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When I Think of Selling My House

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A big beautiful white for sale by owner house for sale
for sale by owner real estate sign and beautiful house.

When I think of selling my house the first thing I think about is equity. Equity is defined by one of the many dictionaries out there as “The value of mortgaged property after deductions of charges against it”. In other words, how much money you walk away with when selling your house after it is paid off.

Equity can be built in a couple of ways. One way you build equity is by paying down your mortgage. That’s like a savings account.

Another way one can build equity is time based. Most real estate appreciates over time. So if you buy a house and live there for 15 years all the payments you have made paying down your mortgage is equity and if your homes value has increased, which it likely has, that’s even better.

For example if you have lived in your house forever, unlikely, and have paid off the mortgage you get to keep it all. Yay for you.

If you bought your house last year and are selling because you decide you bought the wrong house, or whatever reason, you might not get anything. In fact you might have to pay to sell your house if you hired a real estate agent because you have to pay the agent. There is not likely to be a lot of equity in your house depending on how much you put down when you bought it.

How Much Money Do I Get

I have lived in my house for 11 years now. I negotiated a good price when I bought it, put down 16% and paid all of my own closing costs. Only putting down 16% means I had to pay PMI, or private mortgage insurance, for a few years so that cut into my equity somewhat.

My wife and I plan on leaving the area when we retire in…not sure yet how many years but hopefully not long. So the other day I was pondering what it will be like when I sell my own home. My own, I’ve sold lots of homes for lots of people over the years, but what about when I sell my own home.

So I have been paying the mortgage down for 11 years. Add that to the 16 % I put down and the rise in market values. That’s a nice chunk of equity. That would be added to our retirement account so it’s also a very important chunk of equity.

That chunk is as of today, if I sold my house, $47,000. We’re not selling today but if we were that would be our profit minus any expenses. The selling expenses are cheap, about $620 for the closing fee and title insurance. Unless I have to pay a Real estate agent. If I was going to pay a real estate agent to list it on the internet at today’s value it would cost me another, ready for it, $8400. That is a nice payday for someone to do something I can easily do myself.

It’s also something you can easily do yourself.

Yes, I Am A Real Estate Agent

Yes, I am a real estate agent and I know how to do everything that needs to be done. But, there are many brand new agents that are winging it just as I did when I was a new agent.

Two points to the fact that I am a real estate agent.

The first point is I know how easy it is to sell a house, in any kind of market, be it a buyers market or a sellers market. For anyone. That’s the big “secret” in the real estate industry we don’t want you to know.

The second point is I will not list my house on the mls. Most agents don’t. I’ll go straight to the online real estate portals such as Zillow, Trulia, Homes.com ect. That is where I’ll try and pick up a buyer without an agent. That will keep my profits at $8400

If a buyer comes to me with an agent that they have a contract with I may consider but I am for sure going to negotiate with that agent. I may offer them 2%, or 1.5%. The buyer will always know what I am doing so everything is in the open and disclosed. If the agent does not accept my deal then the buyer may lose a great house, due to his agent.

Yes, when I think of selling my house I think of profits. I don’t mind paying someone to help but I’ll pay them something within reason.

You can sell your house yourself too, and keep more of your profits.

Buyer Has A Real Estate Agent

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What do you do with your For Sale By Owner when the buyer has a real estate agent they want to work with? You actually have a multitude of choices. Remember, you are in control. That’s one of the reasons you decided to do a For Sale By Owner.

You can:

  1. Pay the agent his or her rate..
  2. Tell them thank you but no thank you you will wait for a buyer without an agent.
  3. Negotiate with the buyers agent.
  4. Separate the buyer from the agent.
Buyers agent shaking hands with their client outside of a house.
When your buyer has a real estate agent

Let’s go through these options one at a time. Keep in mind that the reason you’re selling your home yourself is to save money. Lots of money. Depending on your personality, time constraints and stubbornness will determine what’s in your best interest when your buyer has an agent.

Pay The Agent His or Her Rate

When your buyer has a real estate agent you can pay the agent his or her rate. In my state, Kansas, that is most likely 3% of the contract price. Otherwise it would be 6% if you were hiring a listing agent. The bonus to this option is the agent will do all the paperwork for you. You still save thousands of dollars on the listing side.

The agent will want to use their contracts so make sure you read and understand what it is you’re signing. Real estate contracts from real estate associations are designed to protect the real estate brokerage and absolve them from responsibility.

