Home for Sale by Owner Help

[NCLaker]

Looking for recommendations for a company to work with regarding selling a home by owner.  Looking to eliminate money on seller commissions for a lake home in the Chisago Lakes area (North Center Lake).  Services I would need:  MLS listing & listing to other home sale sites, disclosure forms, scheduling service for realtor showings, professional for sale signs, sales brochure, open house listing.  If selling becomes a problem, would be helpful if the company had a flat rate realtor upgrade option.

Any other advise you have about the general process for selling by owner or flat rate realtors would be appreciated.  Thanks!!!

[PurpleFloyd]

So not sure if this helps but back in the early 90's we were looking for our first house. Started with a realtor and bank in Mankato and at that time for the houses we were looking at in the Mankato area they had the closing costs listed at about $3k.

We ended up buying a house from a family member in a small town and financed through the local bank. When we brought up closing costs, the Lian officer said they take care if it and they ask for a $300 check to cover the closing costs.we got $60 back from that amount.

The only reason I bring that up us closing costs are a big money maker for those who do them and if you can either have a local, small bank do them or even do tge legwork yourself it can save a lot of money and a realtor is not needed. Not sure if that fits what you are looking for or not.

As far as getting help listing etc, that is a service and I would think mist would charge their normal rate for what they do.

 

Is this something you could buy a yard sign yourself to say it's for sale and put the listing in the local shoppers guide etc and show it yourself? 

 

Otherwise the 4% types might be the best option. I know some that do that in the Kato area and they are great people with no loss in quality vs brokers.

[NCLaker]

Thanks for the info PF.  Good tip on the closing costs.  As for as the selling side of it ... unfortunately you have to go through a realtor or flat rate type service to list on MLS,  Mankato may be a bit too far away unfortunately since I'm in the Chisago Lakes area.

[PurpleFloyd]

Oh yeah, I was just stating that in this area the flat fee brokers give good service and I suspect you would see similar results in your area. Good luck in the sale.

 

The question I have is do you think you need to list on MLS to sell the house or can you sell through other channels as a for sale by owner and still move it while possibly saving yourself and the buyer some money. If the market is strong it's certainly doable without that listing service.

Edited September 7, 2016 by PurpleFloyd

[Musky hunter 82]

We recently went through this same situation, with a house in south western MN, not a lake place but we wanted to sell it by owner.  Really the only way to get your home out there for people to see is if you use Zillow or other for sale sites and put up a sign in the yard.  The problem with this is that mostly the realtors are looking at MLS numbers and in our case you can't have one unless you list through a realtor.

Depending upon how fast you want it to move and how much work you're willing to do, then you can decide what way to go.  When we had it listed by owner, we had to field any calls about the house, we had to show the house and had to replace signs that would blow away.  it ended up not being worth it, when you think about time away from work and not getting in front of realtors eyes.

For us we decided to list it with a realtor after about a month on the market "For sale by owner" (in that month I showed it 4 times, the first month the realtor showed it 8 times)  

[NCLaker]

Thanks for all your advice guys

I'm actually trying to help out an elderly neighbor.  I had sold our previous house using a for sale by owner service (Home Avenue - included posting to MLS and the other things I needed for $700),  Now he wants me to advise him on the process to help save him money.  I put this out there to all of folks on this site because I thought it important to do additional due diligence on other for sale by owner company options & advise before I talk to him.  This site has always been a great resource.

I did a little bit of searching on Angie's List & Yelp, but only had couple of hits.  One of them was the company I used and the 2 sites had feedback that opposed the other.

Edited September 7, 2016 by NCLaker

[Lip_Ripper Guy]

I'll (try) to take my (professional-non FSBO company) Realtor hat off and try to give you the most unbiased advice I can. 

1) If you don't get the listing on MLS, you are wasting your time.  And wasting money.  

2) If you don't get the listing posted to broker reciprocity sites, you are also wasting your time.  And wasting money.  

You'll notice most of these companies only post theoretical savings, rather than % of listings that lead to closings.  You never see market share.  You never see % of sold price vs list price.  There's a reason for that.  

Here is the FSBO (company or totally on your own) reality.  Nobody (generally) is using hsolist with any regularity.  No matter what the FSBO broker tells you, nobody (generally) is using their page.  Relying on a yard sign, or an open house posted in the local newspaper is a long shot, at best.

