Why Choose FSBO ("For Sale by Owner") 
As a Means of Selling Your Home

While it can seem complicated, it won't be if you, the home owner, are prepared and aware of some of the basic principles and procedures. 

Become informed. Learn how to effectively market your home, prepare an information script about the home's features, and keep confidential information about you confidential. 

Know when it becomes beneficial to use the services of a real estate company and the resources of each of the company's trained agents. Know who represents whom. 

Understand value. What it is, and what is not. Know when it's the right time to sell, as well as the right time to buy. 

Know how to neutralize your home and how to request the undivided loyalty of the real estate agent. Know what real estate services are important for you and the value of each. 

Good luck with the sale of your home. You're ready to begin. 

There are seven primary reasons why a home owner offers a property for sale: 

1. Moving up to a larger home.
2. Moving down (empty nester).
3. Financial concerns.
4. Divorce.
5. Health concerns or death.
6. Alternative investment opportunities.
7. Corporate relocation.

1. Offer the home "For Sale By Owner."
2. Engage the services of a real estate broker.
3. Convey the property by gift or will.
4. Assign ownership to a third party (corporation or trustee).
5. Dispose of by property settlement or other agreement.
6. Governmental or institutional foreclosure.
7. Deed in lieu of foreclosure.

Selling a home is like running a corporation with a variety of important responsibilities. Components of a successful selling process include knowledge of a number of factors such as: 

1. Pricing strategies.
2. Marketing and advertising.
3. Confirming financial qualification of buyer.
4. Property inspections and possible repairs.
5. Disclosure of known property defects.
6. Home warranty program options.
7. Seller payment of buyer expenses.
8. Knowledge of seller closing expenses.
9. Provision of possible real estate commissions.
10. Owner title problems.
11. Mortgage payoff obligations.
12. Closing and possession dates.
13. Survey and boundary line concerns
14. Post closing problems.
15. Termite and termite damage certification.
16. Environmental concerns.

"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming that price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 

1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised and each acting in what he considers his own best interest;
3. A reasonable time is allowed for exposure in the open market:
4. Payment is made in terms or cash in U.S. dollars in terms of financial arrangements comparable thereto;
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions (adjustments to the comparables must be made for special or creative financing or sales concessions). No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area: these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparison to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustments should not be calculated in a mechanical dollar for dollar cost of the financing or concession by the dollar amount of any adjustment should approximate the market's reaction to the financing or concessions based on the appraiser's judgement) granted by anyone associated with the sale.

However, either party, for whatever reason, may not want to pay or accept that particular price, or may be willing to pay or accept another price. 

In the home selling process, emotion often plays a major role in arriving at the selling price of the property. If the owner is motivated more by emotional factors, and possibly reveals those motivations, the selling price is likely to be lower. Likewise, if the buyer is motivated more by emotion, and discloses those motivations to the owner, the selling price is likely to be higher. 

An owner's plan to establish an asking price in excess of the realistic value of the property will likely prove unsuccessful. Betting on an emotional buyer is to assume the buyer is uninformed. While many may be, more are not. A price that is too high may also discourage a buyer from even considering making an offer. 

As a general rule, experienced and informed home buyers are more likely to see a new home on the market soon after it becomes available, as they frequently are aware of market conditions. Losing these buyers may not only delay a sale for the owner, but may also reduce other expected financial benefits. 

Homeowners should be aware of the possible subjective vale, especially if the home has unique or one-of-a-kind features, quality location, enhanced architectural design or other factors to encourage or motivate a buyer. Even with those features, the informed owner should consider the speculative odds of obtaining the emotional sale versus the more likely odds of realizing a market value sale. 

The replacement cost approach considers the cost necessary to build new improvements (less depreciation) added to the market value of the unimproved lot. The market data approach uses comparable sales data (with adjustments) to compare value. The income approach calculates value by considering the economics of the property. 

To determine market value, a professional appraiser should be hired to prove an appraisal report to disclose a defendable indication of the property's value. Even though appraisals differ, the appraisal report should be considered an important guide in confirming value. 

Hiring the right appraiser is important. Knowledge of the area, access to similar sales data, and previous inspection of other property interiors for comparative purposes, are important appraiser qualifications. 

The appraisal must also be timely. The use of comparable sales data that are too old may nullify the credibility of the report. 

Whether the appraisal is provided to the prospective buyer or not, the property owner must accept the fact that the buyer may want to obtain a separate appraisal to determine the property's value. A buyer's lender will likely require an additional appraisal as well. 

Most companies will provide this information without a charge, especially if they feel the owner is considering using their services to market the owner's home. However, when dealing with any real estate company in an interview process, consider the following recommendations before meeting with the real estate professional. 

