you understand what items are covered!
Step 7. Home Appraisal
The appraisal is independent from the
home inspections and focuses on other aspects. An appraisal is
required by the lender, and places a monetary value (Market Value)
on your home. It does not take into consideration the condition of
appliances, etc. Even though a buyer may be willing to pay more for
a property than it is worth, no lender will lend more money for a
property than its Fair Market Value. If the borrower is ordering
their own appraisal, make sure the appraiser is approved by the
lender.
Step 8. Satisfy all conditions during
the Escrow Period
While your home is “in Escrow”, both
the seller and buyer have to satisfy certain conditions in order to
proceed to closing.
The seller needs to disclose certain
property issues, provide access to home inspectors & appraisers. The
lender will also require you to convey “clean” title to the
property. That means that all outstanding liens must be paid off,
etc. Your current mortgage will be paid off as part of the
transaction.
Again, refer to the DRE publication Disclosures in Real
Property Transactions available online at:
http://www.dre.ca.gov/disclosures.htm.
The buyer on the other hand needs to
“approve” the inspection reports, and meet the lenders requirements
in order to get approved for the Mortgage. This may include proof of
income, assets, employment verification, etc.
Some documents both parties (the buyer
and seller) have to sign will need to be notarized. Pick a
professional Notary Public who is familiar with notarizing Real
Estate and Loan Documents. For your convenience, many Notaries are
so called “Mobile” or “Traveling Notaries” who will visit you in the
comfort of your home. Contact All States Notary, Inc (www.allstatesnotary.com)
to schedule your document signing at your convenience.
Step 9. Closing
About 30-60 days after “opening
Escrow”, the day has come to “close” the transaction. The buyer will
do a "walk through" of the property to make sure that the property
is in the agreed upon condition (all agreed repairs are completed,
appliances that were part of the sale are still there, etc). The
seller will hand over the keys, and receive the proceeds from the
Escrow Company within about 2 days. In case a problem has not been
rectified to the buyers satisfaction, the Escrow Company can
withhold funds in order to correct the problem and closing can still
take place, as scheduled. The Title Company will issue Title
Insurance, and the Deed conveying title will be recorded with the
County Recorder.
Summary
This general overview should give you
a basic understanding as to what is involved in a Real Estate
transaction. Each situation is unique and may vary depending on your
specific situation. Laws are different from State to State (Some
States require an Escrow Company to handle the paperwork, other
States will let Attorneys handle the paperwork).
If you are ready to proceed, go to
www.valleylist.com to list your home FREE of
charge “For Sale by Owner”.
This website is specifically dedicated
to properties that are offered “For Sale by Owner” in
the San Fernando Valley and adjacent areas (Simi Valley and Conejo
Valley).
If you decide to sell your home with
the help of a licensed Real Estate Agent, send an email to:
info@valley-mortgage.biz and we refer you to one in your
area.
Rest assured that we are here to help
you, should you feel the need for help.
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