The vast majority of buyers are already working with a real estate agent, and if they aren't, they will ultimately want the professional advice and experience that comes with it.  Any agent who has been through the process of working with someone trying to sell their own house knows what a nightmare it can be, and ends up being 10x's the work.  They don't want to show your house, and probably won't, because they won't know about it.

So let's suppose that the buyer and/or their agent finds out about your house, and want to buy it.  They (at a minimum) are going to charge their customary buy side commission.  Let's call that 2.5-3% depending on the area.  Nobody is working for free.  Many agents will require you to seek legal representation, agency representation, or charge to handle your portion of the transaction.  Tack on additional dollars for that. 

At the end of the day, you are forgoing professional experience and representation (and a giant pool of buyers) for this theoretical 1-2% savings.  When you eliminate that pool of buyers, you eliminate the demand for the home, and I guarantee you lose out on far more than that 1-2%.  There is a reason that FSBO hasn't caught on, and won't catch on.  

The universally best advice I can give, that will end up with the greatest dollars in your pocket, is to seek out the best 2 or 3 agents in your area, interview them, and have one list your home.  It will sell.  You'll be far happier, and end up with more money in your pocket.   

     

[NCLaker]

Thanks Lip_Ripper for the insight, I'll pass it onto my neighbor that is trying to figure this out.  I was fortunate when I sold my own home, I used an FSBO that did list my home on MLS and was showing up on various realtor web sites.  I ended up lucking out and selling my home in 2 weeks (properly fixing up & staging, as well as high demand for lake homes probably helped a lot).  But I think you are right that FSBO is not for everyone, especially if you aren't prepared to do your homework and properly executing the house prep, listing, and selling.

It was interesting that in those 2 weeks I had mine for sale, I had only had one professional realtor showing.  My buyer and some other very interested parties came from my Open House, seeing it on the Internet, and references.  I think the price I ended up selling it for was pretty close to what the market would yield at the time.  Since neither me or the buyer used a professional agent so saved me quite a bit of money.  I did use my own lawyer to put together the purchase agreement.

 

[delcecchi]

I would say, based on my neighbor on Lake Vermilion, that choosing a realtor who is able to market the property correctly and reach the potential buyers is very important.  There are some realtors who seem content to get the listing, throw it on mls and put a sign or two up, and wait for the gravy to come in.   Others are more proactive in actually working to find potential purchasers and earning their commission.  

If a place is worth 400k, isn't the commission to the listing dealer like 25 or 30K?   What does a particular dealer do to earn their portion of the pie is the real question to me.

[Lip_Ripper Guy]

14 hours ago, delcecchi said:

If a place is worth 400k, isn't the commission to the listing dealer like 25 or 30K?   What does a particular dealer do to earn their portion of the pie is the real question to me.

Depending on area, that is about right for the gross commissions.  That is roughly split between buyer brokerage and listing brokerage.

Without getting into a novel, a good agent is honestly worth every penny you spend.  While marketing is important, it is awareness in negotiations that I feel is most important.  It's subtle details, and knowing how/when/where to push that will save thousands of dollars, which create a net gain.  On that same note, an "average" agent isn't worth a nickel.  An "average" agent in MN sells under 4 homes per year.  Most people don't know that.  The worst thing a person can do is hire their part-time brother/sister/uncle/neighbor who is just "average" and not good to great.  It is only prolonging the inevitable, which is them being the 90% who wash out after 2 years.   

[delcecchi]

Ripper, what you say might be true, but judging by the neighbors on each side of me on Lake Vermilion, it isn't necessarily so.  These are full time agents and real estate people and I haven't seen that they are doing much to earn their money.   The property on one side was on the market for several years and the effort was to put it in the MLS system, put up a sign on the beach and a couple on the road and wait.  Finally sold at a substantial reduction. 

Looks like the house on the other side is on the same path.   I see no effort to use the internet or to market outside the area.   I would say that most of the effort is exerted to get the listing in the first place.   Then it is just a matter of waiting for a sale, showing the property if someone expresses interest, and waiting for the money to arrive. 

That may be just due to my vantage point and the market up there.

[PurpleFloyd]

Great realtors are not that easy to find and the ones that are really good want to sell the best houses because they take less work and have quicker turnaround. Location is also crucial. If you live in an area with high demand and high value properties then listing with a realtor can yield a quick sale but good ones generally don't want to spend a lot of time selling marginal properties that are located outside their core area. 

