When is it safe to sell my own home?

If you have a choice in when to sell your home and are not under financial duress, then you’re lucky. As a FSBO survivor myself, I was under financial duress, and had to sell in one of the worst markets ever. So lucky FSBO condidate, take heed on a few market factors before listing your home.

Now, each market is different. Each home is in a different condition relative to competition. And each owner is different in terms of their level of selling capabilities. So these aren’t hard and fast rules. However, they will impact the speed at which you will sell your home and most definitely will impact your pricing decision if you are looking to sell in a specific time frame. For reference, nearly a quarter of home listings on the market as of July 1 experienced at least one price reduction, a 9% increase from the previous month, according to real estate search site Trulia.com. The average price drop was 10% off the original listing price – about the same from previous months.

So delay or think hard about listing your home if 2 or more of the following conditions exist in your selling situation.

  • 5+ similar homes are for sale in your square mile.

    This one is easy right? This is a simple supply and demand issue. The more supply, the more buyers’ hold the power and price reduction is used as THE competitive selling technique. I useRealtor.com for all my competitive searches and try to stay away from sites that don’t serve up the MLS listed homes. Try searching 1 and 2 mile radius’ around your home. Make sure your query looks for homes with similar square footage, bed/bath numbers and year built. If you are in a more rural area, lot size and outbuildings will matter as well. This should give you a good sense of the inventory in your area.

  • Average Days on Market for similar homes within a 2-3 mile radius (DOM) is greater than 6-8 months.

    This one is a bit tougher to find, but it’s out there. Start with the list of homes you found in your inventory search. Take a look at each listing. Go down to the bottom of the listing. There are two things you can check to see how long the home has been listed. The “days on site” is a good indication of how long the house has been listed (may not mean that this is how long it’s been on the MLS, but it’s a good bell-weather for DOM.

    Section located at lower left of a listing page. See "Days on Site" for a rough estimate of DOM.

    The other thing you could look at is the listing that sits on the broker’s site. Most of the time the Realtor.com listing will have a link to the agent/broker’s site in the upper right hand corner. They usually have another version of the listing on their site or give you access to the actual MLS listing which will have a days on market number, also at the bottom. Don’t be confused by what looks like multiple listings. It’s not. It’s the same information just communicated through different “templates.”

    Agent details usually located in the upper right of listing.

  • Home prices in your area have dropped steadily and more than the broader city you live in.

    Almost every market has taken a tumble or the last few years. That isn’t the point here. The point is whether or not your specific area is better or worse in performance than your broader city or county.

  • Your home isn’t ready for prime time

    The shape your home is in relative to other listings is critical especially if you have a lot of competition. Make sure you can rival your competition. This is a much longer conversation that I cover in other blog posts. But be ready, this isn’t just about curb appeal.

How do I decide on selling my own home…without an agent?

Hmmm…what a great question. I’ve met many folks who have to sell their home given the economy but because their home is “under water” or “upside down” in terms of the mortgage-to-value that they can’t afford an agent. Many stop there and say, “I guess I need to do a short-sale or go into foreclosure.” Think again.

    Here are some questions to ask yourself in deciding if you should pursue selling your own home without an agent.

  • Do you have 5-6 hours/week to spend managing this process?

    Selling your own home is not rocket science but it is time consuming. You need to commit the time if you want to sell your home quickly. When you eliminate the agent, you take on all the responsibilities of marketing your home! Assume that once your house is listed, you’ll be spending at least 5-6 hours a week fielding inquiry calls, scheduling appointments, preparing/leading showings, etc. This will taper as you enter escrow where it’s primarily about distributing the right forms, waiting for signatures, getting proper documents into escrow, etc. The less confident you feel about any step of this For Sale By Owner (FSBO) process, allow yourself more time so that you can do the research you need to accomplish each task.

  • Have you ever sold or bought a home, even if using an agent?

    If you’ve never been through the process of selling or buying a home, even with an agent, I would not recommend doing it yourself. You learn a lot even having an agent manage the process. You understand that there is a purchase agreement, that that purchase agreement can be countered with a counter offer, that there are contingencies that must be properly documented and followed in the final purchase agreement, that there are title documents that must be ordered and reviewed, that there are strict disclosure deadlines, etc. If you’ve been through it once, you understand the high level process as a foundation to managing yourself.

  • Are you familiar and efficient with online research?

    The internet has made the for sale by owner (FSBO) process possible. Once upon a time, an agent or broker was the only way you could list your home on the MLS, get comps, or get the forms necessary in the sales process. Now, you can do that legwork with the touch of a button. You can analyze your market area relative to others, get detailed and accurate information on your competition (pricing, age, floor plans, etc.), list and advertise your home, and get a ton of great advise on each step of the process along the way! If you know how to use Google, research different MLS sites, and are willing to invest some time on different online advertising channels, you can market your home successfully.

  • Can you negotiate with confidence?

    Negotiating is one key aspect to selling your own home. And it’s often negotiating with an agent, who can be very intimidating to server their client. You have to know how to use basic negotiating skills; understanding the underlying desires of your buyer, knowing your walkaway point, envisioning win/win contract terms in order to get what you want out of the deal, being confident enough to ask questions, and saying ‘no’ when necessary. Some people aren’t comfortable with negotiations. And while I do it all the time, it wasn’t so long ago that I felt pretty uncomfortable doing it. I learned that as long as I prepare myself with the “right” data and right frame of mind, I can overcome demanding buyers/buyers’ agents. To learn how to better arm yourself for negotiations try our ForSaleByOwnerABC’s webinar.

  • Can you pay off your mortgage with the sale of your home?

    Some people may not be able to pay off their mortgage even after figuring in the elimination of agents’ fees in the closing costs. The last home I sold was “under water.” After I figured in the removal of the agents’ fees, I would’ve still owed $35,000 to the bank, even if I got the price I was asking. That’s how bad the values tanked in my area. After I got past the sulking, crying, and head-spinning phase, I realized that writing a $35,000 check, however gut-wrenching, was better than taking a multi-year hit to my credit history (Short-sale and foreclosure both have hefty credit implications) and continuing to pay the large monthly mortgage payments. This may not be an options for you. But if, financially, you can cover your mortgage via your selling price, then selling your own home could be a much better choice then short-selling or moving into foreclosure. I am a business owner who values credit as an asset …I couldn’t risk not being able to invest in (via partially on credit) equipment, building space, a car, or even obtain necessary suppliers’ credit.

  • Do you know what you don’t know?

    This sounds stupid. I know. But I’ve seen people walk into this process having no clue what their doing but doing nothing to build up their knowledge base in the areas they are clueless on. For instance. No knowing which disclosures are required by their state and never doing the research on what the exact list is for their area can completely dismantle your purchase agreement, or worse, open up the opportunity for the buyer to come back years later with a lawsuit. These are worst case scenarios. But even the little things can mean the difference closing escrow in one month vs. three. As long as you know where your weaknesses are in this process and are willing to spend time learning the best way to shore up your weakness, you’ll do fine. Clearly decide which aspects of the for sale by owner process (FSBO) make you the most nervous. Then find the resources you need to build your confidence. There is a lot of information out there to help you. You just need to put the time into doing the research. Don’t wing it! Get the tools and tips you need for each step of the process by registering now for our ForSaleByOwnerABC’s webinar.