We sold our house FSBO. That’s For Sale by Owner of “fisbo”, if you want to make people slap you. Previously, I talked about instances in which you should probably use a traditional realtor, but today I am detailing our experience prepping and listing our house for sale using an unconventional real estate arrangement.
Step One: Trust No One
The first thing I did when I thought about selling by owner was Google it. Bad idea. I found many, many sites that talked about selling by owner and even had step by step guides (yes, yes, I see the irony, thank you.). Unfortunately, 9 out of 10 of them were written by realtors with the not so subtle goal of terrifying the reader into hiring the nearest realtor ASAP. Many of them were even hosted on realtor sponsored sites.
Try posting an inquiry on a forum along the lines of “I’m considering selling my house myself. What is my first step?” You will instantly be pounced upon by 100 realtors with 1000 reasons why you should quit dreaming and hire them NOW.
My favorite such response was from a realtor who answered such an inquiry with a list of questions like, “Who will wait at the courthouse if you need to get information on your property?” and “Who will represent you at closing.” Um, even if I should actually need to go to the courthouse (most records are online now and easily available) would I rather pay a babysitter $15 so I can wait myself, or should I give you $21,000 or 3% of the sale proceeds? Tough one. And represent me at closing? Pwahahah. I have been in closings with and without realtors, and I assure you, all they do is sit there and wait for their check. Oh, hold on. I forgot the part where they pass the keys to the other realtor. If you are capable of transporting your keys and signing your own name, you do not need representation at closing. We took the option of going in to sign closing documents the day before the buyers, so we just left all the keys and garage clicker with the title company.
Before we go any further, let me reiterate: I do not hate realtors. I have personally hired three realtors for three different real estate transactions in the past couple of months, and I have been extremely satisfied (so far) with the job they’ve done for me. Realtors perform many wonderfully useful services. It’s just that most of them continue to charge the rates they did when they did a lot more of the work. Waiting at the courthouse is a good example. Most realtors still want to be paid the same amount they were when they were standing in the courthouses waiting for documents and manually pouring over listings hunting for something that meets your criteria. These days, however, you can get most any public information from multiple online sources, and with or without a realtor, you can sign up to receive automated updates in real time whenever something that meets your criteria gets listed. A huge portion of buying and selling real estate has been automated, but most realtor prices don’t reflect that change.
Let’s say you survive the initial trauma of Googling FSBO. You’ve made it to:
Step Two: Explore Your Options
There are probably more options than you think. Here are some ideas ranging from least to most expensive.
a. Zillow Make Me Move. Zillow is a national registry of regular MLS listings that also allows you to list your home pre-market. That means you can put as much or as little info about your home on the registry for free and tag it with a price you might be willing to sell for. People who see your listing can contact you to ask about it. They can only contact you once, and they don’t get your personal information unless you respond (like Craigslist).
b. Craigslist. Yep. You can sell your house on Craigslist. Zillow Make Me Move offers this service free which automatically scans public records for a lot of info on your house to help you create a detailed listing. The big problem is that people looking to buy a house don’t look on Craigslist. I’ve sold everything except my offspring (even when I may have wanted to) on Craigslist at one time or another, so I totally listed my house there just to see what would happen. I cast my line, but all I got was an old boot and a bunch of solicitations from realtors offering to list my house on the MLS.
c. Advertise. I sent an email about my house to the list-serves of my church and my parents of multiples group. Check to make sure this is an approved use of mailing lists first, though. This didn’t work for us, but one of my friends sold a house to people she knew from church without ever listing it. You could also place ads in newspapers, though not only are people not buying houses in newspapers anymore, they aren’t even buying the newspapers.
d. FSBO sites. ForSaleByOwner.com and a couple other sites specifically facilitate transactions between owners and buyers directly. These sites are far more popular with people listing their houses than with people looking to buy a home, though. And they’re not even that popular with people listing.
d. Flat rate listing services. The truth is, when people are looking for a home, they get on the internet and start searching the houses listed on the MLS (and hire a realtor). The vast majority of homes are sold and bought through MLS listing. If you get your house listed on the MLS, pretty much everyone who is looking for a house like yours will see it. Only realtors can list homes on the MLS, though. A number of agencies have gained popularity in recent years offering to list your house for a small flat fee (usually around $100 to $500).
I tried this myself with MLSmyhome.com. Unfortunately, I didn’t realize that MLSmyhome was just a national referral agency who charged me a middle man fee to refer me to a local realtor who would list my house for a flat rate. Their customer service was despicable. They were going to take 5-9 business days to even get the house listed, and the local flat fee lister they referred me to had a horrible, unusable website that gave me fits. I quickly cancelled my order and got a refund. Definitely check to make sure your flat fee listing site is not just a national referral center.
e. Flat fee realtor. After the mistake with MLSmyhome, I started searching the web for LOCAL flat fee listers. That is how I found my realtor Steve. Steve was my realtor, and he helped facilitate the biggest monetary transaction I have ever made in my life. I have never met Steve. I could not pick him out of a line up. He has never seen my house. He could not pick it out of a line up. He helped me sell my house in Virginia though he lives in North Carolina and did the bulk of his job on his hands-free phone driving back from Rhode Island. But, yeah. Steve was my realtor, and he did a dang good job.
