Thinking About Doing a FSBO?

First, are you really a good FSBO candidate? You should ask yourself a few questions, such as below, before really considering it.

1. Ladies, will you have someone available, sometimes at a drop of a hat, to help with your security when showing the house?

2. Gentlemen, how comfortable and secure do you feel about allowing strangers into your home for showings?

3. Do you have, and will you devote the necessary time for the marketing and showings?

4. Will you be available for showings at the convenience of the buyer instead of only at your convenience?

5. Are you a control freak? Someone who also is always trying to re-invent the wheel. Someone who likes to tell other people how to do their job better. Yes, those things describe me. However, that makes you good FSBO material because most Realtors probably would rather not have you for a client anyway. Mine got rid of me after three months. However, I had the last laugh as I sold to an unrepresented buyer for almost 20k more than where he was trying to lead me.

If you felt you answered those questions honestly and with "Yes's" you should probably read on, because there are more things to consider.

I came across the post that is attached to the link below on Zillow that had some good security information on it for FSBOs. I thought I should include it here.

http://www.zillow.com/advice-thread/FSBO-Security-Tips/243066/

I sincerely believe selling as a FSBO is probably, in the vast majority of cases, going to take longer than being represented by a top notch agent. If you are in a declining market, the longer you are on the market the more your home's value drops. You have to weigh one thing against the other in deciding to do a FSBO.

Lets get one thing out of the way first. You can read in their entirety the studies attached to the links below if you like, but their findings basically state that Realtors do not net the seller more. 

http://faculty.wcas.northwestern.edu/~ane686/research/fsbo.pdf

http://www-siepr.stanford.edu/papers/pdf/06-41.pdf

You might want to note that the Northwestern study was done in the Madison, Wisconsin market which, if not the strongest, is one of the strongest FSBO markets in the country.

If you do decide to do a FSBO, you must be a patient person and one who can stay committed. Pricing is the very, very tricky part. If you say to yourself, "Well since I am not paying a listing commission, I can sell it for x dollars cheaper." That's fine if you can stay committed as a FSBO. However if you don't, and later decide to go with a Realtor, it would be very hard to then raise the price to accommodate the commission.

Initially interview 3 or 4 agents and get CMAs to at least get an idea on price, and for future reference on an agent in case you do bail out. It has been recently brought to my attention that some agents choose not to leave comp info behind after the interview. My suggestion is to take your own notes on them from their information during the interview. If any object, show them the door. Hopefully, you will meet some good professionals that will leave the info behind for you to study along with their marketing plan. Those are the type you would want to represent you if you decide on representation later. A good question to ask at this time is if they will do a flat-fee MLS listing for you, and also ask if they have an ala carte price list available for various itemized services. 

Once you decide on an initial price, you must keep abreast of the changes in your market. In this down market you have to stay ahead of it, or at least with it to expect to sell. You shouldn't be behind it chasing it down. Also, do not get too cutesy with your listing price. For example, do not list at 299,900. At 300,000 you meet the search criteria in two directions, with 300,000 being the top in one, and the bottom in another.

When selling a house, remember that you are in competition with other sellers. I think we all realize that could not be any truer than now. Your house is in a beauty contest, and is up against many agent prepared houses. In almost every case agents are more knowledgeable than you in preparing a home for sale. YOU CAN'T under estimate the value of de-cluttering and staging. THEY DON"T. The link below is to a regular poster on Zillow that may be able to help with this important issue.

http://www.zillow.com/profile/An-OrderLee-Home/

The other obvious issue is price.The main thing is to be real on price with very little wiggle room. You can always say no to a bad offer. The trick is to get an offer. There is something known as a 3/2/1 buydown that as a seller you could offer to stand apart from the crowd. I am not necessarily recommending it, but knowing about it can't hurt, and it is an option. The first link is to an explanation of it. The second link is to a discussion on it. The third link is to a company that specializes in handling them. I do not know anything about the company. If you decide this is something you would like to offer, do your research.

http://helpingufindaway.blogspot.com/2007/07/321-buydown-mortgage-loan.html

http://www.zillow.com/advice-thread/3-2-1-buydowns-vs-price-reduction-a-great-way-to-sell-your-home/46967/

http://www.321advantage.com/

The general perception agents have of FSBOs is that the homes are overpriced, and the owners they have to deal with are too emotionally attached and non-professional. In short, they are a pain in the posterior. In dealing with the agents you must try to overcome being viewed as stereotypical. Offer a co-op that is consistent with the average rate for your area. An agent posted the following advice that should be taken to heart "be clear and up front to agents bringing the buyer- one aspect of FSBO that breeds caution from buyers agents is a lack of clarity on the fee."  In your ads you can add the abbreviation "CSB" with the percentage offered; e.g. 3% CSB. That's agent lingo for 3% commission to the selling broker. Yes, the selling broker. That's their term for buyer agent. 

