FSBO Archives

4 Ways To Sell Your House

A house for sale with a dog in the front yard

When it comes time to sell you house you have options. Some more expensive than others and an actual free option. There are actually 4 ways to sell your house. I’m going to discuss those different ways here and the cons and pros of each.

Using A Real Estate Agent/Realtor To Sell Your House

Hiring a real estate broker and using one of their agents is by far the most popular and well known way to sell your house. Often the first thing that comes to a potential home sellers mind is hiring a Realtor. Hiring a Realtor is effective and will get a home sold but it’s also one of the most expensive.

If one does go the Realtor route make sure you shop around. With all of the real estate market and listing information free to the public, experience isn’t as important as it used to be. Commissions are important because that’s what eats up your profits. You can find agents that will list your house for less than the usual 6%. Keep in mind when interviewing agents that we are trained to convince you that we are worth it.

Whether or not you hire a real estate agent or not has to do with your personal opportunity cost. According to Zillow the average home price in the U.S. in August of 2021 is $304,000. Assuming you have an average priced home a 6% commission will cost you $18,240. Is the time it will take you to sell your house worth more than $18,240? If so then you should consider hiring someone to sell your house for you.

Pros

The pros to hiring a real estate agent are an agent will do most of the paperwork for you. An agent will help you to price your house and let you know what you should do to get your house ready to sell. Realtors guide you through the process and help to schedule inspections, appraisals and closings.

Cons

The cons to hiring a real estate agent are, of course, the huge expense.

While not so much a con, but a realization, you should know an agent will let you know what you need to do to get your home ready to sell but it’s still up to you to do it. That means repairs, updates, cleaning and anything else that needs to be done is still on you.

An Ibuyer Will Buy Your House

Ibuyer companies to help sell your houase

An Ibuyer will buy your house directly from you outright avoiding the anxiety of listing. With an Ibuyer you avoid opening your home to strangers for showings, unknown repairs during the inspection process, waiting for the home appraisal and fretting over your buyers financing. No need to sell your house on the open market when using an Ibuyer

Don’t mistake these for the many flippers that are working the real estate market. Ibuyers are not flippers. You see those signs on the side of the road that say we buy houses. It’s not those people. An Ibuyer will give you close to market value for your house, maybe a little less than you could sell on the open market. There is a service fee that averages around 5%.

An Ibuyer will make you an offer. If you accept there will be an inspection of the property and then a final offer including any repairs that the Ibuyer deems necessary. Sometimes Ibuyer’s can be a little more expensive than a real estate agent after repairs and everything is said and done but there’s no doubt they are super convenient.

Ibuyers are starting to gain traction in major US cities. Home sellers are attracted to the stress free aspect of selling a home using an Ibuyer.

Pros

The pros to using an Ibuyer are the convenience, speed and the assurance of the final price without the anxiety of waiting for offers as you sell your house.

Cons

The cons to using Ibuyers, again, is the cost. Ibuyers can be expensive and you may get less money for your house.

Wholesalers Will Buy Your House (We Buy Houses)

Wholesalers are another group that will buy your house outright. The difference between wholesalers and Ibuyers is wholesalers want to buy your house for a lot less than what it is worth. Their goal is to buy a house as cheap as they can get it and resale it, or “flip” it at a significantly higher price.

Wholesalers mostly look for homeowners that are in distress such as being close to foreclosure or underwater. Sometimes the more unscrupulous sort will prey on older people, new widows or widowers or folks that are in desperate financial stress.

When dealing with wholesalers make sure you fully understand the contract you’re signing and the implications it can have on you in the future. Many times the homes are “bought” and the house is still in your name but sold or rented to someone else. Wholesalers make your mortgage payment while collecting the difference as profit. The clause in the contract can be left open so the wholesaler has no deadline to get the mortgage paid off and taken out of your name. It’s like a free ride for them but ties up your credit.

If you can’t sell your house because your underwater consider renting it out and using the rent to pay down the mortgage until you can pay it off.

Pros

Using a wholesaler will get your home sold fast. If your underwater or in financial stress a wholesaler can really be a big help.

