A ‘For Sale by Owner’ sign in front of a house in Chappaqua, N.Y. may signal savings in commission fees for the homeowners if they can find a buyer. However, agents can bring much expertise to the table if the sellers haven’t done their homework beforehand.
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Jeremy Magelky had three things going for him when he set out to sell his home.
Home values were rising in Fargo, N.D., and there were few homes for sale in the area. On top of market conditions that favored sellers, the mechanical engineer also had the luxury of time — nearly a year to get his three-bedroom, two-bath house sold in time to close the deal on his next home.
That gave Mr. Magelky the confidence to sell his home without the assistance — and expense — of a real estate agent.
“If there’s low supply, the demand is going to be higher,” said Mr. Magelky, 31. “If it had been a tougher market, I don’t think I would have tried it.”
There can be compelling financial incentives to go without an agent. The for-sale-by-owner approach can save sellers big money on agent sales commissions, which typically run 6 percent of the sale price.
On a home that sells for $300,000, that’s $18,000 that would typically be split between a seller’s agent and the agent representing the buyer. Both are typically paid by the seller.
Mr. Magelky estimated that he saved $10,000 by not paying agent commissions.
“It’s just cutting out the middleman,” said Mr. Magelky, whose home took eight months to sell.
Historically, for-sale-by-owner transactions accounted for between 15 to 20 percent of the market, according to the National Association of Realtors.
The figure tends to go up when the market is hot because it’s easier for sellers to go it alone, and that number declines during a down market because there’s a glut of unsold properties.
Since early 2012, steady job gains and low mortgage rates have fueled a rebound in the housing market, setting the market on a recovery path after the worst housing bust in decades.
For-sale-by-owner home sales made up a record-low 9 percent of all sales last year, the association said.
But homeowners who sell their property on their own may not always be able to tap the pool of buyers that an agent can in the open market, which could reduce the range of offers.
And the process of selling a home can be painstaking and confusing, potentially more trouble than it’s worth — especially if the seller is in a time crunch to get a home sold.
Here are five tips for how to tackle a home sale without enlisting a sales agent:
● CONSIDER IF YOU’RE UP FOR THE TASK
Selling a home on your own means handling a lot of tasks that an experienced real estate agent would normally take on, including listing the home, reaching out to a network of buyers’ agents, preparing the home for viewing, and dealing directly with prospective buyers.
In broad strokes, selling a home requires pricing the property, promoting it until you find a buyer who makes an offer, and sealing the deal.
If you don’t have the time to devote to stay on top of the process, it could take you longer to sell the house and maybe result in a lower sales price.
● GET HELP DETERMINING YOUR ASKING PRICE
Figuring out the best price to list your home requires knowledge of the local market trends. It’s the type of information that agents have at their fingertips, but it’s not exclusive to them.
“You have to take an honest look at what you’re selling, and establishing price can sometimes be the most difficult thing,” said Paul Jarvis, a certified financial planner based in Fargo, N.D.
Experts suggest hiring a property appraiser to gauge the value of your home relative to comparable properties that have sold in your area. That typically runs a few hundred dollars, but it will help provide reassurance that you’re pricing your property realistically.
If you skip the appraisal, you can glean some insights on real estate Web sites that help walk sellers through the pricing process.
At Forsalebyowner.com/pricingguide/seller, the tool costs $40.
● ATTRACT BUYERS
The first step in getting your home sold is to make would-be buyers aware that it’s on the market.
Before the Internet, this often meant relying on a “for sale” sign in the yard and an ad in the newspaper. Now many Web sites allow homeowners to post photos and descriptions of their home.
Some of these sites cater specifically to for-sale-by-owner listings, including ForSaleByOwner.com, Owners.com, and Fizber.com. Other options include popular real estate portals Zillow.com and Trulia.com.
All allow homeowners to put up listings for free.
For $99, USRealty.com lists a seller’s home in local multiple listing services, or MLS, plus key national sites, such as Realtor.com.
Experts advise taking good photos — you can look at listings for homes represented by agents as a guide.
That typically means making sure interiors are well lit and exterior shots are taken on a sunny day with a good camera, said Colby Sambrotto, president of USRealty.com.
● MANAGE SHOWINGS
Once you start receiving inquiries from buyers interested in visiting your home, it may be tempting to drop everything and have them come over.
Experts suggest sellers resist that impulse, and set up a small window of time every week for buyers to drop in. That will make it easier to manage the visits and create a sense of urgency among buyers when they run into others taking a look at the home.
● GET HELP WITH PAPERWORK
Unless you’re comfortable drawing up agreements on payment and closing terms, consider bringing in an attorney to help put the finishing touches on the deal.
Another option is offering a smaller percentage of the sale, say 1 percent, or a flat fee to a real estate agent for help in nailing down the last details of an agreement.
Of course, you can do it on your own. A basic agreement can be as simple as the price, how the buyer will pay, either by cash or loan, and the closing date.
That’s what Mr. Magelky did.
“It wasn’t too complicated,” Mr. Magelky said. “It’s intimidating, but once you get into it, it isn’t really that tough.”