fsbo like a pro

FSBO Like A FSBO Like A ProPro

Contents - Introduction……….……. - Pricing………………..…… - Staging……………………. - Photography…….………- Marketing………………… - Websites………………….. - Contracts…………………. - Negotiation……………… - Closing…………………..... Appendices - Using a Realtor……….… - Adjustments Guide..…. - Useful Websites………… - Examples of Flyers…….

FSBO Like A Pro – Duncan Connor © 2009

Duncan ConnorRealtor ®

Findley Real Estate, Inc.2862 Buford HighwayDuluth, Georgia 30096Business (770) 476-5238 Ext. 229Cellular (678) 343-1061Email [email protected]

Each Office Is Independently Owned and Operated

About the AuthorDuncan Connor is a Realtor® who lives in Duluth, GA and works throughout the metro Atlanta area.You can find him on Facebook, Zillow, Linked-In and at his office in Duluth.When he’s not working, Duncan enjoys spending time with his wife, Jennifer, and their dog, Murphy.If you have any questions or comments, feel free to email Duncan at [email protected]

FSBO Like A FSBO Like A ProPro

3513151719202223

24252627

Okay, so you’ve decided to sell your home by yourself. You don’t need no stinking real estate agent, right?

Well, before you make that decision, let me take a second to tell you what a real estate agent does to earn their money; and if you’re still committed to selling your home without one, at least you know what you’re going to have to do.


Let’s think about moms. They’re cooks, cleaners, nurses, teachers, gardeners, friends, dog groomers, and taxi drivers…and most of them also hold down a full-time job.

The task ahead of your real estate agent – which in this case will be you – is a little bit similar.

A real estate agent must be an appraiser, inspector, educator, interior designer, handyman, landscaper, graphic designer, publisher, tour guide, local historian, economist, financial manager, call center agent…you get the idea.

The last thing to consider right now is that a real estate agent will usually do all the work to sell your home without getting a cent in return, until you get to the closing. If you plan to do all this work yourself, you should understand that a lot of it will hit you in the pocket.


Selling your home comes down to two main factors:• Price• Exposure

Those are two little words that make a huge difference. If your home is overpriced it may sell…eventually. Or it may not. And even if you get offers on your over-priced home, you are dependent on a property appraiser agreeing with your assessment so that potential buyers can get a loan.

Exposure is all about getting your home out in front of people who might be interested in buying it. Sure, you can stick a red and white FOR SALE sign in your yard, but then what? That sign is only visible to people who pass it. What you need is a sign that’s visible to people who aren’t standing in front of your house.Remember, too, that many real estate agents won’t show homes to their clients if the seller is not offering to pay a commission to them. If you really want to sell, you should think about paying that 3% commission to the buyer’s agent.


Pricing

Let’s say that you bought your house for $150,000 seven years ago, and you think that property values have increased by 20% since then – so your home must be worth $180,000 now, right? Maybe not.If you’re pricing your home, you need to think about the assumptions you make. For example, why do you think that the value has seen a 20% increase?On the next few pages I’ll show you the steps a realtor takes to value your home, and you can do the same thing.


1. Find comparable properties that have sold in the last six months. They need to be close to your home, be of similar size, and if you can find homes with the same number of bedrooms and bathrooms that will make things easier.

2. If the homes you have selected are very similar, take the average sale price as the basis price. If there are significant differences, take the middle sale price as your basis price.

3. Make a list of the major features – I’ve included a list at the back of this guide for you to use. If your home has something that one of the others doesn’t, add the estimated dollar amount for that feature. If one of the other homes has a feature that your home doesn’t, subtract the estimated dollar amount.

4. Add and subtract the dollar amounts from the basis price. That dollar amount is going to be close to the your list price.

Pricing


Your Home Comp #1 Comp #2 Comp #3Price TBD $ 189,750 $ 204,000 $ 196,200 Bedrooms 3 3 4 3Bathrooms 2 2 2.5 2Lot Size 0.14 0.14 0.2 0.2Stories 1 1 1 2Construction Hardiplank Wood Hardiplank HardiplankGarage 2-car 2-car 2-car 1-carFireplace 1 1 1 0

Your Home Comp #1 Comp #2 Comp #3Price TBD $ 189,750 $ 204,000 $ 196,200 Bedrooms 3 $ - $ (8,000) $ - Bathrooms 2 $ - $ (3,000) $ - Lot Size 0.14 $ - $ (2,000) $ (2,000)Stories 1 $ - $ - $ (5,000)Construction Hardiplank $ 5,000 $ - $ - Garage 2-car $ - $ - $ 8,000 Fireplace 1 $ - $ - $ 1,000

