Every day hundreds of homeowners are selling a home without an agent. Although utilizing the services of a professional real estate agent is the easiest way to sell a home, there are systems available to those homeowners who feel they can manage the transaction on their own.
The process of selling “for sale by owner” (FSBO) requires the homeowner to be educated in how to market their home, who to market it to, and understand how to manage the paperwork involved in a real estate transaction.
There are companies who specialize in providing FSBOs with the tools necessary for selling a home. These companies either charge a percentage of the sale, or a flat fee for services. Such services may include signage, contracts, flyers, flyer boxes, and a link to the home on the company’s website. These services usually do not include information on how to market the home for sale to attract as many buyers as possible.
Whether using FSBO services from a company or not, there are several steps that must be taken in order to sell a home and meet all legal, and taxable, requirements. Here is a short list of what you need to obtain and understand before handling the sale of your own home:
- Legal and binding contract forms
- Federally mandated disclosures forms
- Proper disclosure of defects
- Tax ramifications, including but not limited to IRS capital gains requirements
- Real estate tax information, distribution, and responsibility
- Deed restrictions and liens
Some states will have standardized forms available for homeowners who attempt to sell on their own, and there are packets of forms available at many office supply stores. If using the latter, it is a good idea to contact an attorney to review the forms to ensure they are legally binding, protect the seller, and meet all local, state and federal guidelines. In addition, there are some federally mandated forms such as the Lead Based Paint Disclosure form that, if not included in a real estate transaction, can result in penalties for the seller.
One of the risks for FSBOs is litigation brought forth by angry buyers after the close of the transaction due to failure to properly disclose any known, and unknown, defects in the property. That is why it’s imperative to have a home inspection on the property prior to putting it on the market. Although most buyers will have their own home inspection conducted, some will not, further opening up potential law suits in the future after the close of sale.
FSBOs should always investigate the tax consequences of selling their home, whether on your own or with a real estate agent. Consult a tax professional for advice on capital gains laws that may end up resulting in additional taxes due at the end of the year, on any unpaid local taxes, and the responsibility for the current year’s real estate taxes.
Attempting to sell a home “for sale by owner” is possible, but many critical issues must be researched in order to guarantee a successful, legal sale. By contacting the right professionals, understanding the law, and being proactive about taxable consequences, selling a home without an agent can be achieved with success. However, understanding all the risks and liabilities of selling a home as a FSBO, makes even more sense to consider hiring a professional to do the job they are trained to do.
Overall, the commission you’ll pay a real estate agent is a small price to pay for the peace of mind you’ll have by not having to worry with all of the aforementioned risks and liabilities.
Should you use a real estate agent to sell your home or try selling it yourself? Kiplinger has the answer…
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We all want the sale of our house to go smoothly. We know that somewhere between sticking that sign in the front yard and packing up the moving van, there are a lot of details that need to be handled. With these details comes stress, all bundled up in emotion. Selling a home means more than just signing on the bottom line. That’s where hiring the right real estate professional can be invaluable.
Listing with a trustworthy real estate agent that you feel comfortable with can save a lot of money and time, but also a great many headaches and heartbreaks. A knowledgeable, experienced agent understands the nuances of the real estate transaction as well as the emotions of the sale of one’s home. It takes a special understanding of what happens between the seller, or sellers, and potential buyers to keep everyone on track during potentially difficult times.
Contacting a real estate agent early in the process will help alleviate many of the problems that could arise in those first discussions about selling a house. Once the right agent has been chosen by the seller, it’s time to get to work finding out how to build a good relationship with their client. This starts with learning about their clients and what motivates them.
A homeowner may be highly motivated to sell their home quickly. For this type of imminent sale, the time-frame may be tight. Perhaps a job transfer is coming soon, or a new school year starts, or any number of reasons; some pleasant and some unpleasant. A good agent wants to know the motivation in order to better serve you. Be open and honest with the agent you choose. There is no need to beat around the bush, your agent will soon know more about your personal life and finances than you would believe. That is why choosing an agent with experience and integrity is so important.
Sometimes, a move is not imminent. A homeowner may want to test the market for future decisions. Instead of guessing, homeowners should use a real estate agent’s expertise to find out the true value of their home. It prepares them better for making decisions for the future. In other words, guessing what your home is worth is no way to prepare for a future sale of your home, or purchase of another. Your agent will want to know if this is the case so he or she can do some projecting into the future markets for you. There is no reason to ‘fool’ an agent into thinking you’re ready to list your home when you’re not. A good agent wants to help you determine the value of your home whether or not you’re ready to list.
Whether the sale of your home is planned soon or in the future, it is best to contact a qualified agent early in the process. An experienced agent will help by getting the information straight right from the beginning in order to avoid mistakes early on. The right agent will assist the seller in defining what is important during the process, provide a sounding board for ideas, and then help customize a plan of action.
