Selling your home on your own
It's tougher than ever to cut out the middleman...but it can be done.
NEW YORK (CNNMoney.com) - All signs are pointing to a changing housing market. That means if you're selling your house by owner, you'll want to be even more market savvy.
In today's 5 tips home edition, we're going to tell you what you need to know if you're going "For sale by owner."
1: Know the landscape
The housing market is flattening in many parts of the country. That means houses are selling more slowly and buyers have more leverage in negotiating price. In other words, it's harder to sell your home by yourself.
Last spring houses in Massachusetts, for example, spent an average of a month on the market. Today houses are selling after three months, according to Liz Provo of for-sale-by-owner magazine, "Picket Fence Preview."
Once you realize the kind of market you're in, you may want to adjust your expectations a bit. You're going to have to do more than slap down an ad in the newspaper. You're going to need local exposure. Think signs, ads and open houses.
2: Be price-sensitive
Finding the right price for your home makes all the difference. One of the biggest mistakes homeowners make when putting their house on the market is overpricing. People who sell their own homes tend to be more unrealistic, says Steve Udelson of Owners.com, a site that offers FSBO properties.
Get a licensed residential appraiser instead of using a real estate agent to give you comparisons on other homes in the area. The price the appraiser comes up with is more accurate, according to Provo. That's because they only use the price of houses that have already been sold, not houses that are selling. "Real estate agents use pricing as a sales tool," she says.
Appraisers may cost about $275 and you can find them by checking in with your local bank or at appraiserusa.com. Since you don't have to pay that 6% broker fee, you may want to think about using that savings to cut your selling price. If you're in a really stagnant market, you may want to price your home 4% lower than your competitors. But if the selling market is more brisk, you won't want to price your home more than 2.5% below your competitors, according to Udelson.
3: Listings are not always a golden ticket
Many sellers think that getting on a multiple listing service will be their one way ticket to selling their home. And while getting on one of these industry lists that allow other brokers to see what you're selling can be a boost, there can be many drawbacks for a FSBO.
Without a broker, you can use a flat-fee MLS service. You'll pay about $500 upfront, regardless of whether or not you get any bites. Plus you must agree to pay a 2.5-3% commission to a buyer's broker if they contact you.
Even if you decide to list with a discount broker, you still may not see the results you hoped for. Sellers agents won't bother taking their clients to your home if they don't see the commission payoff, according to Blanche Evans of RealtyTimes.
4: A la carte brokers
If you like the idea of selling your home, but you're still hesitant about certain details of the process, think about getting a limited service broker. In this case, you can enlist the help of brokers to help you with marketing your home and handling open houses or contract negotiations.
You will pay fees upfront, but in the end, it will be cheaper than paying thousands in broker commission fees. Check out helpusell.com if you're exploring fee-for-service brokers.
5: Don't be intimidated
If you get headaches just thinking about the paperwork involved with selling your home by yourself, remember that you're not alone. You have your lawyer. It's your attorney's job to prepare the purchase and sales agreement. That's why you pay $500-$800 in legal fees.
If you have questions, you'll find that there are plenty of interested parties -- like your mortgage broker -- who will help you out.
Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to firstname.lastname@example.org.