Adjusted Price $ 194,650 $ 194,750 $ 191,000 $ 198,200

As you can see, if the comparable property has something that is “better” than your home, you’re making a downwards monetary adjustment of that property. The idea is to adjust each property so that each feature is the same as yours or has an adjustment to compensate for the difference.Based on the information above, the average adjusted price of your home should be around $194,650. However, there is another important factor to consider…



The sale price of other homes is only part of the puzzle. With so many homes on the market, it’s important that you price your home to compete with everything.

If your neighborhood has a lot of foreclosures that’s who your competition is. It doesn’t matter to a buyer if you’ve taken good care of your home and lived there for twenty years, while other homes need new carpets and paint, and the former owners lost their jobs. All that matters to buyers is: how much do I think this home is worth? If your home is priced at $15,000 more than a neighboring foreclosure, is your home really worth $15,000 more?

I know it’s not fair, but when the supply of homes is so large, if your home is over-priced, buyers are more likely to decide that they can get something comparable at a better price for them – and you’ll lose the buyer.

So in addition to sold homes, you need to take a look at the price of homes like yours which are currently for sale.

9


Your Home Comp #4 Comp #5 Comp #6Price $ 194,650 $ 182,500 $ 169,900 $ 199,900 Bedrooms 3 3 3 4Bathrooms 2 2 2 3Lot Size 0.14 0.2 0.14 0.14Stories 1 1 1 2Construction Hardiplank Hardiplank Hardiplank HardiplankGarage 2-car 2-Car Carport 2-car 2-carFireplace 1 1 1 1

When we looked at the sold comparable properties, we estimated that your home could sell for $194,650. However, that calculation is based on the past, and you’re selling your home now. Looking at the table above, you can see that Comp #5 is very similar to your home, and it’s on the market for $169,900. Maybe it’s a foreclosure, maybe the seller just needs to get out from under the mortgage…but it is still on the market, which means that for some reason, buyers are not prepared to pay even $169,900.

Since you now know that, how likely is it that a buyer will pay $194,650 for your home? Not very likely, right? So to be competitive you need to decide how low you can go in order to sell. Remember that every month you stay in the property will cost you another mortgage payment and tax and utilities. If you pay $2,000 every month for those, wouldn’t it make sense to reduce your price by $5,000 to sell the property three months sooner than if you don’t drop the price?

10


A final note about pricing, for now, is that you need to cover your costs.That may sound like a great big “duh”, but if you find out that the price you can reasonably expect to get for you home is less than you owe, you have a big question to ask: Do I need to sell, or do I want to sell?

If you need to sell due to some financial or other problems, you should call your mortgage lender first. They may have programs in place that can help you.

If you want to sell your home, now may not be the best time. Unless you want to go to the closing and hand a check over to your mortgage lender, you might want to hold off until the market comes back up a little (or a lot).

Costs you should take into account will include 3% to the real estate agent who finds you a buyer – they’ll expect to get paid for brokering the deal. You may also be expected to pay up to 6% of the sale price in closing costs assistance to the buyer. While you can add that 9% onto the price, remember that you have to remain competitive – adding $18,000 to a $200,000 house will just reduce the number of buyers who want to look at your house.

11


Let’s say that you live in a cul-de-sac in the back of a nice subdivision.You decide to sell your home buy yourself and stick a FOR SALE sign in the yard.How many people do you think will see your sign? That’s right, just the people who live in your cul-de-sac, or people who got themselves lost in the subdivision. Next, ask yourself: how likely is it that one of my neighbors wants to buy my house? Or that they know someone who might want to buy my house?

Those are some pretty long odds you’re playing. You need to get your home out in front of people who are looking for a home to buy, which means you need to put it on the internet.There is a headache-inducing number of real estate websites out there – from zillow to hotpads to kijiji to trulia to craigslist…to name only some of the most popular.

If you decide to sell your home by yourself, you’re going to need accounts at all of these websites, and time to update them at least every other day.Oh yes…almost forgot. You’ll need an ad to post to them so buyers can see what it is you’re selling, and you need some photos, too.

