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FSBO Tip – Don’t Do It

My Number one FSBO Tip? Don’t sell it yourself! A “FSBO,” or house “for sale by owner” can sell fast, and for as much as it would have if listed with a real estate agent. Sometimes – but not normally. Consider the following ten points.

 1. Buyers work with agents. Most look at MLS listings. Sell it yourself, and they won’t see or hear about your home. How do you find that “right” buyer or get top dollar when you’re invisible to most of the market?

 2. Your FSBO will get lower offers. Naturally, the buyer thinks you’ll take less because you’re saving the commission! Save a $10,000 commission, get $10,000 less – where’s the advantage in that?

 3. Advertising is expensive. The costs the real estate office normally pays are yours if you sell it yourself. How much could you spend on ads if it takes a year to sell?    4. They have the resources. And you don’t. Agents have books of sold properties to look at, for example, to determine the best price for your home. You can dig through county records, but you do have to value your time too, right?

 5. They know the market. What’s the target market for your house? Young couples, retirees? What features do they want? You should know these things before you write your ads. An experienced real estate salesperson will know.

 6. They know the laws. What about written disclosures, and who pays for the real estate transfer tax? When you sell it yourself you don’t get to ignore the laws.

 7. Are you a good salesperson? Can you develop rapport and properly answer objections? Could your defensiveness scare off a buyer who criticizes your home? Think back on your own purchases, and you’ll realize that a good salesperson makes a difference.

 8. Paperwork. Will you help the buyer properly fill out an offer to purchase? An agent would. Do you have the other closing documents ready?

 9. Agents negotiate for you. When did you last learn a new negotiating technique? Can you counter-offer without scaring off a buyer? A good salesperson is trained in these skills.

 10. You may not save anything. The documents, newspaper advertising, signs for the yard – it’s all your expense when you sell it yourself. After your hard work, you may get low offers and negotiate poorly. Honestly, sellers often net less money from the sale when they try to save the commission.

Most “FSBO” sellers eventually turn to a real estate agent for help. You could learn the things an agent does, but is it worth it to spend all that time and maybe not even save any money? Don’t sell it yourself unless you really know what you’re doing. That’s my number one FSBO tip.


For Sale By Owner: Pre-qualifying A Buyer

A big issue and pressing question for a lot of For Sale By Owner sellers is how to determine if a potential buyer can afford to purchase the home for sale. This situation is known as pre-qualifying a buyer. At first glance, this may seem like a complicated process and a complex dilemma but in actuality it is relatively simple and involves crunching a few numbers in some basic mathematic equations.


It is important to determine the meaning of some terms that are involved in this process. The first term to understand is the acronym PITI. This stands for Principle, Interest, Taxes, and Insurance. This is a figure that represents the total cost, monthly, of the mortgage payment including principal and interest as well as the monthly cost of property taxes and homeowners insurance. The second term is Ratio. This is a number that most banks use in order to determine how much of a buyer’s monthly gross income they can afford to spend on PITI. The most commonly used ratio is twenty-eight per cent. This ratio is determined without considering any other debts such as credit cards or car payments. Sometimes this ratio is referred to as the front-end ratio. When other monthly debt is taken into consideration, a ratio of thirty-six to forty per cent is acceptable. This is called the back-end ratio.


The calculations are as follows:  the front-end ratio is determined by dividing the PITI by the gross monthly income. The back end ratio is determined by dividing the PITI combined with the debt, by the gross monthly income. Four things are needed in order to determine the PITI. The sales price, the mortgage amount, annual taxes, and annual hazard insurance. From the sales price you must subtract the down payment in order to determine how much is needed from your bank.


The mortgage amount is generally the sales price minus the down payment. To determine the principal and interest portion of the payment you must use a mortgage payment calculator and input the loan amount, the interest rate, and the term of the loan in years. Mortgage calculator websites are available and can be found without much difficulty. Annual taxes are divided by twelve in order to determine the monthly property tax payment. The annual hazard insurance must be divided by twelve in order to come up with the monthly property insurance payment.


All of these terms and figures seem daunting, but once put into practice, things become easier and more self-explanatory. This is the most complex portion of pre-qualifying your buyer. Other requirements include the standard credit check and job history check. A good credit rating as well as at least two years of consecutive employment are usually necessary in order to get the best terms for a mortgage and to get the lowest interest rate possible.


It is not as difficult as it sounds in order to pre-qualify a buyer. This can usually be determined by a simple conversation where figures are discussed. With a small amount of due diligence, this process can be much simpler than it sounds and a profitable transaction can be completed.

