Selling your house is your first real step into playing in the big leagues.
Or rather, it’s often one of the first larger transactions you’ll engage in. Depending on your market, it may be harder than the purchase. It may be easier. Yet when it comes down to it, sales is sales.
There’s a lot of moving parts and more to keep track of, but it’s an experience on your path to building wealth that’s a bit more … impactful. In addition to the dollars involved, many of us have emotions involved — houses make people sentimental.
But a house is just a house, and financial choices take precedence over emotional ones (or at least they should, anyways).
Should You Use A Third Party
While realtors handle the basic four items listed above, each item involves more than can be seen on the surface. For the person with plenty of time and drive, selling privately may not be such a chore.
For others, their lives may be simply too busy to invest hours each week on the sale of property. Realtors are professionals who handle the tasks associated with transferring property all day, every day; they are specialists with many connections to accomplish tasks quickly and efficiently.
Realtors are also trained and experienced in prequalifying potential buyers to minimize wasting time on pointless showings. They have the knowledge and contacts to do so quickly and painlessly, saving you time and disappointment. In addition, they are also trained, unemotional negotiators.
They know the pulse of the current buying market and what homes are in demand, and can therefore negotiate from a position of strength.
In some cases, buyer agents may not want to show your FSBO (for sale by owner) property to their clients. They may assume a nonprofessional in charge of the negotiations will mean numerous headaches and delays. Without a professional realtor making an offer, FSBO sellers are viewed as unreasonable, difficult, and miserly.
When buying a car, this is an easier choice. Using a third party means you get less money but you save more time. That’s true here. Real Estate has more moving parts to learn and keep track of — in some cases, that may end up costing you.
Consider it an exercise in hiring an expert to save you the time and the trouble.
Should You Sell Privately
FSBO (for sale by owner) is a viable choice for selling property, and it occurs quite often. A realtor or agent does basically 4 things to earn about 7% of your selling price:
- Lists the property through MLS (Multiple Listing Service)
- Handles marketing through different venues
- Facilitates showings and open house events
- Acts as an intermediary in negotiations
If you can handle the above chores yourself, there is no reason to pay out $17,500 (7% of $250,000) for these services (multiply your asking price by 0.07 to find your potential realtor fee).
Do your own research to ascertain comparable listings for homes similar to yours. Choose a competitive price for your listing. You can obtain a flat fee listing on MLS so your home will be listed on various sale sites.
List your home and begin advertising. Yard signs, internet ads, Craigslist, and even a personal website are all great ways to advertise your property. Include many photos of every space, indoor and outdoor. Know your property’s selling points and describe them in your ads. There will be some costs for advertising, but they will be much less than a realtor fee.
A main objection many have to selling privately is not being able to let go.
It’s often difficult to keep emotions out of the selling process. And, emotional attachment may not allow us to see our home as a prospective buyer sees it. The flaws you have grown to ignore will stand out vividly to a prospective buyer.
When negotiating for a sale, the private seller must remember they are not selling memories, but property. If you are unable to unhitch emotionally from the property, you should reconsider your reasons for selling or hire a realtor.
The Issue Of A Property Lien
In most cases when selling a home or condo, there is a lien on the property. This is normally from a bank or other financial institution that financed the purchase (the mortgage).
In these cases, the seller completes the lien obligation at the time of sale, the lienholder signs a release, and the transaction is completed. This is the simplest solution to selling with a lien.
Other liens can present more difficulties. Liens can be placed on your property without your knowledge. A creditor can file a lien without informing you of such actions. Consult your county clerk’s office to determine if any outstanding liens are against your property. Here are some common lienholders:
- Child support liens
- Tax loans
- IRS back taxes and penalties
- Medicaid liens
- Mortgage loans
- Home equity loans
Very often, lienholders are open to negotiation to settle the lien for less than is owed, as long as arrangements are made. They would rather get some of what is owed than none at all. If liens are discovered against your property, consult an attorney or financial advisor before placing your home for sale.
Making The Sale
Some ideas to consider to make this a smoother, more profitable process:
- Sell the Kitchen – The kitchen is the most-looked-at room in the entire home, so selling it is important. New paint and cabinet hardware can go a long way. Even purchasing one new appliance can make the room appear more modern.
- De-Personalize – The more personalized your home appears, the harder it is for potential buyers to see themselves living there. Put at least a third of your personal stuff in storage. Arrange the furniture to showcase the floorplan and best features of each room. Create a magazine display for potential buyers to walk through.
- De-Clutter the Closets – Every buyer looks for storage, and there is never enough. Empty half the contents from closets and reorganize the remaining items to appear neat. Potential buyers will snoop and see roomy closets that appear larger.
- Board the Animals – Your pets may be part of your family, but nothing says “dirty” like food bowls, litter boxes, and pet hair on furniture (and buyers!). Board the pets with friends or relatives and clean out anything that indicates the presence of pets.
- You only get 1 chance to make a First Impression – How does your home appear when getting out of a car in the driveway or on the street? Spruce up the exterior from the street to the doorway. Make sure everything appears clean, warm, and inviting.