12


StagingIf you’re thinking of selling your home you’ve probably seen a show or two on HGTV, or visited HGTV.com, that concerns itself with home staging.Georgia Interior Solutions are professional home stagers, and they have been nominated for Professional Stager of the Year for two years running.No, this service isn’t free, but for a reasonable investment you can get an experienced interior designer to advise you on how to show your home’s best features in a way that really grabs the attention. The photos below are provided courtesy of Georgia Interior Solutions.

13


In 2005, StagedHomes.com published a report that revealed that staged homes sell for almost 7% more than homes that aren’t staged.

There are many books available to help you, but there are a couple of approaches that most stagers adopt. One is to stage the whole house, which can be time consuming and potentially expensive; the other is to stage key areas, like the entrance and the living area. The idea of key staging is to create a positive first impression that draws buyers into the house.

Most will also recommend that you depersonalize – remove personal pictures and knick-knacks. Since you’re selling your house it can probably be safely assumed that you plan to move. So pack those things away, you’re going to need to do it sooner or later.

14


While it’s not necessary to stage your home, it is important to make sure it’s clean and uncluttered and lets in as much daylight as you can. If you can’t get a lot of daylight in, use multiple low-wattage lamps rather than a single bright light source.The goal is to enable you to take the best photographs possible, since those pictures will be prominently displayed on your flyers, and online in your ads.If you have a talent for digital image manipulation, you should know that panoramic pictures can be especially powerful.

With panoramas, this picture can become…

…this one

15


The great thing about digital photography is that you can take tens, or hundreds, of photographs without spending a small fortune on processing costs.

When you’re photographing your home, remember that buyers will expect that you have a tub, a potty and at least one closet – so unless they’re spectacularly interesting, you probably don’t need to photograph them.

Additionally, people spend most of their time in the family room, the kitchen and the bedroom. Along with exterior photos, those rooms should be the focus of your photographs. For exteriors, bright, overcast days give you better light than very sunny days, and you should try to take pictures with the sun behind you.

If your home faces east, photograph the front in the morning and the back of the house in the evening. This will ensure that the shadow of the property is cast behind the building as you take the photographs.

16


MarketingWhen you put that FOR SALE sign in your front yard you’re going to put a flyer box out there, too. Which means you need flyers.

Flyers do four things:1. Photographs to grab attention2. Highlight the features of the home3. Describe by this home is a great buy for the price4. Let buyers know how to contact you

While your flyers are unlikely to produce a buyer, they’re good for buyers to take away if they drive by your home while touring the neighborhood. The thing that should send buyers to your neighborhood is a good web presence.

There are many pieces of software you can use to create a flyer, but something like MS Publisher or PowerPoint are easy to use and produce great results.Examples of professional flyers can be found all around your neighborhood, but I’ve included some at the back of this book.

If you plan to pay a commission to any realtor that brings a buyer, make sure you advertise that fact. Simply state: “3% Selling Realtor Commission Honored”.

17


That means that once you have created a flyer, or an online ad, you should email it to everyone you know, and ask that those recipients send it to as everyone they know.

There’s a good chance that your buyer will get one of those emails.

In a 2008 study, the Georgia Association of Realtors found that half of FSBO homes were sold to someone that the seller already knew, or that the buyer was referred to the seller by a mutual friend.

18


WebsitesThere are some great sites you can post information on – too many to write individual how-to guides here. Some sites, such as vFlyer and postlets will provide HTML code for you to post your flyer to ad sites like craigslist and backpage. If you post your listing on craigslist, you can re-post it every 48 hours to keep it near the top of the ads.zillow, hotpads and trulia all allow you post information about your home which is available for buyers to view.

Some sites provide traffic tracking statistics so you can see how many visitors have clicked on your ad.

Once you have an online ad, it might be worthwhile purchasing a domain name like www.123mystreet.com, which you can use on flyers. Simply sign up with a company like GoDaddy and redirect users who go to 123mystreet.com to the URL for one of your online ads.

19


ContractsAt some point you’ll get an offer. Most probably it will be less than you want, but you’re going to need to understand what it is you’re looking at.A contract has several key points to consider:

1. Selling price2. Closing date3. Request for closing costs4. Method of Financing

All of those things are important, but for you the most important thing is likely to be the dollar amount that you’re going to net. However, the method of financing needs your attention because it will tell you that the sale is contingent on the buyer obtaining financing with very specific terms. At the time of writing, the buyer is required to make a minimum down payment of 3.5% of the sale price, not including their share of closing costs; and that a seller can provide up to 6% of the sale price as a contribution towards buyer’s closing costs.

