Friday, January 18, 2013
Like many homeowners, we are stuck in our home. What's keeping us from moving? The Realtor's commission. We bought at the height of the market and when home prices dropped like a rock, it was a painful reality to see equity evaporate like a rain puddle in the sun after a long rain storm. I was giving serious thought to FSBO (For Sale By Owner) when I was approached to review Sissy Lappin's book, Simple and Sold.
In the interest of full disclosure, I'm not a home buying or home selling newb. Over the years, we've put offers on houses that had the deal fall through, successfully bought, and successfully (after many months) sold a home from 12 hours away. Many, many moons ago, I worked for an attorney who concentrated a portion of his practice to real estate. I have drawn up sales contracts, dotted I's and crossed T's and gathered figures for HUD-1's, typed property legal descriptions, and held the hands of many a buyer to get them through the approval stage to loan closing and keys in their eager hands.
So, it's with this wide peripheral vision that I read Simple and Sold.
The book is very conversational. As in she has written the text in a way that makes you think you could actually be talking to her over a cup of coffee at Starbucks. She fills in main points and selling tips with real-life experiences with dealing with her own clients over the years. For instance, in cautioning you about problems that might arise about a fixture, she tells the story of a client who found herself in a precarious (and heart wrenching) position over a lighting fixture. These stories, woven through the chapters, will help you avoid potential pitfalls you may not have thought of when you considered selling your home on your own.
One thing I would point out is that, at least from my own experience, the nuances of real estate are based on custom. In one chapter, she mentions that sellers are responsible for paying for the title policy. At least in PA where I handled real estate closings, this was not the case. Yes, you typically ask for a general warranty deed from a seller. However, title insurance was a requirement of the bank's approval letter, so I as the buyer was responsible for getting one. (I even had to pay for a title policy when I bought my home here in Virginia). Owner's insurance may be optional. So I would argue that local custom would dictate who pays for what on that settlement sheet. Title Insurance can be costly and may even be determined in part by your home's value or the amount of your mortgage (depending on the company).
If you have bought your home in the past few years and still have your closing documents, it might be a good idea to pull them out. You'll see exactly what you had to pay for on the closing sheet and what the seller of your home had to pay for. That would be my yard stick for determining costs. Some title companies prepare seller deeds, whereas some areas might require you to get an attorney to do that work for you. Again, this is down to a local custom thing (as are some tax pro-ration issues). Pulling out your old sale documents can be useful and relevant to both you and your potential buyer.
Was I inspired with a can-do attitude? Could I really confidently sell my own home?
Yes and no. While I found the book had some good advice for selling a home without a real estate agent (and the huge commission), one of my biggest reservations is that my market area does not sustain FSBO's very well. I have seen FSBO signs in yards, only to see them give up and opt to go with a Realtor. A glut of foreclosures or bank-owned home sales has brought down prices in my area as well. It's hard to compete with that without having to bring money to a closing table.
I don't live in a metro area and there aren't a lot of potential buyers looking around at the moment. A small town an hour away from a big city is at a disadvantage for foot/car traffic already. There are so many reasons not to sell on your own.
But in reality, there's no harm in giving it a go on your own and the marketing tips provided in the text will give you a leg up on the competition as you try to sell your home successfully without a Realtor. If you do try and are unable to sell on your own, you've got enough know-how to ensure that your Realtor is doing all he/she can to sell your home, and is presenting it in the best light. Once you calculate the commission (about 6-7% of sales price), you may decide that it's worth it to try to sell on your own because that's $12,000 on a $200,000 home. Why leave money on the table when you can pocket it yourself?
Editing to add: Disclosure --- I received a complimentary copy of this book for the sole purpose of review. My opinions are 100% my own. This blog post is not compensated.