The Guide To Selling Your Home By Owner

Sell by Owner Like the Pros!

You are about to learn how to sell by owner quickly and for the highest possible price. We’ve developed a comprehensive tool-kit for preparing your home, marketing your listing, pre-screening buyers and all of the forms necessary to complete a sale.

If you choose to handle the purchase contract and closing on your own, it is necessary to use a competent Title Insurance provider that understands the escrow and closing process in the absence of a Real Estate Agent or Real Estate Attorney. Review the resources we recommend on this website for completing a For Sale By Owner transaction.

Step #1: Sellers Quick Start Guide

Most people think selling their home is a matter of slapping a “For Sale” sign in the front yard. In some markets that may work but we want you to sell your home for a premium and avoid a lot of costly mistakes that most sellers make.

To begin, please review our Home Sellers Quick Start Guide. It is a pdf file you can download, print and use during the entire home for sale by owner process. The guide outlines the steps that need to be completed in order to sell your home. Some of the items are often missed by real estate professionals and will put you in the drivers seat of the transaction.

Step #2: The Equity Maximizer Audit

This is the fun part (NOT!)…We are going to prepare your home for sale and ensure you get top dollar. We’ve prepared an audit tool you can perform yourself called The Equity Maximizer Audit. This is a pdf file that you can download, print and use to tour your property and make adjustments and improvements. If your home doesn’t show well, it can greatly increase the time it takes to sell and reduce the sales price.

Step #3: Marketing Your Home

Determining The Price of Your Home

While you are working on the results from The Equity Maximizer Audit, start your competitive market analysis. The research should include properties sold in your neighborhood within the past 3 months and homes currently on the market. Homes sell on a $/square foot basis and smaller homes in a neighborhood will have a higher $/square foot price because of the inherent land value. The easiest approach is to find all of the recently sold properties in the area using a tool like Zillow. Next, build a table of the square footage of each property, the sales price and calculate a $/sq ft for each property. Using the range of values and size of the homes, it should be obvious where your home fits in the spectrum.

Additions and deductions need to be considered when comparing properties. Many home owners believe that upgrades such as premium cabinets, a pool, landscaping, window coverings, etc. can be added directly onto the value of the home. This is a dangerous mistake. While incremental adjustments can be made to the $/sq ft price, the market will only bear a reasonable premium and your home won’t get traffic if the price is over-inflated. If your home is upgraded beyond the homes in your neighborhood, it will sell faster than the competition if it is priced within the $/sq ft range calculated in the exercise above.

Attracting A Buyer

Marketing a property has changed greatly with more buyers turning to the internet to research homes for sale. In this section we’ll outline how to market on-property (signage, fliers) and listing services that increase exposure.

Signage

A “For Sale” sign can make or break the first impression a buyer has of your home and account for 20% of sales. Don’t use a rinky dink home made sign that is suspended from an old hockey stick and stuck in the front lawn…unless you expect to never sell or sell at big discount. If you are expecting a premium, you need to exude quality and make a great first impression.

We recommend going to a professional real estate signage company (yes, they exist) and purchasing a metal sign. There are also companies that will install a large wooden post to hang your sign from. The price of the post is cheaper than you might think ($20-30) and will prominently display your sign for all to see. Keep in mind you are eliminating real estate commissions when selling by owner and the few hundred bucks you spend on marketing can come back 10X when a sale is made.

For Sale By Owner Sign

Free Recorded Message (Hint: Don’t Use Your Answering Machine)

In the sign above, there is a space for a phone number to be inserted between the “For Sale By Owner” and the “By Appointment Only”. The phone number should link to a recorded message that provides information about your home (best features, square footage, year built, school district, price) and allows prospects to leave a message if they are interested in learning more.

Google Voice provides a free phone number that is perfect for this purpose. Simply create a Google account and snag your free local telephone number. The Google Voice number is linked to a primary telephone (like your cell phone), however, if you don’t want to receive any calls, forwarding can be turned off and all calls will be routed directly to the message center. Google also translates voice messages into text so you can quickly weed through all of the Realtors soliciting you for the listing.

Printed Flyers

In addition to the free recorded message, printed flyers are a good way for someone driving the neighborhood to get more information about your home. Flyers should be printed and placed in an “Information” box that hangs from the For Sale sign. Information boxes are also available where you purchased the For Sale sign.

To save you some trouble, we’ve made a flyer you can download and modify using Miscrosoft Word.