Cons

Some wholesalers can be unscrupulous and not fully explain the implications of the process. Getting involved with this type of home sale can tie up your credit for years. It is highly recommended that you hire an attorney to look over your contract and explain it to you.

The wholesalers goal is to buy your house as cheaply as possible. Make sure you know what your house is actually worth.

Sell Your House Yourself

For sale by owner sign in front of a house

By far the best option when it come time to sell your house is to do it yourself. That’s where you’ll make the most money with the least expense generating the most profit. When it comes to disrupting the real estate industry that is what’ll do it. When regular people figure out how easy it is to sell a house.

Real estate agents know how easy it is. That’s why there are so many of us. Easy money.

New agents aren’t taught how to sell a house. Selling a house is easy. Mostly what we learn in real estate school is real estate law. Real estate coaches and brokers teach us how to fill out paperwork and to convince you that it’s difficult to sell a house and why you need us.

Most people shopping for homes find them on their own on sites like Zillow. When you sell your house yourself and market it on Zillow home shoppers will find it and call you directly.

Some home sellers think that the MLS is the way to go. By hiring a real estate agent you can get your house on the MLS but there is also a less expensive way. Hire a flat fee service. A flat fee service will list your home on the mls for a fraction of the cost that a listing agent will charge you. Keep in mind that using a flat fee service means you are willing to pay a buyers agent, usually 3% of the contract price unless you can negotiate a better deal.

Pros

When you sell your house yourself you get to keep all your money. It’s the most profitable way.

Cons

When you sell your house yourself you have to do all the work. While it’s not hard to sell a house it can be time consuming.

Why You Don’t Need the MLS To Sell Your House

by Joel Weihe

The multiple listing service, or MLS, is the place where real estate brokerages cooperate and put their houses that they’re selling so they’re all in one place. That’s where the brokerages agents go to list the houses that they’re selling or to look for homes for the buyers that they’re representing. But do you need the MLS if your selling your house?

The short answer is no. You don’t need the MLS.

In this post I’m going to talk about the more complicated answer. Why you don’t need the MLS to sell your house and different ways you can use the MLS if you do feel it’s necessary.

Full disclosure: I am a real estate agent in the state of Kansas and have been since two since 2009. I do use the MLS to put the homes that I’m selling on. I’m also not currently selling my house myself. When it is time to sell my house I will not post it on the MLS because I don’t want to pay a buyers real estate agent.

The houses for sale that I see on the MLS, you can actually see on 3^rd party real estate websites like Zillow, Realtor.com and agent corporate websites. Home buyers have the same access to viewing real estate listings as I do.

The difference between realtor.com, the agent websites and Zillow, is Zillow will post for sale by owners while the other two will not. So buyers have more homes for sale to choose from when browsing Zillow. In all honesty you will get more exposure putting your house on the MLS because it will syndicate out to Realtor.com and the agent websites.

Why Use Zillow?

Zillow.com is the most popular and widely used real estate website. They get about 36 million visitors a month. 36 million! That’s a lot of eyes.

As mentioned you won’t get as much exposure on Zillow alone simply because the mls distributes your listing to more websites. Keep in mind though Zillow is the most popular place where home buyers search for homes. Zillow is a huge multi-billion dollar company that incorporates other businesses under it’s umbrella. They have a mortgage business, a showing service and an Ibuyer department. Zillow will buy your house directly from you. Zillow an all encompassing one stop shop real estate public company.

Most of my clients end up finding their home themselves on Zillow and simply forward that information to me. Then I set up showings for them through the sellers’ agent. Granted the agents will take care of paperwork for you but at what cost? That transaction could easily have happened without real estate agents in the middle.

Zillow.com will let you list your house on there popular website for free as a for sale by owner. I’ll show you how to do that right here. That is the cheapest way to sell your house where you’ll find the biggest return. You’ll get to keep the most of your money that way.

MLS Options

If you feel like you have to put your house on the MLS, you can hire me or another real estate agent. There’s literally millions of us around the country and we’ll charge you anywhere from 4% to 7% of the contract price to put your house on the MLS. We only get paid if it sells but what a nice paycheck it is.

