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.

Free and cheap ways to build curb appeal

So many people think their home sells itself. And of course, the blood sweat and tears you’ve put into your home does help.  But there is a standard you must meet.  You have to meet the competitive standard.  And for most cases, your home is up against others that are being sold with the help of an agent.  Agents walk through a potential client’s home and tell them the things they have to do before they’ll even list the home.  You have to do the same.  Depending on the age of your home and the shape that its in relative to your competition, the level of effort will vary.  But, let me be clear.

YOU CAN DO A LOT OF THE PREP FOR FREE …or for very little expense.   Here are a couple For Sale By Owner homes that I’ve toured recently…very nice contrast!

HOUSE #1:  A couple facts.  This home is priced over $500,000.  It’s price was competitive with the other listings in this area.  It’s in an upscale community in San Diego.

Front driveway

Front yard

side yard view

HOUSE #2:  In contrast, here’s another For Sale By Owner (FSBO) home that was in a much less appealing neighborhood at a significantly less price.  This owner did it right.

Front Entry

Front yard; view from front door

Contrast is obvious right?

Let’s first talk about the FREE ways to prepare your home for sale first.

1.  Manicure the yard you have: House 2 had a very well manicure, albeit sparse, font yard.  The lawn had some rough patches but the fact that it was mowed and the edging around the walkway and sidewalk was pristinely cut, it created a very clean look.  Look at House #1!  What an opportunity to rip out the dead plants on their front hill.  The ivy and what I think was ice-plant, had grown together and grew right up and over the front wall in big mounds.  There were dead trees on the side yard which was in perfect view from the street given that it was a corner lot.  Yes, this would have taken time, but if there is no money to spend in prepping your home (which in this economy is absolutely a possibility and I feel for you), then clean it up.  In this case, they need to trim the crazy ivy to show some semblance of a front porch and then pull out all the dead trees and ice-plant/ivy mix.  My personal opinion, I would rip out all of the ice-plant mix in the front down to dirt.  I’d rather have dirt than what looks like a very unwieldy job for the potential buyer. If you can’t do it yourself, get your son to do it!

2. No Plants?  No problem.  Just clear the planters of weeds and debris:  House 2 had maybe 5 plants in the front yard…but the planters were weedless and the dirt a bit damp.  Again, clean and simple allowing the eye to go straight to the house as opposed to dwelling on poorly maintained planters.  The lack of plants and weeds also did two things for me.  It showed that there was an irrigation system in place and it allowed me, as a potential buyer, to visualize what types of plants I’d like to add.  Versus “oh gosh, I wonder what’s in there. I’m gonna have to clean all that out before I even think about doing any planting.”  I don’t think I need to talk too much about House 1 in this case, but let me add that the For Sale sign in the yard was dirty, had orange tap on it, was faded and the phone number was missing!  Talk about debris!

4.  A freshly watered yard adds color: Ever notice, in higher end home listing, car commercials, and even real estate brokerage commercials how everything looks damp and recently sprayed down?  Take notice.  They do this, I got the inside scoop, because it makes everything more vivid and fresh.  On the day of your showing, spraying down the plants and lawn…and even the walkway and entry (be careful of people slipping!) can add a more color and lushness to your entry.  House 2 did this.  Everything was just a bit damp and that much more vivid than the neighboring homes.  The dead plants in the yard of house 2 make this property look very dry and unwelcoming.

Now let’s talk about a few inexpensive ways to prepare your home on the outside for sale:

1.  Freshly painted trim: If the windows are the eyes of the home, the trim is eyelid/under eye.  Sounds hokey, I know.  But when you see a person with dilapidated eyes, they look a lot older than they are…right?  Same with you house.    If your front trim and door is cracked, dirty, and peeling, the buyer immediately goes on guard.  “How old is this house?”  “I wonder how well they took care of the inside?”  Trim can, when freshly painted, make the house look much younger than it is.  Even if you’re only painting the trim in the front, do it.  It’s cheap.  I’ve never seen anyone have to buy more than 1 gallon of paint for their front trim.  Unless you live in a mansion in Beverly Hills…and I don’t think they would be reading this blog!   Quick cost Paint + 2 brushes + tape + a tarp for keeping things clean:  $45

2. Clean the walls: I can’t tell you how many homes I’ve toured where the front walls, fencing, steps were a mess (check out House #1).  Rain water stains, dirt, old cob webs, etc.  I’ve seen it all.  This doesn’t mean you have to paint everything (unless your current paint is in bad shape).  Does your neighbor have a power washer?  I bet he does.  If not, rent one.  It’s not just about the house walls.  House 2 had pristine planter walls and fencing which, again, allowed me to forgive the sparse yard and get dreaming about what I could do vs. what I had to do.  Many homes in this neighborhood had not-so-tidy planters and fencing so it made this house stand out.  This house was a shining star in the neighborhood.  House #2…what walls?  Is there even a walkway up there? So if you can’t pain, then clean the walls.   Quick cost: power washer rental, one day $30