It’s normal practice for a seller to expect the buyer to be able to produce a loan approval letter with the offer, since as a seller you’ll want to be sure that the buyer has the ability to secure financing for the purchase.

20


ContractsA contract will generally include the following, though only the Purchase and Sale Agreement is the only required document:

a) Purchase and Sale Agreementb) Seller’s Property Disclosure, signed by the buyerc) Financing Contingencyd) FHA Loan Exhibit (if the buyer is obtaining an FHA Loan)e) Appraisal Contingencyf) Buyer Loan Pre-Approval Letter

21


NegotiationThe key to negotiation isn’t that you get all your own way, or that the other guy doesn’t get what he wants - any good negotiation will end with both parties feeling like they got most, if not all, of what they wanted.

Before you begin to negotiate you should know what the lowest amount you can accept is, and that if you don’t like the deal on the table, and the buyer isn’t working with you, you can end the negotiation. If you do end the negotiation, be aware that they buyer may not come back to you, and you may lose the deal for good.

Chances are, you’re going to be asked for more than you want to give away, but remember that both you are working towards selling a house you want to sell to a buyer who wants to buy it.

Finally, while you have years of great memories of living in your home, the buyer doesn’t. For them it’s just a purchase, the memories will come later; and if it’s not in the home you’re selling, it will be in a home someone else is selling. The buyer isn’t buying your memories, and you’re not selling them, so don’t take the negotiation process personally – it’s not, it’s business.

22


ClosingIn almost all cases, you’re going to be in the office of an attorney or title company.

If you recall from when you purchased the home you’re now about to sell, the bulk of the signing is done by the buyer – you’ll only have a few documents to add your signature to.

There may be a delay while the financing institution completes the wire transfer to the attorney, and then the attorney will issue checks.

Remember that if the buyer used a real estate agent you may have to pay a commission to them, usually that will be around 3%.

At the closing you’ll also be expected to turn over any keys, garage door openers, warranty paperwork, transferable bonds…and let’s face it, you’re not going to need it when you leave the closing office.

23


WHY USING A REALTOR® IS GOOD VALUE FOR MONEY

Service FSBO "FlatFee"dotcom Realtor

A FOR SALE sign in your yard

Average 3% payment to a realtor who finds a buyer for your home

Your listing on Atlanta's two multiple listing services, the first place realtors go to to find homes for their clients Your home prominently advertised on 20+ other websites including realtor.com, zillow, trulia, and craigslist Advertising to out-of-state buyers

The most photos on every website, plus a virtual tour on sites that allow them Professional Comparative Market Analysis to help you determine your home's market value

Access to up-to-the-minute facts about home sales in your neighborhood and city

A security lockbox to allow your home to be shown while you're at work or on vacation Professional flyers to market your home

A brochure box to put those flyers in

Targeted marketing to real estate professionals who are working with buyers interested in a home like yours right now Filtering of unqualified buyers so you don't waste your time showing your home to someone who can't buy it A skilled contract negotiator in your corner

Assistance with listing and contract paperwork, and an explanation of the closing process and costs Proactive advice about changes to the market, related legislation and everything that affects the saleability of your home Feeback from buyers about how desirable your home is, and how to make your property more attractive to buyers

24


Your Home Comp #1 Comp #2 Comp #3 Adjust

Price

Bedrooms $ 8,000 per bedroom

Bathrooms $ 5,000 per full bathroom

Lot Size $ 12,000 per full acre

Stories $ 5,000 per full story

Basement $ 15,000 for full finished basement

Adjustments Guide

This adjustment guide is just a guide. It’s not 100% accurate, but it does provide a reasonable rule of thumb for some popular features. The adjustment required will change with supply and demand – for example, if every home with a full basement was put on the market, the adjustment would decrease considerably.

25


ContactsA list of companies and websites referenced in this document.

Home Salesatlanta.craigslist.orgwww.hotpads.comwww.trulia.comwww.kijiji.comwww.zillow.comwww.georgiamls.com

StagingGeorgia Interior Solutions(678) [email protected]

OrganizationsGeorgia Association of Realtors(770) [email protected]

Georgia Real Estate Commission(404) 656-3916www.grec.state.ga.us

Marketingwww.vFlyer.comwww.postlets.com

This guide is copyright Duncan Connor. No portion of it may be reproduced without permission of the author, which will be freely given if you contact him. Look out for other books by Duncan Connor, which will be made available for download at http://publications.atlantalocalrealtor.com

26