Once you have interviewed several agents, asked all your questions, and finally chosen the one that’s right for you, it’s time for the agent to turn the tables and ask you a few questions. Any good agent will be sure to ask a potential client these simple questions:
- Do you need to sell your home soon?
- What is the reason you’re selling your home now?
- Will you be open to negotiation with a buyer?
- Are you prepared financially to repair items that show up on the home inspection?
- Are you listing your home now in order to sell at a future date?
- Are you pricing your house as a way to test the market for a future sale?
- Have you tried to sell your house by yourself? If so, what have you tried?
- Are there back taxes owed?
- Are there liens on the property other than a mortgage?
- Are there any reasons that would prevent you from accepting an offer, other than price?
Of course some of this information will be discovered as the paperwork is prepared, but hearing it from the seller first matters. If these questions seem intrusive, they are only designed to avoid an embarrassing, or worse, situation down the road. Be prepared to share your story; this is only a short list of the questions you will expect a good real estate agent to ask a client.
There is much more to selling a house than getting the paperwork done. An agent needs to learn first about the homeowner’s reason for selling, how desperately they want to sell, and how much they are willing to sacrifice in order to sell. All these questions may feel very personal, but a good agent will help their client understand that this confidential information is necessary in order to get their home sold as smoothly as possible.
As the holidays fast approach, a question that is asked every year about this time is, “should I wait and try to sell my house after the holidays?”
Homeowners looking to sell their home during this time of the year need to do a few things to set their home apart from all the others on the market.
Maintain Your Landscaping
Consider adding some fall flowers like mums to your porch or a wreath on the front door to brighten up the home as prospective buyers approach. In addition, grass should be cut and trimmed and leaves cleared as much as possible. If your lawn has already gone dormant for the season, be sure it is trimmed and not weedy in appearance.
Keep Your House Warm
You don’t want prospects coming into a cold house. Spend the extra money while the home is for sale to make your home as warm and inviting as possible. But don’t go to the extreme and keep the house too warm or buyers will be uncomfortable and your utility bills will go through the roof.
Let In Plenty of Light
Open all of your blinds and drapes, and turn on room lights. If you have particularly dark rooms, consider adding accent lighting to brighten up the room.
Decorate, But Don’t Overdo
Take advantage of the holidays and brighten your home with some tasteful decorations. But keep in mind, most homes are viewed during the daylight hours, so a lot of ornamental lighting, Christmas trees, etc., won’t show up all that well, especially on the outside of the home. So just remember, everything in moderation.
Just because the holidays are upon us is no reason to not put your home on the market if you’re needing to sell. Just consider these tips, and do what you can to always keep the home in showing condition.
Hiring a real estate agent to help you sell your home is a smart decision, but there are many pitfalls to avoid in order to ensure you are hiring the best qualified professional for you. By understanding what an agent does for their client, why they do it, and what their systems are, it is possible to not only successfully sell your home, but have a pleasant experience as well.
In essence, real estate agents work for themselves, developing their own way of marketing and selling homes, so every real estate agent is different. These differences may be slight, or they may vary greatly, but the only way to discover what services each one provides is to interview the agent. Interview at least three real estate agents at your home, well before you must put the home on the market if possible. The interviews should focus on several aspects that you may not be aware of yet. Let’s take a look at what a proper real estate agent interview should involve:
The Interview
It is important to understand that the interview process is not to find out which agent claims to be able to get the most money for your home. In fact, pricing should not even be discussed at the initial interview. The object of the interview is to discover what services each agent provides, learn what type of marketing plan they have in place, how that marketing plan applies to your situation, and what systems are in place to manage the paperwork generated by a pending contract.
However, as important as these details are, it is just as important to learn whether or not you are comfortable communicating with the agent. Many sellers make the mistake of simply hiring an agent who promises to sell the house for the most money, even when they do not feel comfortable with the agent. A real estate transaction can be extremely strenuous and emotional; that is why open, clear, comfortable lines of communication are critical to a successful sale.
Questions to ask each agent should be written out and utilized during each interview. Asking the same questions of each agent will provide you with a standard way to compare them after the interview process is completed. Below are some of the most critical questions to ask a potential real estate agent:
- How many active clients do you generally assist at any given time?
- What is your marketing plan?
- Describe how my home will be presented on the Internet (over 80% of buyers seek homes there!).
- How do you manage a contract? With all of the paperwork, the numerous service providers involved, and the buyer’s side of the transaction, it must be difficult. How do you keep everything straight?
- Are you a full time real estate agent?
- Do you have any vacations planned? If yes, how will you manage my business during your absence? How will you be able to handle an offer or showing?
Be sure to take plenty of notes during the interviews. Once the interviews are over, go over your notes thoroughly. It is a good idea to schedule a second interview with the real estate agent you’ve chosen, this time requesting that the agent provide you with statistical information and recommended pricing on your home. You may even want to have each agent provide this information in a second interview as well, just to be sure of your final decision. Although this adds to your time-line, it is critical to make the best possible choice in an agent in order to avoid the all-too-familiar pitfalls.