1. Avoid disclosing any information to the real estate company which the owner wouldn't want a potential buyer to know. This may include motivations for selling, even if the real estate professional asks for this information. If the owner is asked for a reason for moving, a simple response of, "We're considering relocating", may be sufficient as a response. With this answer, no specific information, which could work against the seller's interest, is revealed.
2. The owner should not reveal an opinion of value or expected price to be sought from a sale. Doing so could alert other parties of an expected sales price. Rather than responding to a question of, "What do you think your home is worth?" or "What would you be willing to sell this home for?", the home owner may want to respond with, "We're simply trying to determine what market value may be. We understand that you are knowledgeable and experienced with homes in his area and can provide us with a realistic evaluation and other information should we want to sell."
3. Make no representation of engaging the real estate professional as a listing agent, but suggest, if appropriate, that other real estate companies may also be interviewed to determine which company will do the best job in marketing the property for sale and representing the interests of the owner.
4. Always remember that the real estate professional does not represent the owner's interest unless and until there is an agreement to do so. Always assume the real estate professional could use information obtained from the owner against the owner when showing the property to a prospective buyer.

When a quick sale is desired, the home owner may better realize this occurrence if the asking price corresponds to the perception in the market place of being good. While many home owners may not want to accept the quick sale price theory, many find it beneficial when other opportunities exist. Those opportunities may include the timely purchase requirements for a replacement property, new employment possibilities, enhanced educational benefits for children, or others. 

As a word of caution, however, this action should not be considered insurance to sell at that figure. Even a property meeting many of the best attributes (good location, top condition, ideal marketing factors) will be difficult to sell if there is no buyer in the marketplace with specific buying requirements that correspond to the features of the property owner's home. The more neutral or average the property is, the greater likelihood that more buyers are available to buy that particular home. Conversely, the more individual the home is, the greater number of buyers needed before one is located to buy the property. 

There is an old real estate adage that says, "The first offer is always the best". When considering all the opportunities that may be available with the first (and quick) offer, it may be better to seriously consider it if all other factors fall into place. First offers tend to be higher than those submitted months later, especially after the property has been stuck on the market. 

Serious buyers are frequently run off by unrealistic sellers who think an uninformed buyer from some affluent out-of-state state with lots of money and no sense will buy everything under the sun regardless of price or logic. Owners who wait for these illusionary buyers will not only lose them, but will likely lose other important, realistic opportunities to sell. 

Even though the asking price may be assumed to be the value, calculate the monthly expense on the market value, or the expected actual selling price. As a further example, if a property worth $200,000 is offered for sale for $250,000, the monthly expense (direct and indirect) not to sell it is approximately $2,000 per month. During a six month period, when the property is actively offered for sale in the marketplace, the owner would have spent approximately $12,000 not to sell. Therefore, a rejected offer of $200,000 received after thirty days would have to be increased to $214,000 if not resubmitted until six months later, just to net the same proceeds as the $200,000 offer would have netted six months earlier. 

The likelihood of the $214,000 offer being submitted, however, is remote as any extended time on the market may be perceived as a negative feature of the property. The better buyers may have already bought and there may be more competition with additional new listings for those other informed buyers. 

The data on previously sold properties in the immediate neighborhood adjacent to the owner's property should be reviewed to gain a historical "time on market" perspective. Most properties listed through a Multiple Listing Service (MLS) provide this information. However, in comparing the sold properties, it is also advisable to review those that have been terminated, have expired, have been withdrawn, or may be pending a transaction closing. This information will provide an indication of what is not selling and how long the ones selling take to sell. 

The higher the asking price above the apparent market value, the longer it will take to sell, especially since the available source of buyer prospects will be limited. Further, if the property is not maintained in good condition throughout the showing process, additional time may be necessary to obtain a sale. 

Whenever possible the property owner should move quickly to close the sale transaction. Too may problems can develop that may either delay or prevent the closing from occurring. Before considering extending the time to close, be sure all conditions have been met and there is some assurance that the transaction will definitely close. 

Careful planning may position the owner's property on the market at the time more buyers are aggressively looking to buy. If the preceding winter months have been cold, the spring months generally create a frenzied buying season. If the winter months have been mild, the buying activity will gradually improve toward the summer months. 

With the closing of the school term, the commencement of summer vacations, and hot weather conditions, the home buying activity begins to diminish. Property owners may find that the better opportunities to maximize a sale begin to fade at this time. 

Given a choice between offering a property for sale during the summer months and the fall months, home owners may benefit better by starting the process during the later period. Families returning from summer vacations may recognize the benefits of buying before the winter holiday season becomes busy with other activities. 

Unless the home owner is in a must sell situation, marketing a home for sale during the winter months, especially during the holiday season, is not likely to produce the satisfactory results sought. There are a limited number of home buyers in the marketplace at this time because of other family and holiday activity commitments. 

If a property can't be sold with a reasonable time, assuming the owner has implemented an effective marketing place, the owner may want to consider one of three primary options: 

1. Reduce the asking price to a figure more compatible with market value. If the property has been priced too high, the owner may have no other choice. If a prior appraisal report has been obtained, it may be necessary to update it if the sales date is too old (in excess of six months).
2. Engage the services of a real estate professional to aggressively market the property. Real estate companies use the Multiple Listing Service (MLS) to maximize a property's exposure to buyers and other real estate professionals. Currently, non real estate companies are developing, and have available, similar listing systems for home owners to use without real estate professionals [such as FiSBO Registry, Inc.].
3. Temporarily take the property "off the market" until conditions warrant its reactivation. Typically, the time to begin re-offering the property should be positioned during the seasonal time discussed above, or at least following the passage of at least one selling season. One season may produce a new generation of homebuyers who are not familiar with the property.