Steps to Selling Your Home by Owner

Step 1. Start Digging and Become Knowledgeable about Your Home.

When you are just thinking about selling your home, start digging for information. The more you know about your current home, the smoother your closing will go when you sell.

Documents to retrieve or things to know prior to putting your home on the market:

  1. Find the closing documents from when you purchased your home. Make sure you have the Owner's Policy, Survey Report, and Sellers' Disclosure.
  2. You are required to fill out a disclosure statement when you put your home on the market. Be truthful or could come back to bite you. This includes letting buyers know if you are in a flood zone and if flood insurance is required.
  3. If you live in an association, pull out the Homeowner or Condominium Association Rules.
  4. Many homes are located in neighborhoods that have deed restrictions. If this pertains to you, make sure you read it and have it available for buyers.
  5. Call your existing lender and ask for your payoff amount. You don't want to be surprised after you have accepted an offer.
  6. Know whether you have well and septic or city water and sewage.
  7. Check with your city and/or county to see if inspections are needed before closing. For example, some counties require your fire alarms to be inspected.
  8. Choose a title company and call them prior to putting your home on the market. They will let you know what you need to do or what documents you need to have before closing. A title company will give you a list of fees that will be paid at closing. Be sure to include the title company on your purchase agreement so that the buyer's lender will not choose another one.
  9. It is our recommendation that you hire a real estate attorney to handle your paperwork. Some will do all the paperwork and be available at closing for a flat fee. We also recommend meeting with an accountant or financial advisor to learn about tax implications when selling a home.
  10. Research how to sell your home by owner. Information is available online or at your local library. The more you know, the more comfortable you will be when you show your home to buyers and negotiate offers.

Step 2. Prepare your home for prospective buyers.

To prepare your home for prospective buyers, you must make minor repairs, clean, paint and do landscape maintenance. The exterior and interior are equally as important. It is not necessary to remodel your home or pay for a costly addition. The checklists below outline everything you should do to enhance your home's appeal to a potential buyer. These tips will add value to your home and could mean the difference between a quick sale at your asking price and a lengthy sale at a lowered price.

Outdoor Checklist

  1. Driveway, walks, steps and porch should be free of debris, leaves, snow and ice.
  2. Lawn mowed and edged, hedges trimmed and yard clutter free.
  3. Repair large cracks in concrete and potholes in blacktop.
  4. Fix and paint deck.
  5. Fix and paint fences.
  6. Paint and repair siding.
  7. Paint and repair roof overhangs.
  8. Repair or replace gutters and downspouts
  9. Replace any loose or missing shingles. Repair roof leaks.
  10. Repair or replace gutters and downspouts.
  11. The front entry to your home is very important. Repair and paint porch railings; polish metal items such as brass knobs or address numbers; make sure your doorbell and outdoor lighting fixtures work; paint the front door and lubricate the hinges and handle. Finally buy a new, unobtrusive welcome mat.

Indoor Checklist

  1. Repair broken windows.
  2. Fix sticky windows and drawers.
  3. Replace broken or missing hardware on windows, cabinets and doors.
  4. Fix or replace doors that do not open or close easily.
  5. Oil door hinges.
  6. Fix leaky faucets, leaks underneath sinks and clogged drains.
  7. Remove stains from bathroom and kitchen counters.
  8. Clean out the attic and garage.
  9. Eliminate clutter. It makes a room look bigger.
  10. Remove oil stains from your garage floor.
  11. Paint walls and ceilings if needed. Neutral colors have the most appeal to buyers.
  12. Replace stained or torn wallpaper.
  13. Shampoo carpeting
  14. Clean and wax bare floors.
  15. All mechanical systems and appliances should be in good working condition.
  16. Your kitchen is the most important room in the house. It should appear bright and attractive. Paint dull cabinets, install lively curtains and use higher wattage bulbs to increase brightness.

Open House Checklist

  1. Dust thoroughly.
  2. Scrub and vacuum floors.
  3. Clean windows and mirrors.
  4. Clean and straighten bathrooms. Put fresh towels on the towel rods.
  5. Kitchen should be spotless.
  6. Closets and storage spaces should be clean and uncluttered.
  7. Eliminate pet odors.
  8. Your home should be well ventilated and fresh smelling.
  9. Open window draperies and shades to let in light, to show a pleasant view and to make rooms appear larger.
  10. Place flowers and touches of greenery throughout the house.
  11. House temperature should be at a comfortable level.
  12. Have a crackling fire on a cold winter day.
  13. Play soft music and bake cookies or bread to make your home more inviting.

Step 3. Determining a Price.

Determining a selling price is the single most important aspect in selling your home. The value of your home depends on the neighborhood in which the house is located (the biggest factor in determining value), the condition of the house, current market conditions, interest rates and the length of time the house has been for sale. In order to receive the best price for your home, you have to determine the price that comparables (homes that are similar in terms of style, size, condition and location) in your neighborhood are selling for.

There are three ways to determine your home's value:

  1. Research the market by comparing the average asking price in your neighborhood (this information can be found by checking classified advertisements) with the average selling price (this information can be found at your city assessors office) in your neighborhood.
  2. Ask a real estate agent to do a market analysis of your home (real estate agents will do this for free but you should tell them you are considering selling your home yourself)
  3. Pay for a market analysis, which is a professional type of analysis done by an appraiser for about half the price of a full appraisal. If you need a full appraisal later, see if the appraiser will apply the cost of the market analysis to the full appraisal. They may be able to do that if not too much time has elapsed. This information can also be useful in negotiations with a buyer. A further point to consider is that for a quicker sale, or a sale in a buyer's market, price your home lower than the competition if you are able to.