Housing prices have risen dramatically in the past year. It’s going to cost you a bundle more than it would have just a year ago. It’s really expensive to list your house with an agent, but it’s more than likely that it will sell a little quicker than if you sell it on your own.

A realtor will do just about everything for you. They’ll help you to price your house. A real agent will let you know what you need to do to get your home ready for market (and then you have to do it). Sometimes staging is a benefit and your realtor will get that done for you. The most useful thing a real estate agent does is to guide you through the process and everything involved in such. Everything from choosing an offer once your house is on the market to getting that contract to the closing table.

The other option to get your house on the MLS is to use a flat fee MLS service. These are companies that will list your house for a fraction of the cost that a real estate agent charges. If you use a flat fee service you get that extra exposure for a lot less money. By using a flat fee service you generally have to do all the work an agent does yourself. You’ll have to learn to price your house and how to get it ready for market.

You Choose The Method and The Returns

You can list your house on the MLS by paying me or paying a flat fee service. If that doesn’t appeal to your financial sense of well being list your house for free on Zillow. Sell it yourself saving those real estate commissions.

You Choose.

What A Pre-Approval Letter Should Contain

by Joel Weihe

Meeting with a mortgage lender to get a pre-approval letter.

What should your buyer’s pre-approval letter contain? A letter from a lender should always accompany an offer from a potential buyer. How that pre-approval reads is important. It can be the difference between your transaction making it to the closing table, or not.

What Is A Pre-Approval Letter

What exactly is a “pre-approval” letter? It’s a letter from the bank or a mortgage lender that states the bank will lend a buyer the money to buy a house. The reason it’s pre is because the lender still needs to verify that the buyer is able to pay the money back over the life of the mortgage. That verification process happens in underwriting after the buyer is in contract.

The lender uses some upfront information to determine if the buyer is a risk worth taking. That information usually consists of but is not limited to;

A qualifying credit score.
How much money the borrower makes.
How much debt the borrower carries.

If all that checks out then the loan officer will issue a pre-approval letter. The buyer submits that letter along with an offer for your house.

Types Of Pre-Approval Letters

So you have an offer on your For Sale By Owner accompanied by a pre-approval letter. There’s something very important you need to know about that letter from the bank. There are two different kinds. Here we are going to discuss those 2 different types of letters and what you need to look out for.

Unverified Pre-Approval Letter

One way a lender may gather information on a potential borrower is to pull credit and ask a series of questions. Those questions are designed to establish the borrowers ability to be able to pay back the loan. Some loan officers may issue an approval based on those answers without verifying the information given.

That’s important! Sometimes that’s called a pre-qualification instead of an actual pre-approval. Not an actuall approval. In a case like that the lenders letter will read something like;

Financing is contingent on buyer submitting

Most recent paystubs.
Most recent bank statement, or two.
Last two years W-2’s
Most recent tax return

Here’s an example of a not so great pre-approval letter.

That means that the lender has taken the borrower at his word about income and after they are in contract verifies the information. The problem with that is if the buyer has given information the lender can’t use, overtime is a common on. Sometimes the the buyer simply isn’t truthful. When that happens your deal falls apart.

Verified Pre-Approval Letter

A verified pre-approval letter, and the type you want, is the opposite. The lender has done all the due diligence before issuing a letter. The lender verifies with documentation all of the buyers income and debt. In short he makes sure the buyers income and debt answers were accurate.

There will still be an underwriting process to further secure the buyers ability to repay the loan but that is mostly a formality.

Which Do You want?

With the income and debt verified upfront there is a much better chance of your transaction making it to the closing table. You want the pre-approval letter that the lender has taken the time to verify and document the buyers ability to successfully buy your house.

Make sure your buyers letter is not contingent on verification of income and debt.

Happy Selling!!

Should You Sell Your House Yourself?

by Joel Weihe

Handing over cash for house in front of beautiful new home.

When it comes time to sell your house you may wonder should you sell your house yourself? By selling your house yourself you’ll save having to pay a listing agent and possibly no agent at all. That could be a lot of money.

Sounds like an easy answer, huh. Not so fast.

