As more homeowners pursue sale by owner sales, the need for information detailing how to guarantee success is more apparent. Although FSBO transactions are more acceptable, there's still underlying hesitancy that many sellers face before pursuing an FSBO. Before FSBO sales became a viable way to sell property, this hesitancy had roots in so-called "horror stories." However, now that there are fewer horror stories, it's based on the misconception that FSBO homes stay on the market for longer, sell for less, and require more effort than if you use a traditional real estate agent. However, all these disadvantages originate with sellers not having guidance on navigating an FSBO. Thankfully, this guide on how to sell a house by owner should help you avoid the errors that lead to unsuccess.
The Trifecta of How to Sell a House By Owner
To achieve a lucrative sale when completing an FSBO sale, you need to do more than list your property and think sellers will come. You need to complete a handful of steps that guarantee your success as an FSBO sale.
The Flat Fee MLS Listing Company
Most sellers understand the need to find a flat fee MLS company to get onto your city's or county's MLS.
However, most sellers don't understand how critical the flat fee MLS company is to the transaction. The MLS is more than syndication to buyer agents, it's the foundation of a profitable and quick sale. The one you select -- whether digital-first options like Houzeo or tried-and-tested companies like FSBO.com -- your MLS should offer more than syndication. Therefore, besides the upfront fee on the MLS, you want to pay special attention to:
What the flat fee MLS Company Offers
Ideally, your flat fee MLS company should have a six-month listing term standard, allow you to edit your listing for free, and offer 24 property photographs. The MLS company should also provide documentation and phone and email support.
The Costs You Need to Cover
After examining what the flat fee offers, you can gauge what more you need to spend to accomplish a successful sale. You should consider expenses like professional photography, signage, lockbox, documentation, and escrow.
How Many Homes Have Sold Through this Flat Fee MLS
Most Flat Fee MLS don't publicize how many homes they've sold. But that doesn't mean it's impossible to make an accurate guestimation. To do this, you'll have to use a flat fee MLS with a buyer-side website. On this section of the website, you should be able to filter by days on the market and choose the most severe case: longer than 90 days. Comparing the current listings to those older than 90 days should give an idea of how many homes are selling daily. You can check out Houzeo reviews for more information.
The Buyer's Agent Commission
While you can use a flat fee MLS to avoid paying any commission, this is usually the cause of homes receiving very little interest. This minimal interest leads the property to stay on the market for longer and -- when it finally does sell -- sell for considerably less.
If you want to get buyer agents interested in your property, you should offer between 2 and 2.5 percent buyer agent's commission. This is the industry norm and means buyer agents who pursue your home for their clients won't get a pay cut.
Above Industry Standard Commission
If an industry-standard commission produces buyer interest, above the industry standard can double that interest and cause more agents to show your home to clients in a bid to get the commission. Naturally, this leads to more offers, leading to substantial profits. Typically, anything above 2.5 to 3 percent is above industry norms.
Below Industry Standard Commission
This is often the commission strategy sellers use to save a buck. But, while you're trying to save a buck, you're incurring more costs. Most buyer agents won't be interested in your property, which means you'll receive fewer -- if any -- offers. When you receive offers, buyers will bid less because they've realized your home has been on the market for a considerable amount of time and may assume it has hidden issues.
Unless you want to get less for your home, never select a buyer agent commission less than 2 percent.
The Market-Related Price
Sellers often aren't objective about the price their home could realistically fetch on the open market. When they list, they assume that their pricing is reasonable based on a cursory glance at what other homes in the neighborhood achieve.
Remember, you want to avoid the dreaded "price reduced," as that signals to buyers that your home isn't worth what you think it is.
Sellers often compile comps to price their homes, but these often focus solely on the neighborhood. A more accurate comparison will be the neighborhood and immediate vicinity, the condition of the property, the square footage of the home, the square footage of the lot, and the surrounding area. Homes closer to schools will sell for less than those in a quieter part of the neighborhood.
Once you've found 5 to 10 recently sold homes with nearly identical features to yours, then you can find the average price to select for your property. Even if the figure you select is lower than the market average, you can always adjust higher than do the dreaded and adjust lower.
These tips are applicable whether you want to know how to sell a house by owner or how to wholesale real estate. Regardless of the property transaction, if you follow the trifecta, you'll achieve success.
If you want to check How to Sell a House By Owner in a specific state you can check them out here:
- California: How to sell a house by owner in California
- Illinois: How to sell a house by owner in Illinois
- Pennsylvania: How to sell a house by owner in Pennsylvania