Step 4. Marketing Your Home.

The most important element to successfully marketing your home is giving it maximum exposure. Your home will not sell unless buyers know it is available. The internet provides the largest market exposure for home sellers. An internet advertisement has the potential to reach over 1 billion people world wide including over 229 million people in the United States alone. An internet advertisement is viewable 24 hours a day, 7 days a week and with 80% of home buyers beginning their search on the internet, it's a smart advertising choice. Other important marketing options include a professional For Sale by Owner sign with a brochure box in your front yard. This alerts both neighbors and others driving through your neighborhood that your home is for sale. The brochure box provides essential information about your home to potential buyers. As the seller, you also have the option of holding open houses (typically on Saturday or Sunday) or showing your home by appointment only. Other important methods include advertising in your local newspaper's Sunday classified real estate section (keep your ad short but remember to indicate the website where it's featured) and word of mouth — tell relatives, friends, neighbors, co-workers, church, mosque or synagogue members, hairdresser or barber, doctor, plumber and carpenter — virtually everyone you know - that your home is for sale.

Step 5. Negotiating Offers

Before negotiating with a buyer, you must understand that selling your home is a business transaction. To negotiate successfully, you must stay calm and in control at all times. Set aside the emotional feelings you have about your home and take nothing personally. You should also strive for a deal that is win-win. This leaves you and the buyer feeling you have both gained. When a buyer is prepared to make an offer, request a pre-approval letter from the buyer's mortgage company. (You may want to do this before showing the house.) This informs you that the buyer meets the lender's preliminary qualifications for a mortgage.

It is important to have your disclosure forms filled out to give to any potentially serious buyers: they would be the regular Seller's Disclosure, the Lead Disclosure, and the government lead brochure if your home was built before 1979. (FsboMichigan furnishes to its clients the Offer to Purchase, the Seller's Disclosure, and the Lead Disclosure in hard copy. They can also be downloaded from the website, as can the government lead brochure.)

After you receive a written Offer to Purchase (and it must be in writing to be legal) you have three options: accept, reject, or make a counteroffer. Part of the value of fsbo selling is that you and the buyer can informally negotiate the selling price and other information before the offer is actually written up. If you have several offers, consider all of them and respond to the most attractive. Once you and the buyer agree on terms and both parties sign the purchase agreement, the offer has been accepted. Prior to this, an offer can be withdrawn, but after it is signed, it is binding. Sign two copies, one for each party.

If you make any changes to the offer, it is considered a counteroffer. When this is done, the original offer is null and void. After the offer or counteroffer is accepted, the buyer should tender earnest money. This is usually at least $1,000 and is often up to 1% of the offer, but can be any amount agreed to by the buyer and seller. It ensures that the buyer is serious, and is a potential source of damages if the buyer backs out without cause. You can set this money aside in a special account, or have it escrowed by an attorney, lender or title company. If the purchase goes through, this money is applied to the sale. If buyer or seller contingencies are not met, or not met by the date specifed, earnest money may be either retained by the seller or returned to the buyer, depending on which contingency was not met. These contingencies are conditions within the contract which require a specified event or action to happen by a certain date in order for the contract to be binding. Examples of these contingencies are the buyer getting an inspection by a certain date, being able to sell his existing home first, or obtaining a mortgage at a certain rate of interest, all having a certain date for completion.

If you are using a title company to handle your closing (or you could use a mortgage company or an attorney), they like you to connect with them early on the process. They will usually gather the closing documents and hold the closing for between $250 and $350. So, after accepting the offer, take your copy of it to a title company, or whoever is handling the closing. They will take it the rest of the way, letting you know what they need.

Step 6. Closing On Your Home

The closing is the final step in the process of selling your house. It is the process where property funds and title are transferred between you and the buyer. The closing is usually at the title company but can also be held at your attorney's office or the lenders office. It typically takes about an hour. Several days prior to closing, you should provide the buyer with a walk through inspection to verify that you have complied with the terms of the purchase agreement. Also prior to closing, the title company will prepare a closing statement or settlement statement which details the amount owed by the buyer and the net amount received by the seller. A closing statement is required for every real estate transaction that involves the transfer of property. At the closing, the title company, as a neutral third party, receives and distributes funds, ensures all conditions have been satisfied, confirms that the buyer receives appropriate documents and provides an accounting for the transfer process.

Closing Checklist

  1. Confirm the closing date, time and place.
  2. Review the contract and make sure that closing contingencies have been met.
  3. Confirm that required repairs have been made.
  4. Shut off the water, gas and electricity utilities and have final bills forwarded.
  5. Provide the post office with your forwarding address.
  6. Disconnect your phone, cancel newspaper subscriptions and cable TV service.
  7. Contact the title company to verify that all paperwork is ready for the closing and request a copy of your estimated closing costs. Review the figures for accuracy.
  8. Gather documents for the closing, such as tax receipts, survey and mortgage.
  9. After the closing, cancel your homeowner's insurance policy.

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