Do-it-yourself is a familiar concept to frugal consumers. If you’re handy, doing home repairs yourself can save a bundle, for example.

But do-it-yourself doesn’t always pay. One prime example is selling a home by yourself.

Selling a house without using a real estate agent is tempting because, if successful, you could save thousands of dollars in sales commissions. Saving that money might be even more appealing if you had to slash the asking price because of a sluggish real estate market, which is where most home sellers find themselves today. It could also be enticing if you had an exotic mortgage that added borrowing to your principal, and you owe more than your home is worth. You also may simply want complete control over the selling process.

But the disadvantages of for sale by owner (known as FSBO) efforts are potentially just as large as the savings. That’s especially true in a buyer’s housing market, where drumming up interested sellers is much more difficult than a few years ago.

Cutting out the real estate agent could end up being a decision that’s penny-wise but dollar-foolish.

The basic formula is this: Will a successful FSBO save you enough in real estate commissions to make up for the market knowledge, potentially higher selling price, marketing efforts, deal negotiations and paperwork preparation that a real estate agent offers?

Today, one in eight homes is sold by owner. And almost half of successful FSBO sellers knew the buyer before the sale and didn’t try to sell the home on the open market, according to data from the National Association of Realtors. Fewer than half of FSBO sellers said they would sell another house by themselves.

Clark Howard, an author and syndicated radio-show host, is a self-proclaimed cheapskate who loves a bargain. But on the subject of real estate commissions, he recommends that most people pony up for an agent.

“In most cases, people who do FSBOs basically just waste time until they hire an agent,” said Howard, who’s newest book is “Clark Smart Real Estate.”

The topic of FSBO transactions is wide-ranging and controversial, but here are a few considerations:

Commission savings: Some FSBO home sellers might be under the impression they can save the entire 5 percent or 6 percent commission for selling a house. That’s not necessarily true. Unless your buyer doesn’t have an agent, you’ll have to pay 2.5 percent to 3 percent to the buyer’s agent. So commission savings on a $250,000 home sale would be $6,250 to $7,500.

That’s a lot of money. But then you must deduct do-it-yourself marketing expenses. That might include advertising and hundreds of dollars to be on the Multiple Listing Service, the primary database for home listings. You might also spend money hiring a lawyer to draw up a sales contract and incur myriad smaller costs.

You also must put a price tag on the time required to sell a house yourself. If an FSBO transaction is slower than one with an agent, you might end up making an extra mortgage payment or two. For example, if you already bought a new home, a quicker sale on the old home means you carry two mortgages for less time. That all goes into the calculations when running the numbers on whether paying a commission is worthwhile.

Selling price: This is a hotly debated topic. Will an agent secure you a higher selling price? The National Association of Realtors claims homes sold by its realty agents bring 16 percent higher prices on average. On the other hand, a study released earlier this summer by economists from Northwestern University and the University of Wisconsin showed FSBO sellers in Madison, Wis., made out better than if they had hired an agent and paid a commission. But Madison has a more-robust-than-usual local FSBO Web site, and the researchers’ calculations placed no value on services provided by an agent.

In the end, the tussle over a higher selling price might be the wrong focus. Your concern should be attracting the most buyers. If enough buyers know about your home, multiple bids would ultimately set the appropriate price, regardless of your method of selling. So the question becomes: Can you, as a FSBO, market the house as well as a real estate agent?

Impartiality: To be successful, FSBO sellers must be as objective about the house and its shortcomings as an agent would be. “You better have ice water in your veins, or don’t try to sell your own place,” Howard said. “If you have an open house, you better swallow your pride because one buyer after another will come in there and insult the daylights out of you. People will even criticize your furniture.”

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DEAR BOB: We are buying an out-of-state house. The closing is scheduled for about two weeks from now. It is a “for sale by owner,” and the sellers aren’t too knowledgeable about the sales process. We just received a document from the title company listing the recorded liens against the sellers. The list includes a lien from the state’s Bureau of Child Support for more than $12,000 and deferred property taxes for about $2,000. None of these liens were previously disclosed to us. If the sellers are unable to pay these liens at or before the closing, what are our options? We don’t want to be homeless when we arrive in our new city if something goes wrong with the closing. –Rebecca L.

DEAR REBECCA: If the sellers will be receiving sufficient cash from the sale to pay off the child support and property tax liens, then they will be able to deliver marketable title to you.

