Most home sales in California are performed through a real estate agent and broker. They handle much of the technical work, document preparation, selling process and guidance through closing. However, it is not legally required to use an agent or broker to actually sell a home in California. A homeowner can transact and transfer a home in a sale all by themselves. That said, it’s not often recommended by financial advisers or real estate experts because the sales process is very complicated with a number of steps that can be minefields.
The formal name for a homeowner selling his home is a For Sale by Owner or FSBO. There is no representation involved; the owner is the direct contact for all sales questions, discussions, forms and legal execution. That said, a FSBO doesn’t necessarily give a homeowner any special advantage in the market. The seller will have attention or lack of it the same as if represented, depending on whether the economy is a buyer’s market or a seller’s market.
Getting Started
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The first step to going into a FSBO is do your homework on how the home selling process works. While a homeowner doesn’t need a license, you still need the education on how the process works. Now, it’s quite possible to spend a few dollars, go buy a how-to guide at the local bookstore, and then try to follow each chapter as you go. And that’s the mistake a lot of folks make when putting forward a FSBO that doesn’t work.
Most local community colleges have robust programs for real estate classes. These are some of the best deals available to learn the selling process from an expert. It’s also how just about every sales agent and broker has started on the way to earning a license. Granted, these classes take some time to complete, but they can be invaluable for discussion options, learning from others’ mistakes, getting experience details from professors who’ve been in the trade for 20 or 30 years, and incorporating the knowledge in a way that you’ll remember it a lot better.
Unfortunately, some sellers don’t have months to wait and incorporate the selling process knowledge, even if the classes are online. There are a number other options for fast learning in a matter of days, but this takes discipline and time to apply. However, in any case you want to make sure you have a good grip of the sales process from beginning to end. The buyer has no obligation to work on his own and will very likely use an experienced agent and broker who will use their skill to work a better deal and negotiation for the buyer. So knowledge is your best defense for a good sale.
Finding a Buyer
Selling a home is not a short matter of just posting a newspaper ad. Normally, a regular sales agent posts the home details and listing on the multiple listing service of MLS. That’s not available to the FSBO, so the homeowner has to come up with his own marketing approach. Fortunately, the homeowner has a major tool available to himself with an incredible reach: the Internet.
Before listing, the homeowner has to set a price. Agents normally use comparables or “comps.” These are listing values of homes in the same area that are very similar if not almost the same type of home as the one to be sold. The homeowner can do the same, but he will have to do his own research. Internet sites and newspaper listings are some of the most available sources. Keep in mind, however, there can be a big difference between listing values and actual sale values. So finding out the median sale price for the quarter in your particular neighborhood is a good metric as well.
With a home price target, now it is time to market and advertise. However, before doing so, the home needs to be prepared as well. This is called “staging.” First, all the extraneous property inside the house that doesn’t help make it shine needs to be packed up and either stored in the garage or, even better, put in a rental storage unit. Second, the house needs to be cleaned from top to bottom and kept that way. If the walls are dingy, repaint them. A basic coat of white can go a long way in making a home look good again. If the carpets are looking worn, replace them with a new carpet layer. A basic level of carpet can be had for very low cost, especially with a discount from a big box hardware store moving a lot of material. If furniture looks shabby, spend a few hundred dollars on new furniture and sell it after the home sale or, better yet, sell it to the buyer if he wants it. Finally, don’t forget the landscaping outside, a new bark layer and sod on the lawn will brighten the outside look tremendously. Remove all boxes and tools from the backyard as well as old patio furniture. Make it as clear and as simple as possible. Now, the home will be ready to market.
No Agent, Harder Awareness
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The benefit of a sales agent is that they use their agency’s system to advertise your home to a broad audience. Without the agent, the homeowner has to make up for the difference. Fortunately, an number of real estate listing sites have become quite popular on the Internet. All of these offer the ability for a FSBO to sell a home without an agent, and they are used frequently by buyers of all types searching for the right home.
The trick to a successful website presence is a competitive price and a good photograph or set of photos of the home. This is not the time to have your amateur photographer cousin do the work. Spend a few dollars and hire a professional real estate photographer to do the job. A simple advantage such as taking the photo in the early evening hours can do wonders for color and lighting of a home, and that’s just one of hundreds of tricks a professional photographer knows by trade. With professional photos complete, have them provided as digital files with multiple sizes and then upload them into various real estate listing sites with lots of information.
Be prepared to respond to queries. Since you don’t have an agent, a homeowner has to do all the communication, and there will be a lot of empty questions on the way to finding the serious buyer. Deal with it and get through the slog.
You can also stage open home showings as well. Pick a good day with good weather. Put something in the oven that morning such as baked cookies but don’t make a mess. The smell will make the home appealing and the cookies are an easy handout to visitors. Make sure to have a one-pager flyer with all your homes information, pricing, requirements of sale, and contact information. Give visitors something to walk away with that includes key photos. Final decisions are often made by buyers looking back at the flyer they picked up.
Be prepared to be approached by sales agents as well. They will visit, offer their services and try to tell the seller everything being done wrong. If they’re not present to buy, thank them for their advice and send them on their way. However, some agents will be representing a buyer and will want to split the sale. Typically, a seller and buyer’s agents working together split the commission of a sale 50/50. Consider in such instances if paying the 3 percent commission to the buyer’s agent is worth locking a sale versus six more months of no offers. This is a key decision, especially in a buyer’s market. Doing so still saves money but then pays a little to make the sale happen via the buyer’s agent.
Closing the Deal
Finally, when it’s time to draw up the papers, you as the seller have the first say in the drafts. Use your guides, education and templates (some real good ones are available online with sites like Nolo Press). Negotiation will happen. Be reasonable, work through the terms, and don’t execute until receiving solid confirmation of ability to pay. Always require a non-refundable deposit to hold a home for pending agreement, cash up front.