While you should definitely concentrate on agent showings, you still have to put a lot of focus on the unrepresented buyer. Do craigslist, Zillow and every free site you can find. If you really want to spiff up your craigslist ad, consider the site attached to this link> http://www.postandsend.com/ . When using craigslist it is absolutely essential to delete and re-post every week without fail. I actually did mine every four days. I think you can actually do every it every 48hrs. On Zillow, the thread attached to the following link lists numerous free online listing sites http://www.zillow.com/advice-thread/Discussions/Preparing/US/4580_tid,1,2,0/FREE-Online-Listing-Websites-for-Agents-and-Owners/ .Upload plenty of photos. Some people are overly concerned about their zestimate on Zillow, but if you are not, put a link to your Zillow listing in your craigslist ad as Zillow allows more photos. Postlets is another good site. Their plus option for about $5 is really nice. 

If you would like to have a virtual tour for your listing, you might want to check this company out>  http://www.buildatour.com/ 

 Being on the MLS is absolutely essential for getting the most exposure. I don't know anything personally about using the sites attached to the links below to get on the MLS, however, I have read a very positive post by someone who used the first one. I also saw an agent give her recommendation on the site attached to the second link and another seller on the third.

http://www.owners.com/Tools/SellerHandbook/DecideToSell.aspx

http://www.forsalebyowner.com/listing/new

http://homeworksre.com/

As for as I am personally  concerned, I probably would only consider an out of town source for getting on the MLS if  it was free. Another reason would be if I couldn't find an agent locally that was willing to do the MLS listing for a flat rate that I felt comfortable with. There is something to be said about staying local. If you do decide on an out of town service, ask the company what MLS feeds are included, each MLS is different. You certainly want one in your area, not one in Timbuktu. No matter how you get on the MLS, test it after you are on. Have a friend posing as a buyer call and email to see how it is handled. There have been reported instances of those calls being handed off to agents who just use them as leads to sell other listings. Below is some info that was supplied to me regarding flat fee services:

"Sellers need to be careful when choosing a flat fee listing service to get on the MLS. They make you put the agent's number on the yard sign and in the MLS listing. If the contract you sign says that the flat fee listing service gets the buyer's commission if THEY find the buyer, that should be a BIG red flag. When an unrepresented potential buyer calls the agent, the agent can refuse to give the buyer your contact information. Instead, the agent "finds" this buyer for you, and you wind up paying the buyer's agent commission to your flat fee broker when there was no buyer's agent. As a potential buyer, this happened to me. I called the seller directly when the flat fee broker refused to give me the seller's contact info, but many buyers would not pick up on what the flat fee broker was trying to do. I should add that I've dealt with other flat fee brokers who gladly passed me along to the seller. Not all flat fee services are the same. Be careful and READ THE CONTRACT!!!!"  

When you find a buyer, and if you really become apprehensive about the paperwork, the same agent that did your MLS listing will probably do the paperwork for you for a reasonable fee if you are intimidated by attorneys. My buyer was unrepresented. I had all the necessary forms that I had gotten from a title and escrow company. We went over the necessary disclosures and hashed out a deal. I took the info to a RE attorney to draw up a contract, and contacted the title and escrow company. The buyer ordered the inspection and took the contract to his bank. The bank ordered an appraisal. We closed. Sounds simple, and it was, but obviously this is not always the case. My buyer had a letter of financing approval which is very important. If an offer comes in without one, it is essential to retain the right to keep showing the house. It's really not a bad idea to ask the buyer if he/she has a letter of financing approval before even bothering with the showing. I would want a good excuse if they didn't have one before going any further.

There are advocates of having the house professionally inspected before putting it on the market. I was advised by an agent not to do it. Deborah Madey on this thread> http://www.trulia.com/voices/Home_Selling/Does_the_seller_have_to_submit_a_copy_of_her_inspe-96780  states the same thing. BTW, if you are in TX, be sure to read the post by Dennis Anderson. 

