Should You be a For-Sale-By-Owner?

Selling real estate is a little like going fishing. You cast out your bait. Sometimes you get a nibble. Sometimes you get a bite. Once in a great while, you land a beauty. But, more often than not, you swat mosquitoes, bake in the sun or freeze your buns off; try to convince yourself that you don't have to go potty; wish you'd brought more sandwiches - and what in the world are you doing sitting in the middle of the lake anyway??

The game of real estate is a lot like playing the slots in Vegas, too. You can plug a lot of money in before you admit that the odds are really stacked against you. Consider the current interest rates. Consider the current market conditions. Consider how many homes like yours are on the market. Consider the current lending practices and conditions. Consider how much actual knowledge you have regarding the process. Selling FSBO is definitely possible. Hitting a jackpot in Vegas is definitely possible... if you are lucky - and if you know enough about the process.

The last time I was in Las Vegas, I watched with wonder as an elderly, oriental gentleman pulled the arm on a nearby slot machine. He won $1600. I didn't get to ask him how many coins he had invested to get the lucky pull. Some people are lucky in gambling. Most aren't. It can be expensive. And, when we get on the plane for 3 or 4 days, heading off for our weekend to try our luck, we are well aware that the odds are against us - and that there is a very good reason why the casinos have such beautiful columns and marble floors! Personally - I paid for a few of those marble columns myself over the years.

I also have a lot of money invested in fishing equipment. I could buy the fish cheaper, but that's not the point. The point is I want to do it. I want to try. And, if I'm not successful and go home empty-handed from my fishing expedition, I can always hit the grocery store on my way home or stop at the local pub for a fish fry.

And - you want to try your hand at selling your real property yourself.

• RULE NUMBER ONE: Learn as much as you can about the process; the pitfalls and the pinnacles. Elsewhere on this web site are several reports that can assist you in your endeavor.
• RULE NUMBER TWO: Don't try to do it totally on your own. Go to the professionals who can assist you; namely an attorney who specializes in real estate transactions. Use this web site to guide you and an attorney to advise you.
• RULE NUMBER THREE: Refer to both rule #1 and rule #2.

For starters - consider the buyer's ability to subtract.
Why do sellers try to sell a home themselves?
TO SAVE THE COMMISSION.

Why do buyers want to buy a For Sale By Owner?
TO SAVE THE COMMISSION. Both sides can't win.

Also consider is the buyer's need for help. Let's, for a minute, make believe that you want to buy a microwave. You could go to a specialty store or to the nearest discount appliance store. At those stores it is assumed that you will pay market value for the microwave. The specialty shop's price may be higher, but the service should be good if you have a problem. They may even deliver and set it up for you. The discount store saves you money, but you sacrifice service. If something goes wrong you will have to load the thing into your trunk, take it back, and wait a few weeks while they sent it out for repair.

But, before you head out to the stores, you decide to look through the classified ads for a couple of weeks to see if you can get a bargain. You check out the rummage sale and the appliances classifieds. And you head out in search of a microwave that is For Sale By Owner. You don't intend to pay market value for the microwave. Even if it is brand new, why should you?

You/the buyer do not have the protection of the store's return policy. You have no professional helping you decide which product will best suit your needs. If you need financing, there is no one to help you find the best finance package. And, what about service if something goes wrong after the sale?

When called to the home of a For Sale By Owner, I often hear, "We got a lot of calls, but nobody made us any offers. Half the time they didn't even show up. And, when they did, we found out that most of them didn't have any money."

Like it or not, that is the nature of the beast. Statistics have proven that less than 10 percent of the people who call about a real estate ad ever buy anything. And, it can take that precious 10 percent a long time before they do buy. (My record is five years from first call to the offer to purchase.) And, of those "less that 10 percent," almost NONE of them buy what they called about in the first place. You, as a For Sale By Owner, have ONE property to sell.

The real estate professional, on the other hand, will listen to the buyer, find out what they are looking for; find out how much they are able to spend; access the market listings in the area and proceed to match the good buyer with the right property. Since statistics show that 85-90% of the available homes are listed with the real estate brokerages, chances are the buyer will find a home listed within the professional REALTOR® network called the Multiple Listing Service.

