A Seller's Guide To Success

Looking to take ownership of selling your property? You’re not alone.  FSBO is a great opportunity for homeowners and property owners—when done right. Many sellers prefer this option to avoid making commission payments to real estate agents. This process can save you thousands of dollars, teach you the basics of property sales, and give you more control over deciding who to sell your home to. Read on to learn what you’ll need to know when listing  an FSBO!

Is FSBO Right For You?

The first step to selling your own home: decide if it’s what you really want. FSBO takes quite a bit of work, time, and planning. It also places full responsibility on you, as the current property owner, to handle legal and financial matters of the sale.

Here are some things you should seriously consider before deciding to go the FSBO route:

  • Your knowledge of real estate. How much do you know about the real estate industry? If you’re clueless, you might benefit more from hiring a real estate agent.
  • Your emotional attachment. Selling a property, especially a home, can be more emotionally taxing than people anticipate.
  • Your time. Do you have enough time, energy, and dedication to handle the whole process? From pricing and marketing to paperwork and open house showings, there is a significant time spend.
  • Your people skills. Greeting potential buyers, being the face of the listing, and getting serious over negotiations will be required of you in an FSBO.

If you know about real estate (or are in it to learn), can handle your emotions, have time, and are good with people, then FSBO is a good fit for you!

Determine The Current Value of Your Home

Knowing your financial position is paramount to planning your next home purchase or whichever next phase of life you may embark upon.  The steps outlined below will provide a framework for you to follow to gain an understanding of where you stand financially with the potential sale of your home.

Cost Of Selling: Know Before You List.  This is a question many hopeful sellers don’t consider… but it’s important!
Many people spend as much as 10% of the sale price on selling their homes.  This includes REALTOR commission and additional costs like repair costs, housing overlap costs, closing costs, seller concessions, and more. Knowing how much all this could total out at will help you understand if you have the budget and willingness to list.  

Comparative Market Analysis. To gain a clear picture of your home’s net equity, you will want to establish a value by comparing your home to other similar homes that have sold in the last 90-180 days.  A Comparative Market Analysis (CMA) is used by real estate professionals to help establish a sale’s price for your home.  If you have access to a realtor, they can run a CMA for your home or with a little due diligence, you can find this information on your own by researching sold homes in your neighborhood that are similar to yours in style and amenities.  Another option would be to pay for an appraisal through a certified appraisal company and could be used in supporting your list price should you decide to sell.

Understanding Your Net Equity.  Simply stated, the amount of net equity in your home is what you take away from the transaction after paying fees such as a mortgage balance, realtor fees (if applicable), repairs, closing costs, and any other outstanding obligations required to sell your home. 

Let’s see what this may look like:

Home Sale Price      $400,000

Mortgage Balance     255,000

Realtor Fees (6%)         24,000 

Appraisal                            450   

Repairs                             3,500   

Closing Costs                  2,700   

Net Equity:                $ 114,350

As you can see, there are many items to take into consideration when determining the amount of net equity in your home.  This is why it is a critical step prior to listing so you clearly know what you may walk away with after the sale of your home.  To further help you understand your net equity position, after running the exercise above, reach out to a title company (preferably the one you will use to sell your home) and ask for a net sheet calculation.  The net sheet will be detailed based on the potential sales price of your home and current expenses to be deducted.  For the best accuracy, be sure your numbers are correct so there are no surprises.  Verify a payoff with your mortgage if you have your home financed as this number can differ from that of your balance on your monthly statement.  The title company will give you a second set of eyes and help you solidify your current net equity position. 

Timeline: How Long Will It Take To Sell Your Home?  Similar to sale price, this could be informed by comps. The metric is called “Days on Market” or DOM. DOM will track the average amount of time homes in your area spend on the market. While you can’t nail this down entirely, you should look at when you want to move and how long, realistically, it could take to sell your home.

Where Will You Buy Next? Most likely you have and ideal location or home you are wanting to move to.  This can be due to relocation for work, expanding family size, personal reasons, and much more.  It is a good idea to know what you want and have a plan before listing your property for sale.  There are many additional considerations to take into account such as changing school districts if you have children in school, tax rates in the area you are moving to, moving costs, time needed to get settled into your new home, etc.  While you may feel you are out ahead of the curve, it is always good to sit down and write out pros/cons, or just a list of items and potential costs or resources required. 

Do You Have Financing Lined Up?  Are you pre-qualified to purchase another property? You will want this before you start looking for your next home.  Getting a pre-qualification is easy and will give you peace of mind when searching what you can afford.  An extra benefit of working with a lender before you start shopping is they will have all of your information and paperwork so when the time comes to submit an offer on another home, you are ready to go!  The seller may find this as a solid financing position and even select your offer over others if they feel you are more likely to be able to close on a transacton.   

Selling your home can be an incredibly important decision, and there are many factors that you should be taking into account in order to confidently move forward with the process. One of the most crucial pieces of information that you’ll need to establish before making your final decision is your net equity number. This number is a critical piece of information that can help you to determine if you’re in a good position to sell your home, and what the best method for selling your property will be. By taking some time to properly establish your net equity, you’ll be able to have a clearer understanding of the financial implications involved in selling your home, which in turn can help you to make more informed choices about how best to proceed. So if you’re thinking about selling your home, make sure to keep your net equity in mind!

Share this:

Like this:

Compare listings