Beware the agent that tries and charge more or even double saying they have to “do all the work”. In my experience it is much easier to handle a real estate transaction when I don’t have to deal with another agent. When I handle the hole thing myself. In reality there’s really no more “work” involved for the buyers agent. Don’t let them fool you into thinking there is no matter how slick they talk.

Wait For Another Buyer

Tell them thank you but no thank you. This is exactly what it appears to be. You’re just not going to pay a real estate agent. In this case the potential buyer missed out on a great house because they hired a buyers agent.

There’s this thing in real estate called Agency. When a buyer is in an agency agreement it is their responsibility to pay the agent if you, the seller, doesn’t. At least in Kansas and most other states that’s how it works. The right thing to do for the agent would be to walk away and go find another client. Most of the time the real estate agent had nothing to do with the buyer finding your For Sale By Owner anyway.

Again, if you have prepared your home for market as we show you how to do and priced it right you will get lots of attention. So much that a buyer may be willing to pay their agent to get your house. So much that a buyer may be willing to fight to dump the agent to get your house.

I have been in this exact situation at times with a For Sale By Owner and simply walked away so my client could get their home. With a lot of these clients we still remain friends to this day and they send me referrals too!

If that makes me sound holier than thou I’m not. I’ve just always lived by the philosophy if you treat people right and fair you will get treated the same.

Negotiate When Buyer Has a Real Estate Agent

There is nothing that says you can’t negotiate with your buyers agent. Tell them you want to sell your house on your own but you’ll think about offering them 1.5% of the contract price. Or 2% or whatever you want to offer. They can see what a good job you’ve done getting ready, and that you won’t have any problem getting your home sold. Plus, once again, you can get the agent to do the work for you.

If you are going to negotiate do so with the buyer present. The agent will try and negotiate without the buyers knowledge, even though eventually he/she has to disclose it. They don’t want their client to know they aren’t getting their dream home because the agent isn’t willing to budge.

Separate the Buyer From the Agent

When your buyer has an agent try and separate the buyer from the agent. This is a little tricky and unless all the stars align might not even be possible. If there is way to have a conversation with your buyer without the agent present you may be able to work something out.

For instance in the past I have had people call me, from referrals, and ask me to help them find a house because they did not like their agent. Ethically I can’t do anything but advise them that if they don’t like their agent they need to break the contract, agency, that they have with that agent. Start by talking to the agent directly. If that doesn’t work talk to the agents broker. Ultimately If that still produces no desirable results call the real estate commision in your state and complain.

You can pass on that advice. If your home is as spectacular as it should be and your buyer has a real estate agent you can probably get them to drop the agent.

Sell Your Home Yourself

The real estate industry is in a great flux and changing rapidly. People are starting to figure out that real estate brokerages are expensive and just not that necessary anymore. Instead of being the caretakers of information, which is all publicly available now, they are switching to a service standard. We call it representation. A real estate agent simply represents.

If you need representation and you don’t have the time or inclination to sell your home yourself than hire an agent. I pay someone to mow my lawn because my time is worth more than if I were spending it mowing.

By following our detailed instruction we can show you how to sell your home yourself for the most money while at the same time saving thousands of dollars. It’s the thing agents should be doing for you to get top dollar and to often don’t.

How To Make The Best First Impression

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large brick home with nice front yard for a great first impression.

First impressions are everything. As potential buyers are approaching your house they are already forming opinions. Opinions that matter.  That first impression can make or break the sale. So how to make the best first impression?

A bad first impression is sometimes all it takes for a buyer to avoid looking inside a house altogether. I’ve found that many buyers do drive by’s before they decide whether or not to schedule a showing. If you can’t get showings scheduled you won’t sell your house. 

It starts on line, on the internet, where your potential buyers search for homes and that’s the first opportunity you have to wow them. The chance to entice them to get into their vehicles and drive by your For Sale By Owner.  If they like what they see the next step is to call their agent, or better yet, call you directly and avoid those hefty commissions.

We’ve talked about pictures before and we’ve talked about getting your house ready for market a lot. 

Take pictures on a bright day with the sun overhead or slightly to your back to avoid glare. Get the angle that best represents your home and gives it the largest appearance which is generally not a full head on photo. A slight angle will give the impression of a larger home. 

Here we come in with the camera closer to ground level and at a slight angle to more fill the area and make the home appear larger. Without wasting valuable space we can still fit all the exterior features in, like catching the edge of the 3rd car garage and showing the yard is fenced. Think of pictures not only as pretty things but also information.  Certainly the more information you can fit in the frame the better.