It is possible that the buyer will choose a For Sale By Owner property. The odds are, however, stacked in favor of the professional network. Are you well versed in zoning requirements, designated wetland requirements, shoreland regulations, environmental corridor limitations, well-abandonment procedures, non-conforming property requirements, proper registration of storage tanks, DILHR rules for non-owner occupied properties, land division requirements, federal disclosure standards... ? If your water test UNSAFE, can you explain it to the buyer without scaring the "heck" out of them? When the appraiser calls for more comps and compensating factors, do you know how to help? When the buyer chooses a loan officer/lender, do you know how to get past the bumps. Do you know how to find out if the buyer qualifies for the loan they are applying for? Does your property meet the requirements of the type of loan the buyer is seeking? Do you know how to write the Offer to Purchase properly with the right protections addressed? Go to the report: The Offer to purchase from the Seller's Perspective, on this web site.

The point is: Getting the Offer to Purchase signed can be the easy part. Getting it to closing can be the challenge. A proper beginning usually leads to a successful closing. And most importantly; you have done this on your own because you want to save money. Right? To do that successfully you need to write down your bottom-line+ goals and you need to set a specific time period that you intend to try selling on your own.

As surely as your financial advisor makes you more money that he costs you; as surely as your tax preparer likely saves you more money than he costs you; just as surely - there are times the real estate professional can be free. Skill in negotiation, knowledge of comparable properties, emotional detachment, training in communication skills, mediation capabilities, and expertise in pricing are just a few of the ways the successful real estate agent can put more dollars into the seller's pocket than they take out. Example after example could be told.

One will suffice:
I went out on a listing appointment. Seller was moving to northern Wisconsin. They told me they want to list at $225,000. I had comparables and market data that showed the property should sell at $235,000. They assured me they were going to list the house with me, but they wanted to be certain they could get it sold according to their time frame. After about two hours of discussion, I finally asked if they would list it at my number for two weeks. They agreed that the two weeks would not make a substantial difference. We listed it at $234,900. A buyer who had been watching MLS called immediately. I also had other inquiry calls. The first buyer wrote $2000 over to be sure they got the house. Four other offers were written. Two were over asking and two were at asking. (The market, at that time, was a seller's market.) The home closed for $236,900. The seller wanted $225,000. I was almost free.

If you have the time, the money, the knowledge, the experience, and the fortitude, then certainly try to sell your property by yourself. Try for a specified period of time. Don't use up the best market time while you try to save a few dollars. Your ad costs, your property-holding cost, your debt retirement expenses, your legal fees, and eventually the buyer's subtraction skills could end up costing you far more than the cost of the services of the experienced professional.

Don't forget to put value on your time too. Showing the property and handling details is time-consuming. Be prepared to change your plans on short notice. Acquire advertising skills by doing some research so that you use your time and the space wisely. Trial and error is expensive. Try to be near the phone at all times so valuable phone calls aren't missed. Go to the "Staging Guidelines" report on this web site to help you present your home at its best.

Finally, if you decide to call a professional, choose wisely. Go to the "Interview Agents" link on this site for guidance. The company you employ is only as good as the salesperson sitting at your table asking for your business. All real estate agents are NOT created equal. Get credentials. Get production records. And think twice before you hire sometime who is "part-time." After 33 years, I never did figure out how to do this business part-time. I'm pretty sure, if it was possible, I would have figured it out by now! TRUTH? When the road to closing gets bumpy, most of the tasks necessary to expedite the sale and closing process must be performed during regular business hours... not after-five when the agent gets home from his/her day job.

Handling the most important investment you have deserves the services of a full-time, dedicated professional, whose main focus is the business of real estate and your best interests. Chosen with care, your real estate agent will become one of your most values allies.

Whether you are successful or whether you hire a professional, selling property is unpredictable and exciting. Like that fishing trip, you cast about for buyers, handle the irritations as well as you can, and periodically you stop to consider your sanity quotient. When the happy buyer and the satisfied seller walk out of the successful closing - that is when you discover that the "fishing trip" was an extraordinary experience.