Opportunity Cost

There’s a thing in economics called opportunity cost. Opportunity cost is the potential loss or gain you get from choosing one alternative over another. By doing one activity you’re giving up doing something else that you could be doing. You’re giving up an opportunity.

Specifically, the most highly valued opportunity or alternative forfeited when a choice is made therefore every time you make a choice you incur an opportunity cost.

Economists use it to figure out what activity is the most profitable. So what does the concept of opportunity cost mean to a home seller? It can help you decide should you sell your house yourself?

The average home price in America is $260,000. The average real estate commission is six percent of that, which would be $15,600. That sounds like a lot of money and to most people it is. To others it might not be. It’s all relative and depends on what one’s time is actually worth.

How To Decide If You Should

Selling your house yourself and not having to pay a real estate agent saves you money. If you only make $75,000 a year, it may be more profitable for you to sell your house yourself. $75,000 a year works out to $6,250 a month before taxes. If you own an average priced house selling your house yourself would be like earning a little more than 2 months of work. That’s substantial.

But say you make, like, three million dollars a year. That’s $250,000 a month. It might be more profitable for you to pay somebody to sell your house because you can use that time to make more money doing other things that are more profitable.

Of course, if you make 3 million dollars a year you may own a more expensive than average home but for comparison sake we’ll use that average number, $260,000. To get the point across.

What if you own your own business? And you make millions. Again, it would probably be more profitable for you to hire someone to sell your house for you because your time is worth more money than you would save.

When deciding if you should sell your house yourself you incur opportunity cost. Your giving up one thing to do another.

It all comes down to how much money you put in your pocket. For most of us average people? That’s selling your house yourself and saving thousands of dollars in real estate commissions.

Where Does A FSBO Get a Real Estate Purchase Contract

by Joel Weihe

happy young couple Counting the money saved by selling their house themsives.

The big question when selling your house yourself is where does a FSBO get a real estate purchase contract? Where do you get the paperwork?

Paperwork. A pain in the ass. Gets in the way of everything. But always necessary. If you could sell your house like you sell a car…on Craigslist, that would be nice. It’s actually almost that easy.

Real Estate Investment?

So I just got back from showing an investor a house and he asked me, would this be a good investment?

And I said, well, if you live there a while to build some equity and you sell it yourself, it could be a good investment.

He asks me,”sell it myself, what do you mean?” “What I mean is if you sell your house yourself, without hiring a real estate agent, it could be a good investment because you’ll keep your money instead of giving it away.”

Have you ever thought about selling a house yourself, I asked him?

And he told me, like most people do, I would not know the first thing about all the real estate purchase contract and paperwork.

Well, two things.

Paperwork & The Purchase Contract

First, there’s a lot more paperwork involved when you hire a real estate agent. Real estate agents need a lot of paperwork to cover their ass. Secondly, when you hire a real estate agent, that’s what eats deep into your profits. That makes the purchase a not so great investment.

The paperwork is not that big of a deal.

Filling out the paperwork is not that tough. When I sold my first house as a real estate agent, nobody trained me, nobody showed me what to do and there was no one there to teach me how to fill out the paperwork.

I got the contract, read it, filled in the blanks and I figured it out. Sold my first house just like that. Granted I had access to all the real estate purchase contracts and paperwork. I am a Realtor so that made it a little more convenient for me. Today all that is available to consumers online and easily accessible. The point is do not let the paperwork scare you. You can find real estate purchase contracts drawn up by attorneys that are amazingly simple to use. Like color by numbers. They’re sold all over the internet.

Here’s a link here, for example, where you can buy a state specific real estate package including purchase contract and any required disclosures. There are others, just google it. Most title companies or escrow offices have some sort of contract you can use too. Personally, I would recommend spending a little money and getting a state specific real estate purchase contract with all the legalese taken care of.

FSBO

The rest of it leading up to a contract? Getting your house ready to sell, pricing your house correctly, marketing your for sale by owner and what to do once you find a buyer. I can show you all of it. You can sort through my blog posts or YouTube videos or you can get it all packaged up in order of steps.

Either way you and your family will be incredibly happy with all the money you’ll save by selling your house yourself.