House accessibility is another issue for FSBO's. Get an electronic lockbox. These are the safest, and the most widely used one is called the Supra ibox. Check to see if one is available for rent through whatever agent or company you use to get on the MLS. You might even check with the local MLS on renting one.You can also generally buy one used on ebay. However, it will have to be re-programmed for your area. GE will do that for $25 if you send a letter (must be on business letterhead) from both the old MLS and the new one giving permission for the re-programming. You may call 1-800-545-9601 for more info. If all this seems too complicated just opt for the Supra C-3 push button (see link), and change the combination regularly .It goes without saying to do everything possible to protect easily removed valuables

http://www.factory2go.com/servlet/the-Lock-Boxes/Categories

 Make sure you get a quality professional looking sign with your phone number, mls number, and stating that you are offering a broker co-op. Keep in mind that most, if not all, MLS systems have rules against "by owner" signs. Using one could cause your listing to be removed. It's definitely a good idea to use one provided by the listing service as long as it has all the info mentioned earlier. If it doesn't, make sure that you have an additional one made stating "broker co-op," or use the "CSB" abbreviation with possibly even the percentage stated, as well as anything else that would be missing. You should  have a flyer box with nice, fully informative flyers. Never leave your home without rolling the home phone over to your cell phone. Have a good RE attorney ready, and a title and escrow company picked out.

If you have a showing by an agent and you are home, if you can't leave stay out of the way, but available for questions. The agent doesn't need, or want your help with the client. Remember if you have an electronic lockbox, or even a pushbutton, there may be showings when you are not at home. These showings obviously should only be done by verified agents using their  key card for lockbox access. However, if you are using a pushbutton you must be doubly sure who you give the combination out to, and change it afterwards. A good way to verify that it's an agent that's calling is to request that a confirmation is done from the office using the agency's phone with the published number. After receiving that call, use the caller ID listed number, and check the number against the one on their site or in the phone book. .

You should have information lists available that are suitable for handout with all the pertinent info such as the age of the roof, as well as the furnace and air conditioning system, along with recent upgrades, and replacements. Also, It might be a good idea to have copies of fully filled out disclosure forms available as well. While on the subject of disclosure, hopefully this doesn't apply to you> http://www.zillow.com/advice-thread/Short-Sale-and-or-Foreclosure-is-a-Material-Fact-and-Must-be-Disclosed/206315/ If it does, check out your state law concerning it. 

There can always be a chance for no-shows on showing appointments. Read Don Tepper's advice to help minimize this problem on this thread > http://www.trulia.com/voices/Home_Selling/Is_there_anything_I_can_do_to_prevent_no_shows_-140822

Keep a list of all the names and addresses of people who view your home. If you eventually end up going with a Realtor, you may want to exclude them from the listing agreement. However, remember that an agent may be reluctant to spend a lot of marketing dollars on a listing where the rug could be pulled out from under them at any time. A listing on the MLS with exclusions is often avoided by agents as well.

I came up with an idea for a supplemental sign to be used with your regular FSBO sign. It is to be used on days when the house is show worthy and can be done on any day of the week. You never know when an agent might be driving one of his/her clients around in your neighborhood and has a few spare minutes. It has had mixed reviews from agents, and it should go without saying that if you use it, ID, ID, and ID.
   

This is worthy of mentioning again. If you do go FSBO, the sign is very important. Do not look like every other FSBO with a $10 Home Depot sign. You could even go all out with a light on it to set yourself apart, and seem more professional. An esteemed Realtor on this site has mentioned these before elsewhere:

http://www.listinglight.com/home.cfm?intro=0

Probably the best addition to the "For Sale" sign is actually you. Whenever possible, spend time working out front. I had two impromptu showings while raking leaves. You would think weekend afternoons would be the best times for this to occur, but both times it was during the week. Once an agent with a client pulled up and asked, which was a very good showing, and the other was a couple on their own. The spiral staircase scared them both off though.

Another contributor to this blog brought this up:

"In addition to a professional-looking sign, professional-looking listings/ads are a MUST. This means error-free spelling, grammar and punctuation in the listing copy, as well as plenty of clear, well-lit photos.  With digital cameras being so inexpensive, there is no excuse not to have photos...nice photos. I took five or six shots of each room, brought them up on the computer, and chose the very best ones."