Suburban with yard that makes a great first impression

Make sure the yard is clean, neat, trimmed, mowed and beautiful. That includes bushes, trees and the grass. Make sure all walk ways are clear. There should never be bushes, trees or any other plant life obscuring the view from the street. Sometimes this means taking some bold steps if you’ve lived in your house for awhile and there is overgrown greenery. 

You may love your pink flamingos and your yard sports paraphernalia but your buyers may not. In fact best if you take down all personal yard ornaments and take them to your new house. Depersonalize the yard the same way you do the rest of the house. You never want to risk offending someone so best if everything is left neutral and un-opinionated.

Pink Flamingos that should be reomved from the yard to create good first impression

Buyers spend time in the entryway, at the front door so be sure to impress them.

As home shoppers are walking up to your home they get the first close up impression. Make sure it’s a good one. The sidewalks should be swept clean. In the winter make sure no ice is present.

Any furniture on the front porch should be clean and in good repair. If you smoke on your front porch never ever ever leave ashtrays out. Potted plants are a nice touch in the spring and summer. Maybe some colorful mums in the fall. 

If the front door needs painting, paint it. The door knob should look nice and function properly. There’s nothing worse than having a bunch of clients standing behind me while I struggle getting a front door open. Definitely not a good first impression. Clean out all the cobwebs, dirt and dust from around the front porch and entry area. If you really want to go all out power wash.

Just remember that first impressions are no joke. Often my clients look online and make lists of homes they want to see. Then they drive by and narrow down the list by what they see from the street. Don’t let your house be one of those that gets crossed off the list.

This is the same sort of information I give to clients during “listing presentations”. I give people a list of improvements they can make and things that can be done to bring in a higher price. Then they do them (hopefully). Why not just cut out the middleman and save yourself thousands of dollars.

Joel

DIY Real Estate

The Truth Behind the Success of FSBO’s

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Easily sell your home yourselfFor Sale By Owner, Try It

I am a licensed real estate agent in the state of Kansas. Personally I believe a homeowner can easily sell their home themselves, or sell their home FSBO (For Sale By Owner). What do you think? The real estate industry would have you believe it’s damn near impossible. The stats for successful for sale by owners according to the real industry are around 8%. That seems low. What is the truth behind the success of FSBO’s.

First, way back in 1981, before we had the internet in our homes, the percentage of successful FSBO’s was 21%. That’s very believable and I would expect that the number in 2018 would be even higher. But it’s lower? That doesn’t make any sense. It’s so much easier to sell a house these days. In fact, if priced right and properly prepared for market, homes are selling themselves. Literally!

What I mean by that is with all the real estate sites that are available for public use FSBO’s should be easier than ever to market, right? Well, they are, trust me on this one.

Consumers get online these days to look for homes themselves on sites like Zillow, Trulia, and homes.com just to name a few. Home sellers can go directly to these sites and market their homes themselves. In fact a lot of Realtors do just that trying to avoid paying commissions to other agents, go figure.

Home buyers are often shopping before they approach a real estate agent for assitance. Many of my clients prefer to look at homes themselves and then send them to me. Yes, I know it sounds backwards but it’s what’s happening. Consumers are shopping online for homes on their own. Real estate agents are useful for unlocking doors and filling out paperwork.

So where do these numbers about successful FSBO’s come from.

It’s actually a very slick play on semantics, and not dishonest. The industry grabs the numbers by only counting homes that have been sold by owners with absolutely no help or involvement from a real estate agent.

What I mean is…

  • Some FSBO’s end up using a buyers agent because the buyer had a contract or “agency agreement” with a brokerage. (More on that in a future post, and it’s not nice) Those sellers still sold the house themselves. They attracted a buyer, the buyer viewed the property, liked it and wrote an offer. Those sellers still saved thousands of dollars in commissions but in fact ended up having someone to do all the contract and closing work for half the price.
  • Sellers sometimes want to get their listing on the Multiple Listing Service (MLS) and there are services now that will do that for a few hundred dollars. Yes, the same thing you may pay another agent several thousand dollars for. The industry does not consider those FSBO’s. But who cares about semantics right? We care about saving money and putting it to better use.
  • What if you used a Realtor to help you price your house? You know, interview a Realtor, or two,  with the assumption that you might list with them so they give you a price analysis? Or what if you called up a Realtor and got some free advice? Would that be considered a true FSBO?  Again, who cares. It’s still a For Sale By Owner and you still saved thousands of dollars.