Holding An Open House (Don’t Do It)

Realtors hold open houses to generate buyer leads for their business, not sell your home. Open houses increase foot traffic through your home and attract ‘tire kickers’, not real buyers. Rely on your other marketing efforts and don’t waste your time holding an open house.

Listing Services

We recommend using a mix of free and paid listing services. Craigs List is a well-known free service but has many limitations. Zillow is inexpensive (<$10 for 6 months) and is heavily searched by buyers.

ForSaleByOwner.com is one of many house for sale by owner listing services that we’ve found to be more expensive but does advertise extensively and drives traffic. We recommend staying away from premium packages that can cost up to $800 because most of the resources are available for free on ArizonaMortgageBroker.org.

A majority of properties are sold through the Multiple Listing Service (MLS). You can avoid paying a listing Real Estate Agent by listing your property in the MLS using a service like Housepad. The Housepad listing will also automatically be passed to other non-MLS listing services such as Trulia as part of their flat rate package. There are also Real Estate agents that will list your home on the MLS for a flat fee. If you use the MLS (recommended for a quick sale) you’ll have to pay the buying Real Estate Agent (3% of the sales price is fair market rate).

Don’t forget to use your new Google Voice number in your listing information to avoid the onslaught of solicitors that will track you down through these listing services.

Step #4: Pre-Screening Buyers

Once you have your prospecting systems in place, interested buyers will be contacting you and hopefully making offers. Before you accept any offers or execute a purchase contract, a buyer should prove their ability to financially perform through securing a mortgage or paying with cash.

Every buying prospect should submit a Loan Status Report (LSR). An LSR is part of the purchase contract process and widely accepted by the Association of Realtors as being part of a binding contract. The LSR should be filled out and signed by the lender the buyer is securing financing from, not the buyer. An pdf version of the Arizona LSR can be found here.

Throughout the closing process, request a Loan Status Update (LSU) from the loan officer the buyer is working with. Both the LSR and the LSU will ensure a buyer is qualified and alert you to any potential funding issues that arise during the closing process.

Step #5: Contracts and Closing

Contract, Inspection and Disclosure forms can be found by searching for your state Association of Realtor website. The forms for Arizona can be found here. The Purchase Contract acts as the framework for the transaction and should be well understood by both the buyer and seller. It is customary for the seller to provide a Seller’s Property Disclosure Statement to the buyer, unless the buyer is purchasing the property ‘As-Is’.

Inspection Notice

As part of terms of the purchase contract, a buyer is expected to perform or can potentially lose their earnest deposit that is placed in an escrow account by the Title company working on behalf of the two parties. The seller (you) should allow the buyer an inspection period (typically 10-14 days) in which a licensed home inspector can inspect the home and submit a list of issues to the buyer. After inspection, the buyer will submit a Buyer’s Inspection Notice and you are expected to respond with items you are will to correct prior to close of escrow. If the buyer does not submit the inspection notice within the inspection period, you are not required to correct any of the issues. Keep in mind some of the issues found by the inspector may be required by the buyer’s mortgage lender for the property to qualify for financing. If an agreement on inspection items cannot be reached by both parties, the contract can be terminated and the earnest deposit returned to the buyer.

Appraisal

Once the inspection period has passed, the buyer’s lender will require an appraisal be completed on the property to ensure fair market value. If the property is over-priced or does not meet lender guidelines, the appraisal may not be accepted by the lender and the transaction may be terminated by the buyer. As the seller, you might need to be flexible and willing to adjust purchase price or cure issues in order to complete the transaction.

Closing

In today’s market, the Close of Escrow date on the purchase contract should be set at least 45 days from the date it is signed. This allows time for inspection, appraisal, title and financing.

If the closing date is delayed or either party is in breach of contract for another reason, a Cure Period Notice must be provided to the party in breach. The party then has 3 days to cure the breach or the contract can be terminated by the other party.

If the buyer or the seller agree on making changes to the purchase contract (close of escrow date, purchase price, inspection period, closing costs paid by the seller, etc.) after it is initially signed, an Addendum to the contract should be completed, signed and submitted to the title agency and the buyers mortgage lender.

We recommend using a Title Insurance company that specializes in handling Sell By Owner transactions and manage the escrow process, contracts, funding and closing processes. The title resource should be consulted before you begin marketing your property and the steps in the escrow process should be well understood. A checklist of the critical items and completion dates should be completed with the title agent and the buyer.