Things to Think About Before You Go FSBO!
The local market is experiencing rising home prices and even inventory shortages in some price ranges. Such a market makes it tempting for home owners to consider selling their property on their own. After all, we live in an age of TV networks, websites, blogs, boards, books and more dedicated to all things DIY. Are you adequately prepared to negotiate and consummate the sale of your single largest asset? Like most do-it-yourself projects, the experience of selling your home on your own can teach you lessons that will make you better prepared for the next project but, can you afford the price of that lesson when it comes to selling your home? Consider how many of your first-time ventures into do-it-yourself project have gone perfectly smoothly and yielded the results you desired. If your experiences are like mine, the first one is a learning experience so you can be successful with the subsequent ones! Navigating the sale of your home without an experienced real estate professional is a proposition you must consider carefully before undertaking such a project.
Some questions you should ask and answer for yourself before entering into a FSBO scenario are:
· How will you become knowledgeable of the legal and regulatory requirements placed on you as the seller of real estate? Are you familiar with all of the laws and ordinances in St. Clair county, your city or even more specifically your subdivision? The laws and ordinances governing the sale of real estate vary from state to state, county to county and even city to city. Failing to meet all the requirements can be, not only expensive but also, impediments to the closing process when it is time for the buyer’s bank to insure all the requirements have been met.
· How will you gain exposure to buyers? According to a 2017 National Association of Realtors study of home buyers and sellers 95% of buyers search online for a home. That is in comparison to only 15% who look at print newspaper ads. Professional and experienced real estate agents have an internet strategy to promote the sale of your home to the right audience to maximize its exposure to potential buyers. What is your strategy and how was it developed? What is your budget for promoting your home online? Who will create your online advertising and determine where it is placed and to whom it is targeted?
· Statistics show that buyers find the property they purchase from the following resources:
49% on the internet31% from a Real Estate Agent7% from a yard sign1% from newspaper
How will you tap those resources to which you may have access?
· Buyers are frequently hesitant to deal directly with a homeowner because they recognize that the sale of the home is very personal to the homeowner. They are concerned that homeowners may be easily offended by buyer comments and price negotiations. Dealing with the homeowner directly creates a level of discomfort from the very beginning and is a compelling reason for the buyer to consider other properties.
· How will you handle showing your property with your work/life schedule?
· How will you screen potential buyers to minimize the potential for threats to your personal safety? Do you have a friend or relative that can be with you for every showing?
· How will you know if the potential buyer is financially qualified to purchase your home?
· There are many people to coordinate in the sale of a property (most are the “buyer’s people”) Some of these people include the buyers, their home inspectors, their radon inspectors, their termite inspectors, and housing authority inspectors. There will also be the buyer’s lender, perhaps your lender, their lender’s appraiser, the title company, insurance companies, utility companies, the buyer’s real estate professional, the home warranty company, and sometimes even more. Will you be able to devote the needed time to coordinating all of these parties?
· Once you find a buyer, what happens next? Do you have a contract for the purchase of real estate? Has your contract been reviewed by your legal counsel and does it comply with current Illinois law. How will you select which title company to use? What costs and task are you responsible for? Which ones should you be responsible? What is the buyer responsible for?
· What are the risks associated with the sale of real property on your own? What is your financial liability if you inadvertently fail to meet some of the requirements What are you required by law to disclose? What if you fail to adequately disclose them. What happens if the deal just goes badly?
Are you willing to “learn” how to sell real estate on the sale of your largest single asset and bear the potential cost of that learning?
“While it is wise to learn from experience it is wiser to learn from the experience of others!” Rick Warren, The Purpose Driven Life