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For Sale by Owner

Are you considering selling your home by owner? Here are some tips that you can use to have a successful ‘For Sale by Owner’ experience. We have sold our first two homes using these methods.  We are not professionals, however, so when in doubt, ask a lawyer.

For Sale by Owner - Pricing Your Home

Once you have decided to sell your home by owner, the biggest decision that you will make is the price you will ask for it.

Do your research! Use the internet for tax records to see what homes in your neighborhood have sold for in the past year.

Concentrate on the dollars they got per square foot.

Drive by the homes so you can see their curb appeal, lot issues, etc.

If their location is better than yours, that would positively effect their selling price. Conversely, if they are on a busy street they would have gotten less per square foot.

Ranch homes typically bring a higher amount. The cost of more footings and roof drive up the building costs.

Ranch homes are also harder to find - especially in the Southeast - so they often sell quickly.

Take an honest look at your home inside and out. If you plan to sell it ‘as is’ then you must price it accordingly.

A small investment into fixing up your house for selling could yield big rewards. Note: see getting ready to sell below.

The home seller must also decide if they are going to allow realtors to show their home. If they are, make sure that you understand what percentage of the sale price the realtor will get for the sale.

Your home must appraise for the price you get in the sale or the buyer will not be able to secure a loan. So if you get someone willing to pay above market price, you may loose the sale if it won’t appraise for that amount.

Remember to include closing costs in your pricing. Calculate what you want to get out of your house (equity) and go from there. You will obviously be paying off your mortgage loan at closing unless you own your current house.

For Sale by Owner - Getting Ready to Sell

As you prepare your home for sale by owner, you need to take an honest look at how your home appears to someone else.

Don’t have thin skin. As a friend or even a coworker or someone who has never seen your home for their opinion. Be prepared to take notes on clutter, dirt, etc. Remember, this is only going to help you.

Remove all unnecessary clutter. Extra knick knacks only confuse the eye and gather dust. Go ahead and box these things up. Even rent a storage facility if you need to.

Make sure the pathway into each room is clear. Think of how you can arrange the furniture or even eliminate pieces to that people can easily walk through the rooms and open the closets, etc.

Make sure rooms are well lit.

A fresh coat of paint is the cheapest way to freshen up a room.

Curb appeal - there really is something to it. Trim the bushes, sweep the sidewalk and plant some flowers. Even a new door handle will make a positive impression.

If you plan to remodel before selling, the kitchen is the room to look at. Typically you would get up to 88% of your money back. Bathrooms are a second room in the house you could consider updating before selling.

Replacing the carpet or offering a carpet allowance helps.

If you are in an older home, look into offering a home warranty with your home.

For Sale by Owner - Marketing your home

You need a good, informative brochure to have in a info tube on your for sale by owner sign. Find a recent picture of your house or take a new one that shows off its best features - like when the azaleas are in bloom for example.

The information must include the asking price, year built, square footage, # of bedrooms, # of bathrooms, and any special features of your home.

Be prepared to have many copies available and keep your sign stocked. The first bunch will more than likely go to your neighbors as they will be curious of your asking price.

Be prepared for all of the realtors that will call and offer to list your home. Have a game plan decided and don’t let them pressure you into listing if you are not ready.

Buy a few nice sturdy signs. Keep the nicest one for your yard. Clearly communicate your contact information and if you are showing by appointment only.

There are also many For Sale by Owner companies that will put ads in their magazines or on their website for a fee. You will have to decide how much you want to spend on something like this. In the two homes we sold, we only used signs.

Contact a mortgage lender. Have them do a worksheet that details how much a mortgage payment would be for your home at different rates and percents down. Keep these with a stack of their business cards on your dining room table or entry hall table.

When people look at your home, give them one and explain to them that all offers must include a pre-qualification letter.

You need to know that they can afford to buy your home. The realtor has usually already done this for you and does not show clients homes outside their price range.

For Sale by Owner - Showing your home

When you show your home be as objective as you can.

Try to let a neighbor know when you are having a showing. For safety reasons, if they know they can be watching out for trouble. Its sad to say, but you will be escorting total strangers through your home, you want to be safe.

As you enter a room, try not to talk too much. Point out the features, molding, lots of windows, etc and then listen.

Also, point out obvious flaws - for example, I had a house with vinyl siding that had a grill placed too close to it. The siding was warped slightly, as we would go onto the deck, I would point this out. I think the buyers appreciated my honesty. It was a cosmetic issue.

Make sure to have all the lights on in your house - even if it is daytime.

Clear a pathway into each room. Store knick knacks and extra junk.

Make the closets look as big as possible. Neatly fold your towels and organize your pantry.

If it is getting dark, start on the outside first, or save this until last. Remember your neighbors will be keeping an eye out.

Remember to give each potential buyer a mortgage worksheet. In both cases where we sold our home, the buyer called the lender and we knew how interested they were before they told us. Also, the mortgage lender got the loan, so they came to the closing. We also used this lender to buy our new home.

For Sale by Owner - Accepting Offers

Make sure each offer has a pre-qualification letter from a mortgage lender. You do not want to take your home off the market for someone who will not be able to close.

You will want to include a kick out clause if you have an offer with a contingency.

A contingent offer is one where the buyer has to sell their home in order to purchase your home.

In a kick out clause you take the buyers earnest money and hold the check. Your home remains on the market. You continue to show your home to potential buyers. You tell potential buyers that you have a contingent offer on your home. If they want to make an offer, you have to give the first buyers 48 to 72 hours to either drop their contingency or back out of their offer. They get their earnest money back when you accept the new offer.

You are not allowed to take one contingency to replace another. This would be in the situation where an apartment or non home owner would be buying your home and securing the loan with the equity of a prior home.

Provide appropriate real estate contracts for all the information to be on. Make sure they are signed and witnessed appropriately.

For Sale by Owner - Real Estate Contracts and Closing

Real Estate contracts can be purchased at many office supply stores.

Make sure they are all filled out correctly.

You must decide on a closing date. The mortgage lender is helpful here.

The property must be inspected and appraised. Again, the mortgage lender can help here.

If the closing date and moving date do not match, you may need to rent back the property from the new owner after closing. There are rental agreement forms at office supply stores. Generally, it is a daily rental fee. Again, make sure all the forms are signed correctly.

Ask the mortgage lender to attend the closing with you. They can look over the paperwork and ensure there are no mistakes.

Make sure you understand all of the closing fees and how much your equity check will be at closing.

 

 

 

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