As a homeowner the best thing they can do to make their house sell fast is to make sure it is well kept up with good landscaping, have it renovated if it is outdated on the inside and outside and make sure it is clean and organized. Stage it if possible depending on market and value of the property. 

[Tom7227]

Couple of thoughts.

Coming up with a price isn't as easy as using Zillow IMO.  To many variables go into something like that and I'm not sure how timely the info is on market value.

The other thing that hasn't been mentioned is how quickly the person wants to get the sale done.  With winter coming it would seem to make sense to get things wrapped up within a few months.  That may not be that easy with a FSBO.

There are a number of homes in my area that are owned by folks who have lived in them for many years.  One comes to mind where they have been in it for at least 40 years and are asking $1.3 mil.   They are elderly and the husband has some pretty serious medical problems.  The house is an A frame that was in style when built but well past prime now.  The house has been on the market for over 6 months.  What is a realistic price, how long can you pay taxes and utilities on a house, and what is the value of having even half the asking price tied up without any return on the investment.  Sure it is nice to maximize your income on a sale but you have to be realistic.  IMO these sellers are being very shortsighted and not being well represented by their real estate agent.   A reality check seems to be needed in this case.

 

[Dave S]

I'm actually in the process of preparing my home for a sale and have wondered about the process of FSBO. One thing that has bothered me about some realtors is commissions up to 7%. Meaning $15k plus taken off the top that could go towards another home. What a person puts into it seems to be a matter of perspective and what value does one put on their time of doing their own leg work. We're doing some of the updating ourselves and other projects are being left up to a contractor for some of the remodel. We're not sticking a large sum of money into it but enough to make it appear fresh or updated. Turnkey, if you will. We're fortunate enough to have interested parties now that word has gotten out that our house will be available soon.

When the housing market crashed, we took it in the shorts on the appraisal when we initially wanted to sell. Now that things have stabilized and recovered some, we're making our move. No pun intended.

[NCLaker]

Delcecchi, My neighbor is getting market analysis from realtors way over what similar or better homes have sold for in the last few months.  I am convinced they are telling him this just to get him under contract.  Doesn't take rocket science to get an idea of the ballpark for a realistic asking/selling price.  Information on homes that sold recently, or are under contract in your area are readily available on the Internet.

Tom, FSBO like I was saying to Lip_Ripper, is not for everyone, especially if you aren't prepared to do your homework and properly executing the house prep, pricing, listing, and selling.  Good thing is that if you have the luxury of some extra time on the market, the cheap cost of getting the home listed FSBO could be worth it for the little cost.  Listing with a Realtor can always be a fallback.  Just need to be prepared to accept/understand the real risk/benefits/effort required about what you are getting yourself into.

Dave, what your doing is exactly why we sold our last house FSBO, and it really paid off IMO.  However we did what you did, so it helped.  Although a realtor (if you get the right one), I'm sure can make a big difference with selling quicker, getting a better price, less hassle, etc.  The real work you do to get the house ready for sale and appeal to buyers is what I think is the single biggest factor that you have control over to sell your home faster and for a better price.  If you or anyone is not real good at what makes sense to update, how to prioritize where to spend your money, and how to do it so it appeals to the most buyers, then you should consult someone that does.  The way we staged our home for selling was completely different than how we had it setup for living in. We filled a 10x20 storage unit with all the stuff that we took out so that the house looked as de-cluttered as possible... and we were in no way hoarders and this is in addition to the loads of stuff we brought to Good Will.  ** One key piece of advice that we got from others, DO NOT show any potential buyers look at your house until it is completely ready and staged for showings.  Even if they say the understand your improvements are unfinished, or house is not completely ready.  I think we lost some buyer interest because we did not follow this advice.  Anyways, good luck with selling your home  

Thanks all for continuing to provide feedback to this thread.

Edited September 12, 2016 by NCLaker

[Tom7227]

I'm not trying to encourage or discourage either course of action.  But it is important to know that selling a house can get complicated.

The first thing that comes to mind is how does a FSBO handle an open house?  Can you do it correctly?  Do you have a clue what a real estate agent does during an open house - or doesn't do?  Maybe going to several to get a feel for it would help.

What do you do to advertise?  How and where do you place the ads, know what to put in it, take the right pictures, when to schedule an open house.

How about the paperwork?  Do you have any purchase agreement forms?  Do you know how to fill it out?  Do you know what such a document really means?