Also, my favorite Realtor on this site did a post some time ago about the importance of getting on the broker tour in the neighborhood. This does come from a post he did on another site, and I hope he doesn't mind me re-posting it here.

"Getting on the broker's tour is critical. Much of the trouble that FSBOs have when trying to sell, is exposure. Agents can't show your property if they don't know about the listing, and don't have any information about it. Each agent may represent 2-3 clients who might be interested in a property like yours... so if you can expose it to a dozen agents, you've consequently exposed the house to a potential 36 viewers, who many come back. In order to be on the tour, you MUST be on the MLS, and you list the scheduled tour through it... hours must be followed exactly... each market sets their own. Call the local MLS board (or any local realtor) to find out what the times and day are in your area... and have a couple of broker's tours the first month.

If you really want to attract Realtors... (and you do!) serve some food... we're unbelievable food-whores.... it should be finger-food.. something that can easily be carried and won't mess up your house. Doughnuts, Granola Bars, Nice Cold Mini-water bottles in hot weather, cookies, finger sandwiches... individually wrapped candy... hot Starbucks coffee on a cold day... and make sure you ADVERTISE the food in the MLS.. .there's a check off box for refreshments... and a small area to describe the property... and tell them you're serving a snack!!

Good luck."

A Realtor on another site that is also one of my favorites posted this:

"The important thing to consider is the overwhelming number of buyers are using Realtors and in order to capture them you should try to be as realtor friendly as possible.
I don't have the time to scour all the FSBO sites that are out there and seemingly newly arriving everyday. Get on the MLS. I suggest you create a very nice flyer, drop by the local offices, shake a few hands and generate the competition to sell it. Yes you will hear some of the NAR crappola, but only the bad ones will dismiss a paycheck because you are FSBO. Make me want to sell it before somebody else, including you."

Below is a lnk to some flyer templates.

http://office.microsoft.com/en-us/templates/TC010014361033.aspx?CategoryID=CT101466191033

Along with the flyer, it might be an idea to have some agent protection forms attached.
See the link below for an idea of one that was supplied by Yvette. The one she illustrated as a sample appears to be one an agent would create, however a seller could easily use most of the language and create one for the agent.

http://www.trulia.com/voices/Home_Selling/Would_this_Agreement_to_bring_Buyer_to_Non_Listed_-83119

 A veteran FSBO seller contributed the following :

"We have been successful in selling our homes FSBO the last two times. I think much of the advice here is probably pretty good - selling FSBO is not easy and definitely requires a lot of homework, but I would still do it that way because I see no reason to pay a listing agent to do something that I can do myself.

I will say that both times we did pay a flat fee service to list our home on MLS, and we clearly offered a buyer's agent commission. I hate that I have to pay a buyers agent, but I just don't think there is anything out there that rivals the MLS for exposure - sad, but true. And the first place a buyers agent will look when deciding whether or not to show my house is under the heading of 'Commission'. If I clearly state I am willing to coop, that takes a big hurdle off the table for the agent.

We also do a lot of pre-sale marketing. Many photos and lots of house information passed around via email to pretty much anyone and everyone we know saying 'if you or anyone you know might be interested, please pass this attachment along, etc.' We got at least 6 showings of our current property that way - and often these are "good" buyers. "Good" in the sense that they probably already live in the area, know the area (you don't have to sell them on why your school district is better than the other one, etc), and know when they see a well priced property. In other words, they know the context of the area.

And finally, it really is all about the price. We sold our current home FSBO in less than 2 days on the market. We really thought that we could probably sit around and wait on a good buyer and get $950K in a decent market. So, we can either sit here and argue that our house is worth that much, and wait a while, OR we can price it aggressively and actually SELL the house and get on with our lives. We obviously chose the later. Am I sitting here wishing I could have gotten more for the house ?- NO! I'm thrilled that I don't have to keep it spotlessly clean (with 3 kids and 4 pets underfoot), and that I can now move forward with making offers on whatever will be my next home with nothing holding me back. I know that there will be 'bumps in the road' on even the cleanest contract - home inspections, small repairs, etc., but we now have two parties very interested in making the deal go through, so those things can almost always be worked out. Good luck."

Here is some possible info that you may get on this site that I have read before to encourage FSBO's to use Realtors:

"80% of For Sale By Owners end up listing with a professional;

10% sell on their own
10% decide not to sell.