Why You Might Not Want to Sell FSBO

Selling your home for sale by owner seems like an excellent idea.  You can do so much more with a few thousand dollars than pay it to a real estate agent for commission.  Even though saving money is a good reason to sell your home for sale by owner, the money savings might not be worth the work involved with selling your home.  This is especially true if you have to lower your asking price as many for sale by owner sellers end up doing.


When you sell your home for sale by owner, you take on all the responsibilities real estate agent would normally handle.  This includes marketing the home, fielding phone calls from potential buyers, having open houses, making the negotiations, and closing the deal.  If these steps were as easy as they might seem there would be more real estate agents.


Consider that a real estate agent’s only job is to sell real estate.  The agent doesn’t have an emotional attachment to the home.  He (or she) is experienced in juggling multiple priorities and can quickly determine what a buyer is looking for in a home.  In many cases, buyers feel more comfortable working with a real estate agent because they feel freer to voice their true opinions on the home than they would with the home owner.


Many for sale by owner sellers are not able to show the home to potential buyers in an objective manner.  Often the seller skews the home showing to his own point of view, talking about experiences that he and his family have had in the home.  This can make it difficult for the buyer to truly get a feel for what it would be like for them to live in the home.


Pricing the home is vital to the sale of the home.  A for sale by owner seller with no prior experience in setting home prices might end up setting a price that is too high.  Often homeowners have unrealistic expectations of how much their home is worth.  This expectation stems from emotional ties to the house.  A real estate agent, who might work with several houses a day, is better able to look at the home objectively and set a succesful selling price.


For sale by owner sellers often lack the negotiation skills necessary to ensure that they are getting a good deal from the sale of the home.  If the buyer has an experienced real estate agent, it could be difficult for the seller to negotiate a favorable deal.  This is the reason that many for sale by owner sellers end up walking away with a lower price on the home than they initially expected.


Buyers have schedules just like sellers do.  Selling for sale by owner put the seller in a position where he must schedule his day around showing the home to prospective buyers, some of which might not even show up.  This can end up being extremely frustrating for the for sale by owner seller.

For Sale By Owner Check List

Many people believe that in order to get the best price for their home they need to sell it themselves. Why pay thousands of dollars to a broker for a job that they can do themselves? Even though close to 25 percent of the homes sold last year were sales by owner, at least half said they would hire a professional the next time around.

This is not to say you cannot complete a successful sale without a professional, but a home owner needs to understand the risks and be as organized and as knowledgeable about the sales process as any agent. Here are some of the main points to consider before you make your decision to fly solo:

Property Value

Realistic pricing of your home is crucial to the successful sale of your property. If it’s priced too low, you could potentially lose money. If it’s price too high, you may also lose money due to accumulated costs from the home remaining on the market for an extended length of time. Two years ago, when I sold my last home, there was a sale by owner in the same neighborhood. The property was priced much higher than it was worth, and last I heard, the place was still for sale.

Determining the value of your home involves an in depth understanding of your market area. You can begin by doing comparative studies of similar properties that are for sale or that have sold recently in your area. It’s probably a good idea to hire an appraiser to give you an accurate market value.


A good realtor will advertise your home on their own web site, the MLS web site, in print, as well as through word of mouth. You have to compete with this strategy in order to effectively promote your property. Your home needs to stand out amongst all those realtor listings and the longer it remains for sale, the more it will cost you in marketing.

A good place to start is with one of the numerous online ‘sale by owner’ type sites that offer reasonable advertising packages. You may also want to promote a cash incentive for a sale initiated by a realtor; otherwise you may experience some sparse open houses.


One of the key contributors to a home remaining on the market longer than necessary is the owner’s lack of commitment to show the home regularly, and this includes organizing and promoting open houses. A certain amount of time needs to be dedicated each day to selling your home.

Dealing With the Customers

One thing realtors do very effectively is filter out the serious buyers from the window shoppers or lowballers. You will have to learn how to deal with these people and not fall for an offer that you’ll regret down the road.

Providing useful information to the potential buyer will lend to your credibility. A realtor is always waiting in the wings to field questions on financing options, costs of home repairs related to the purchase, recommendations for house inspectors or laws.

Knowledge of the Legal Process

Many closings have fallen apart due to inaccurate or incomplete paperwork. Have the necessary legal documents ready and know the process inside out. Any financial incentives, or inclusions need to be documented, signed and dated; verbal agreements don’t count.

If this all sounds like a lot to think about, it is. Don’t worry, many successful sale by owner transactions are completed every year, by home owners who took the time to educate themselves on the process and details of an effective property sale.

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Meet the Professionals

Get familiar with any inspectors, lawyers or title reps involved in your sale. You don’t want a delay in process because you’ve chosen the wrong people to deal with.