Do you have the disclosure forms that are now required?  Well disclosure.  Underground tank?  Have to done a radon test?  There probably are a lot more types of things that are part of the routine.

Do you know how to respond to a counter offer?  How about dealing with issues that come up with an inspection - what is the routine response to some of these things?

How about a demand that you pay some of the closing costs?

My daughter sold her house a year or so ago and had a real estate agent.  She presented some of the things to me and I thought some of the demands by the buyers were just absurd.  But the agent said that such things were routine.  I know I screwed up one sale by my hard line but learned to keep my mouth shut and the place sold.

It's hard to peel 5,6 or 7 percent off the deal and hand it to someone else.  Expertise has a price however.

But in the 34 years I worked as a lawyer I saw an awful lot of folks who thought they knew what they were doing screw things up because they got in over their heads. 

[Cheers]

When I sold real estate in the early 90s I was taught (and observed it to be true) that open house was a way for the agent to get new customers while giving  the impression that he was  working for the home owner . It was the common belief among agents  that open houses don't sell houses , it is all for show  ! I don't know of one deal that came directly  from an open house , but every seller wanted to have them .

Edited September 13, 2016 by Cheers
grammer

[delcecchi]

That is my thought about open houses.  Bunch of lookie looos nosing around.  

As for the paperwork etc, there are some companies around like http://www.fsborochester.com/

or there is even a web site for the do it your self crowd 

http://www.forsalebyowner.com/

with information and flat rate help.  

Perhaps it is possible to negotiate a fee for service type arrangement with a local agency.   

 

[NCLaker]

Tom, All good food for thought, FSBO is not for everyone.  Personally I did not do a pure FSOB, i used a service that provided me a lot of the stuff needed (e.g. professional signage, brochures, MLS, Disclosure form, realtor showing scheduling service, etc).  But that alone does not suffice.  Definitely need to do your homework, and is good to have a real estate lawyer involved with the purchase agreement.  Even with all that not everyone is cut out to try selling it on their own.

As I've read posts here on the Realtor side, you can't just assume they will take care of everything for your best interest.  So pays to do your homework even if you enlist one to sell your home.  Always good to find one based on personal referrals imo.

[delcecchi]

There is a real conflict of interest between the owner and the agent.   The agent is perfectly happy to have you invest money in improvements that will not be repaid if it makes it easier and quicker to sell house.  

[Lip_Ripper Guy]

On September 14, 2016 at 7:00 PM, delcecchi said:

There is a real conflict of interest between the owner and the agent.   The agent is perfectly happy to have you invest money in improvements that will not be repaid if it makes it easier and quicker to sell house.  

And therein lies another difference between a good agent, and an average agent (who sells less than 4 homes per year).  A good agent will be able to give a cost/benefit analysis on any improvements they would recommend.

[SandraCavin]

True. A good real estate agents will help you sell your house according to your terms and budget. Money should be properly invested on the improvements that is mandatory. Hiring a real estate attorney is worth the cost. A residential real estate lawyer can help both home sellers and buyers with properties such as new homes, resale homes and condominiums. When you find a lawyer make sure they have a license and they specialize in real estate law.

[delcecchi]

On 9/16/2016 at 11:20 AM, Lip_Ripper Guy said:

And therein lies another difference between a good agent, and an average agent (who sells less than 4 homes per year).  A good agent will be able to give a cost/benefit analysis on any improvements they would recommend.

 

Yeah, but do they?  Or do you have to pry it out of them?   Do they still charge 6 or 7% ?

[Lip_Ripper Guy]

On 4/12/2017 at 11:44 AM, delcecchi said:

 

Yeah, but do they?  Or do you have to pry it out of them?   Do they still charge 6 or 7% ?

 

You shouldn't have to pry anything out of your potential representative.  Most agents are more than happy to do a quick run through a house with a future seller, and talk about what could/should be done in order to create the best selling opportunity.  Both agent and seller need to be on the same page regarding getting the most money (net-after potential improvements) vs convenience ("but I don't wanna fix the holes in the drywall!") vs time (do we wait and get our price, or sell quickly).  Like anything else, communication is key.      

 

As far as rates, you are on the right track for the average.  

[delcecchi]

Creating the best selling opportunity and getting the best return on your upgrading expense are two different things.    The incentives often differ between the agent and the seller.  The optimum for the agent is a quick sale.