I Googled “Virginia flat fee listing” and among other things, found Steve Toop. Steve is licensed to sell in three states including Virginia, and he does everything over the phone and the internet. He offers a variety of service bundles from simply uploading your listing to the MLS ($195) all the way to essentially remote traditional realtor service ($775). We chose the full service package which meant that The Stever uploaded the listing and advised us all the way through closing.
f. Fee for service realtors. Two good friends of ours had excellent experiences using Smith Adams to sell their house. As far as I can tell, Smith Adams is a VA/MD referral service that takes a finders fee to refer you to a local fee for service realtor. I looked into this option very seriously. They offer a buffet of fee for service products including everything from listing on the MLS to open houses, consultations, drafting offers, as well as some hourly billable services like contract negotiation. I hear they do a great job, however, Smith Adams has started raising their prices in recent years. They are now taking at least 1% all the way up to 3%. One percent is still a fantastic deal, just not as low as I wanted.
g. Redfin. If you haven’t heard of Redfin, you will. Redfin is not available in all areas, but wherever it is up and running, it is taking over the real estate world.
Most people know Redfin for its listing registry. Unlike Zillow which is a national registry that gets updated slowly and unreliably and consequently is all sorts of inaccurate if you live in a fast-paced real estate market like Northern Virginia, Redfin is a local registry of listed houses that gets updated pronto.
Redfin is also a discount realtor service that costs half as much as traditional realtors. Instead of charging the traditional 6% to sell your house (and then giving half of that to the buyer’s agent), they charge 4.5%. They still give 3% to the buyers agent, but they take only 1.5% for their fee instead of 3%. In all other ways they are the equal of traditional big name realtors and are known for exceptional customer satisfaction.
Redfin is not the only company offering essentially the same services as traditional realtors at half the cost. I also looked into i-agent which is a local firm that lists and sells homes in the Wasthington DC metro area for a 4.5% commission.
h. By the hour realtors. Just like lawyers before them, some realtors have realized they can make a lot of money on the billable hour. I looked up a couple of local shops that offer this billing structure and asked very detailed questions. One fellow at Spicer Realty told me he bills 30 to 45 minutes to “present an offer”. Not to write it or revise it. To present it. Well I recently had 6 offers presented to me, and all the realtors did was hit send. He said by the time he’s done, he sometimes bills all the way up to 3% (traditional realtor commission) or over! Wow, that’s a lot of padding. That dude must have “waited at the courthouse” for a week.
i. Traditional realtor. For a 6% commission (which she will share with the buyer’s agent), your realtor will usually look over your house, give you advice on what to fix (and what not to fix), tell you how to de-clutter and stage, help you determine a price to ask for your house, list your house on the MLS, talk to anyone she knows in the market for your type of home, host an open house or many, field calls about the listing, schedule showings, explain offers she receives, and guide you through all the contingencies to closing. Oh, and hand your keys to the other agent when the house is sold.
Step Three: Git ‘er listed
As you know, I went with a flat fee realtor who handled things over the phone and internet which meant that I needed to do a lot of the work myself.
That means I prepped and staged the house, took the photos, wrote the descriptions, priced the house, and filled out the listing forms. It wasn’t that hard. I have watched a veritable butt load of HGTV and I suffer from delusions of DIY grandeur, so I felt completely qualified to handle pretty much all of this.
I have been watching home improvement shows since This Old Housewhen I was a kid through the very first season of Trading Spaces and almost every episode of Designed to Sell. The general rule is that you want your house to look as much like a new model home as possible, i.e. like no one has ever lived there, but that someone could move right in tomorrow and call it home. That means updating, de-cluttering, depersonalizing, cleaning and sprucing up.
We had already updated a lot of the dated decor in the house by replacing brass fixtures and and redoing the kitchen and master bath.
I de-cluttered by taking all the visible kids stuff other than the train table to boxes in the garage and a storage unit. I took out the oversized office chair and most of the rugs to show off the floors.
I depersonalized by taking down all family photos except the gallery of kid pictures in the built-ins since I ran out of time and thought they would be less objectionable than shelves chock full of DVD’s and CD’s. I painted the red dining room cream. I thought about removing the Bali furniture, but decided it added more than it detracted.