Rebuttal: There is no doubt that a greater percentage of represented homes come to a successful sale and close. However, keep in mind that the numbers given are most probably coming from a biased source, and secondly these studies are based for the most part on MLS listing information. I for one, never even had our house on the MLS while doing a FSBO and still sold. You can just about bet your bottom dollar those type of transactions are never considered in arriving at those percentages. As FSBO's become more knowledgeable, I am sure their numbers will improve. The link below, I think, confirms that.

http://www.forsalebyownercenter.com/blog/2007/01/realtors-actually-losing-ground-to-fsbo.html

"A national survey of home sellers showed that homes listed by Realtors average selling for16% MORE than those sold without."

Rebuttal: The NAR survey that is generally referred to does go on to point out that if you take out FSBO sales where there was a friend or acquaintance involved in the transaction and just look at transactions in the open market the percentage is tighter. You also notice that the words "selling for" are used. This does not address the agent's commission that is taken off the top of that number, nor does it address the fact that a vast majority of upper end houses are never listed as FSBO's, which obviously skews the numbers. This was also previously addressed in the study linked to earlier in the post. For more information regarding this, click on the link below. Also, the September 08 issue of Consumer Reports magazine reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price.

http://www.forsalebyownercenter.com/blog/2006/10/do-nar-statistics-of-for-sale-by-owner.html

 "Commissions are a deductible expense."

Rebuttal: A commission might be if you are selling at a loss and want to add to it. A commission can be if you are selling something other than your primary residence. A commission can be if your net proceeds from the sale is over $250,000 if single, or over $500,000 if married and filing jointly. The link below explains it better. The simple truth is if you have any doubt, consult a tax professional.

http://taxes.about.com/od/taxplanning/qt/home_sale_tax.htmhttp://www.trulia.com/voices/Home_Selling/Can_anyone_direct_me_to_the_new_legislation_regard-92312

In relation to the info supplied on the above link, there have been some changes to the rules described on it, which are covered in the link below.
 
http://www.trulia.com/voices/Home_Selling/Can_anyone_direct_me_to_the_new_legislation_regard-92312

I did recently come across what I felt to be a couple of informative Realtor blogs. There are things listed in them, other than the Realtor slant, that as a FSBO you would be well advised to take note of. I would look them over thoroughly for tips that may apply to you.

http://www.whydidntmyhomesell.com/

http://www.trulia.com/blog/carl_medford/2008/12/what_realtors_hate_when_

A FSBO friendly Realtor also seems to have some good information available as well.

http://www.trulia.com/blog/hank_bailey/2008/09/forms_you_ll_need_to_sel

One Realtor did post this concern with FSBO's:

"FSBO home owners tend to not have a grasp of the anti-discrimination laws and I've had more than one that have stated things that made me cringe in front of a prospective buyer."
 
Given that, it might not hurt to really familiarize yourself with the info on the site connected to the link below.

http://www.hud.gov/offices/fheo/FHLaws/index.cfm

California residents in particular should probably look for Carol-lynne's post in the comments section for this blog. She brings up a very good point.

There you have it. About 10 months of accumulation regarding doing a FSBO. Additions are certainly welcome. Open minded Realtors opinions are much valued, and buyers and sellers input as well. Please do not just reply to this to bash Realtors. This is not what it is intended for any more than Realtors getting on and trying to discourage FSBO's by taking the standard NAR line.

Many thanks to those named below who have contributed to the information provided in this blog. Very little of it can be credited to me. Particularly, I wish to thank the agents who were so helpful and generous with their time.

Agents:

Alan May
Evanston, Skokie, Wilmette, IL
http://www.coldwellbankeronline.com/Associate/AgentProfile.aspx?AgentID=2113&FirstName=Alan&IsFromAgentSrch=True&LastName=May&PageNum=1&RegionID=0&SortColumn=LastName&StateID=19

Anita Crum
Newport News, VA
http://www.anitacrum.com/

Carol-lynne
La Quinta, CA
http://www.carol-lynnemittelbusher.com/

Central Coast CA
Pismo Beach
San Luis Obispo, CA
http://www.cypressgolfhomes.com/

Don Tepper
Fairfax, VA
http://www.solutions3dhome.com/

Jeff Konstant
http://www.zillow.com/profile/jkonstant/For-Sale-Listings/

Marci R
Bay Point, Pittsburg,The East Bay, CA
http://www.marcireinheimer.com/

Other posters:

fourier2020
geomath
headinghome
Spec_Tater
Yvette