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You want the home you buy to include certain features, but you’re not likely to find all of them in one house for the price you’ll be willing to pay. You can compromise on location, home features such as size, condition, price, or all of these. Just make sure that the tradeoffs you make are carefully considered and that they don’t compromise your quality of life.

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Even worse, a few days later you follow up and the homeowner says, “It was incredible. I stepped out in the yard, sign in hand, and two buyers drove up. I sold my home right there. Never even got the sign planted.”

If you have been in real estate for any length of time at all, something similar has happened to you. It has happened to your colleagues and competitors as well. Sometimes it feels as if you are at war against an unseen enemy—the mysterious “For Sale By Owner.”

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Fizber.com, for-sale-by-owner real estate website, introduced a new tool for home buyers – all home listings are displayed with Google Maps making your search more exciting and dynamic. You can either get a list of homes or use a cool Google Maps feature to browse listings. Fly around a neighborhood with Google maps and see the houses for sale in your area. Click on an individual house for the selling information, house details, etc., all for free and no strings attached. Fizber shows the results via Google Maps with the listings on the left, with photos of the property if available.

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Do-it-yourself is a familiar concept to frugal consumers. If you’re handy, doing home repairs yourself can save a bundle, for example.

But do-it-yourself doesn’t always pay. One prime example is selling a home by yourself.

Selling a house without using a real estate agent is tempting because, if successful, you could save thousands of dollars in sales commissions. Saving that money might be even more appealing if you had to slash the asking price because of a sluggish real estate market, which is where most home sellers find themselves today. It could also be enticing if you had an exotic mortgage that added borrowing to your principal, and you owe more than your home is worth. You also may simply want complete control over the selling process.

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When it comes to buying or selling a home, the idea of having to negotiate can be intimidating. Most of us aren’t aware we have negotiating skills even though we skillfully negotiate daily. (Who walks the dog, takes the children to school, goes out to pick up lunch, prepares the report, etc., etc.?) Let’s debunk some myths about negotiating, shall we?

This Is Not Negotiable

Sellers often say to themselves, “This is the deal I’m willing to make. It’s not negotiable.” That’s not necessarily because there is no room to negotiate. It is the simple result of anxiety about negotiating.

Take this approach and you may be chasing away otherwise good potential buyers. The buyer gets into a huff about the seller’s inflexibility and everything goes down hill from there. This need not happen. Sellers should be willing to enter into reasonable negotiations and just remember that they can say “no” at any point along the way toward working out a deal. However, they need to ask themselves when each subject comes up, “Am I willing to lose this deal over this point?”

The buyer needs to have a similar mindset. When seller and buyer are thinking along the lines outlined above, and each acknowledges the possibility of working out a deal in which both buyer and seller come away feeling like winners, the stage is set for successful negotiations. It is fortunate that most folks do think along these lines.

It’s also helpful that buyers and sellers are not always focused on the same things to the same degree. Price might be more important to one, and the time of the sale’s completion more important to the other. Sometimes negotiations are just a matter of balancing things out.

Typical Pattern

Successful negotiations don’t usually drag on for a long period of time. There’s usually an offer, and a counter-offer which is accepted. Many times the first offer is actually accepted if it is the result of a conversation between buyer and seller where subtle negotiations took place. At most, successful negotiations are usually concluded with an offer, a counter offer, and a counter-counter offer. It’s usually a sign that the deal is not going to work out if negotiations continue much beyond that.

There are exceptions to everything, of course, and the minuet of negotiations can go on for quite some time where two people who love to negotiate are involved. However, even in those cases, most of it tends to be verbal with the written sales contract changed very few times.

The biggest point of this article is don’t get intimidated. If you stay objective, you will be able to get what you need from your home.

By: Raynor

Raynor James is with www.fsboamerica.org - providing FSBO homes for sale by owner.

Obviously, one of the most apparent FSBO benefits, at least to many home owners, is that the act of sticking that ‘For Sale By Owner’ sign in their front yard says that they might save some money and have some control over the selling of their home. However, what are some of the other benefits of an FSBO home sale, and how do you go about doing it.
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Real estate agents are vastly more skilled than you are.

Their people skills are better and there marketing skills are unsurpassed.

They can determine the price of your house, far more accurately than you can.

You obviously believe all of this don’t you? Otherwise, you would never be prepared to pay the agent the incredible amount of money that you are going to pay him, would you?

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