3. Splash of color: I don’t mean paint!  I mean plants.  Plants are an inexpensive way to add warmth to an entry.  If you’ve got a little money, planting a few splashes of color really adds.  In House 2 the owner bought 3-4 flax plants and another bigger-leafed plant I hadn’t seen before.  That’s really all she did.  And it added just enough greenery that it made the front entry way very welcoming.  Quick cost 4  6″ plants (Flax, as House 2 has, are very nice with a variegated leaf that adds rich color to any yard) + a bag of soil:  $40

4.  Welcome mat. Nuff said.

Now all this is lipstick on a pig, so to speak, if you’ve got bigger problems…like cracks in your foundation, paint cracking everywhere, or if you’re roof is falling in.  So be smart about where you spend your time and money.  But know that curb appeal gets people into your house without a negative filter.  For those buyers that have very little vision, and, therefore can’t see through any of the issues spotted from the street, this could be a lost sale. 

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.

Keep Your Emotions From Clouding Your Judgement

Let me start by saying that selling your own home is emotional. Don’t let anyone tell you differently. Not only are you driving the separation between you and something that you’ve called home for years, but you’ve also put your blood sweat and tears into this home. Add to that, you’re dealing with buyers (and their agents) whose one goal in life is to get THE deal on their home of choice. That means hard negotiation tactics. Tactics I’ve seen:

  • Walking in and not showing an ounce of emotion. Leading the seller to believe the buyer isn’t interested.  This definitely makes buyers feel on edge.
  • Telling the seller his/her house is not price competitively given his/her research and that they are crazy for thinking otherwise.
  • And the one that hurts the most…telling you about every flaw they see as they walk through your home.

I’ve seen many others, but these I see most frequent.  All them poke at your anxiety (which is the buyers’ goal), but most of all, all can put you on the defensive.  “I’ve spent quality family time here!”  “I painted the walls myself and planted every flower in the yard!”  “This is a beautiful home!”

Case in point:

I just did a walk through of a FSBO home in San Diego.  I overheard a snarky agent (that’s a technical term) talking to his buyer telling the buyer that there were many ways they could decrement the current price in their offer and that the seller would be crazy not to take it.  “There’s a crack in the driveway.  The back walkway is uneven, which could all be related to foundation issues.  That could cost my client a fortune.  Also, that color paint it very unusual, we would probably want that changed before even considering an offer.  But we’ll talk about it.  We’ll get back to you IF we want to make an offer.”

The seller was incensed.  “He doesn’t know what he’s talking about!  My house is worth ten times what the neighbor’s house is worth.  This is a beautiful color!”

Later I spoke to the seller.  The buyer came back with an offer 20% lower than asking price.  The seller, with an indignant sniff, said he laughed at the agent and said they were moving on.  They didn’t even counter the offer!   Instead of listening and treating this like a business transaction, the seller turned emotional and lost out on what potentially could have been a solid sale.

This happens all the time.  There are a couple things I always do to avoid this:

  1. Know your ‘walk-away’ point and don’t walk away before that
    • Do some homework and come to a decision about what your ‘walk-away’ point will be.  The lowest price you’ll take based on everything you know about the comparables in your market and your personal situation.  It’s usually never the price you list your home at originally.  You also need to know what you’re willing to repair if a buyer requests it.
    • Having a ‘walk-away’ point helps in a couple ways.  If a buyer won’t go above a certain price point or is requesting repairs in the form of a price break that force you below that price point, you can ‘walk-away’ from the deal knowing you made an analytical decision vs. an emotional one.  And on the other hand, until that ‘walk-away’ point is reached, you need to force yourself to stay in negotiation, even if the buyer is not your favorite person or is not showing your desired level of appreciation for your home.  This makes the FSBO process and your decision-making analytical vs. emotional.  It’s easier said than done, but this works if you are disciplined about it!
  2. Know that everyone has different tastes and negotiating tactics
    • Buyers are looking for a deal and will do pretty much anything to pick apart your home.  Be prepared and know it’s about getting the best deal possible.  It’s not personal!
    • One trick I use is to jot down and translate the buyers’ negative remarks into dollars.  For example:  “There’s a crack in the driveway.”  I can assume that he will come back with a decrement to the price even though the crack is a minor blemish and nothing more.  Even paint comments like “The paint is chipped on the window frames.”  I will jot down all the comments and put a price tag against each one.  That way I’m prepared when the buyer offers a lower price or requests repairs as a contingency to the purchase.  I can often combat the decrements to price with realistic costs or reasons why the decrement is unjustifiable.  This provides a data-based counter offer vs. an emotion-based!
    • Bottom line; use the buyers’ negative comments and prickly negotiating tactics to your advantage!

The point is…everyone is emotional.  The goal is to make sure you balance that emotion with an analytical approach.  You’ll be far better of if you do!