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.
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.