I gave the house the deepest possible cleaning. I have much to repent of for the way I snapped at everyone who dared to leave a footprint on the gleaming polished hardwoods that last week. I attacked the grout in all of the bathrooms with copious amounts of CLR and elbow grease. I recaulked and painted all window sills. I repainted baseboards. I recaulked bathrooms. I mudded, taped and sanded the ceilings prior to having them repainted. I rescreened window frames. I caulked and painted the stairway trim. I mudded, sanded and painted over areas where the baby gates had damaged the walls. Jenni, Jeremy and I touched up paint on all the corners of the walls and burned through box after box of Mr. Clean Magic Eraser scrubbing scuffs off the walls. I repainted the door and replaced its old hardware. I fixed the plantation shutters. I hired someone to repair a portion of my fence and then painted it myself. I scrubbed the wainscoting on the outside entry and the garage door. I weeded the patio and resanded between the bricks. I power washed the front steps. I put out flowers and patio cushions. I removed more than half of the contents of the bathroom vanities and master closet. I lined the bottom of the kitchen sink cupboard with cork paper.
This process took about 3 weeks of working on it for a few hours every night. Because I wanted absolute top dollar for the townhouse, I was diligent and thorough. I remember being willing to exceed our housing budget to purchase this property because all the window sills were immaculate. I was determined that all the windowsills should be freshly caulked and painted when I listed the house.
2. Taking photos
I just used my SLR to take photos of the rooms trying to highlight the best selling features. I did not post pictures of the kids rooms because I thought they were perhaps too gender and taste specific.
3. Writing the description of the home.
I remember reading inFreakonomics how the most successful listings talk about specific finishes and features (“7-minute walk to metro”, “gourmet kitchen with granite countertops and stainless steel appliances”, and “vaulted ceilings”) rather than wasting any characters on subjective or abstract descriptors like “Must See!”, “Charming”, ”Lovely” ”Welcome Home”, “In the heart of Vienna”, “Won’t last”, “Shows like a model”, and “True pride of ownership”. I looked through my email records to verify the dates of all the updating and replacing we had done. Those are concrete improvements to the property that I put in the listing and also on the handouts that I made for the open house.
4. Pricing the house
This was tricky. Zillow, Redfin, Trulia, Realtor.com and other sites all give estimates of the value of your home, but most of them are zombie appraisers that churn out values based on an average price per square foot of all the houses of a particular type (townhouse, condo, single family) sold in a geographical region. They don’t take into account factors like specific proximity to metros and shopping centers (Mosaic district!), end unit versus interior unit, garage or no garage, or year built. Consequently, they vary widely. For instance, our townhouse sold for more than $60k above it’s zestimate (Zillow’s value estimate). The best way to price the house is to look at comparable sales in the area. Zillow will feature all the recently sold homes in your area and you can click on each to get more details to determine how comparable each comp actually is.
We were fortunate in that two townhouses in our complex with the same floor plan as ours had sold the previous week. They were still under contract so not listed with a final sale price on Zillow, but we did some snooping and found out approximately what they sold for. In fact, the sale of those two houses is what really accelerated our listing process. We knew they had had multiple offers which meant that there were a number of people out there who were bummed they missed the contract on a townhouse in P**** P***. We wanted to jump onto the market immediately while their wounds were fresh and snap them up.
We looked at the other units’ prices then tacked on $25k for our superior finishes and the value of being an end unit. Kent wanted to ask for more. Having watched too much HGTV, I was definitely leery of overpricing the house. I would much rather price it realistically and start a bidding war than overprice it and have to let it sit until we dropped the price.
I engaged Steve at 10am on a Thursday. Within an hour, he sent me the forms to fill out for the listing. I got most of the information from Zillow and Redfin which pull specs on each property from publicly available sources though I did double check those on the county website. I also got out the tape measure to measure the rooms just to be on the safe side. If law school taught me anything, which is debatable, it is you are liable for representations you make.
Another important consideration is whether and how to offer a buyer’s agent commission. I specifically stated in the listing that we were offering a 3% buyer’s agent commission. When selling by owner, you don’t have to offer the full commission or even any part of it, but you risk turning off agents from showing your property. I wanted buyers’ agents to be 100% confident when showing my property to their clients that they stood to make as much money from it as from any similar property.
I sent Steve the forms and pictures at 2:15pm, and the listing went live at 4:18. I put in an advertisement in the listing for an open house on Sunday afternoon. I already had calls that night (Thursday), and my phone rang off the hook all of Friday and Saturday. I put a For Sale by Owner sign from Home Depot out front. I could have ordered a nice one that said United Brokers from Steve, but there was no time. No matter how carefully you try to write your phone number in a standard font with a Sharpie, those For Sale by Owner signs always look vaguely pathetic. Oh, well. People are looking online for houses, not driving around old-school style so much anymore.
Please stay tuned for Part III: Making the Sale which is where all that hard work and ballsiness of daring to sell by owner pays off in a fat and fabulous way! I have been itching to post Part III since the weekend it all took place, but have held off until after we closed because I didn’t want to jinx it.
Ahhh. So satisfying.