Those low numbers are thrown out there without an explanation for a reason. To scare you. To make you think twice. To stop you.

Don’t be fooled. It’s really not that difficult to sell a house once you know how.

Joel

p.s. If you have questions about the process you can join the discussion at  fb DIY Real Estate group

p.p.s.  For an in depth complete guide to learning how to sell your home yourself and get the most possible money click here!

Negotiating is More Than Just Price-Part 2

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Last post we went over a couple other negotiating points that you have to pay some attention to when selling your house yourself. Those were the type of financing your buyer is using and the ever important earnest money. This post considers closing date, possession and concessions.

Negotiating
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1.Closing date

Closing date is generally up to the buyer due to their lender. When the lender is ready you can close. 30 days is a common time, sometimes 45 days for more complicated loans like VA’s or some FHA special programs.

If you’re buying a house after your sale you might want to try negotiating a 45 or 60 day contract on your property and a 30 day on your new house. That way you have some time to find a house so they both can close on the same day. More often than not your house has to close before you can close on your new house, so the existing mortgage can be paid off.

It’s always good to have a backup plan, especially in a active sellers’ market, in case you can’t find a new home in the allotted time. A backup plan as in a place to live while you look for your new home.

You also will be negotiating when the buyer is taking possession, the day of closing or sometime after. At closing means as soon as the papers are signed the buyer can move in. Which also means that you must be out.

 

     2. Concessions
Concessions are when the buyer asks for something. The most common concession is the seller paying the buyers closing costs or a portion thereof for him/her. Other than the title insurance and the closing fee the buyers closing costs and prepaids are origination fees, filing fees, underwriting fees, appraisal fees among others.

Prepaids are part of those closing costs. Prepaids are so much taxes and insurance put into the buyers escrow account by the bank.

The buyer may be negotiating for furniture or appliances or other personal items.

You may not have to deal with any of that if your house is in the pristine condition it should be before putting it on the market. Look for that full price, or better, offer that comes with proper preparation of the property.

Remember it’s not just about price when negotiating a contract. There are other factors that matter to you also.

Negotiating is More Than Just Price-Part 1

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   Negotiating is more than simply agreeing on a price. There are other considerations. When negotiating an offer, the price is more than likely the one thing everyone is focused on. The other points are of some importance too so let’s touch on those.

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  1. Financing

The source of financing is something that matters too. Who, or what company or bank, is financing your buyers purchase. Where the money is coming from is something I always pay attention to. If it’s a mortgage company or bank I have had problems with in the past I’ll let my client know, along with my opinion.

You want a reputable company or bank. At the very least one you’ve heard of or can research. Check any comments and/or reviews you can find online.

You’re allowed to call the lender and question them. They’re not allowed to give you personal information about the buyer but you can ask. You’ll get a sense or a feeling from speaking with the loan officer.

Ask:

  • Is this a solid buyer?
  • Do you foresee any problems?
  • Can you give me any guarantees this loan will go through?

When you go into contract your house gets pulled off the market. You want to be sure, or as sure as you can, that your deal is going to close. That your buyer is going to make it to the closing table.

  1. Earnest Money

Earnest money is a “good faith” deposit not to be confused with a down payment. At closing the earnest money will be applied to the buyers down payment or closing costs. What is the amount of earnest money you will accept? The more the better. Earnest money shows the buyer is serious and he/she is not going to back out. If they do for no good reason they lose the earnest money and the seller keeps it.

Around here we generally ask for $500-$1000. Our average price point in Wichita KS in 2018 is $140,000. I would recommend as a FSBO to ask for 1-3 percent of the contract price.

Most contracts have contingencies built in how buyers can get earnest back . The definition of contingency is occurring or existing only if or subject to change. A contract may be contingent on the buyer successfully obtaining financing or inspections. These are the potential reasons a buyer may have earnest money refunded.

  • Financing falls through.
  • Parties can not come to agreement over requested repairs as a result of a home inspection.
  • Death in immediate family.
  • House doesn’t appraise at contract price.
  • Job loss.

All state contracts are different and have their own rules and clauses about contingencies. Be sure and understand yours. In a strong seller’s market it may be prudent to write earnest money non-refundable into the contract. A buyer willing to sign a contract like that is confident about his/her ability to obtain financing.

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