Welcome to FSBO Genius!

Welcome to FSBO Genius, where you can save time and money by learning an effective and efficient method for selling real estate without paying commissions to brokers. Our method involves 9 steps to success that were develop by a prominent former Realtor.

Real estate brokers and Realtors obviously provide useful services for selling and purchasing residential real estate, but these services come with a hefty price tag.  Some sellers simply may not be able to afford to pay a commission without ending upside down on their transaction.  Others may simply wish to save money by facilitating some of these services themselves.

Real estate brokers essentially provide 3 areas of service for sellers: marketing your home, negotiating the sales contract, and assisting with closing the transaction.  Each of these areas of service can be effectively and economically accomplished by a seller if they understand the process and resources available to help.  For example, did you know that a broker’s most important marketing tool is listing a home on the local Multiple Listing Service (MLS)?  And did you know that you, the seller, can purchase the option to have your home listed on the MLS a la carte at a fraction of the cost typically paid in commissions? This eBook will show you the process for selling your home all on your own and provide valuable tips along the way.  

The 9 steps to FSBO success are shown below. To read the details of each step, simple visit the corresponding page.

1. Learning the Local Market
2. Pricing Your Home
3. Creating a Property Profile
4. Determining Your Costs & Profits
5. Preparing Your Home for the Market
6. Marketing Your Home
7. What to do When a Showing Appointment is Made
8. Negotiating the Sales Contract
9. Closing the Transaction

Following and learning the nine steps above will arm you with the tools you need to sell your home on your own. Don't feel overwhelmed or underprepared! Take the time to read and re-read the steps so you're familiar with the terminology and process. And don't forget, you can always enlist help if you need if for any of the steps.

If you take your time, follow the steps, and remain patient through the process, you'll reach a successful conclusion for your real estate needs. You've got access to all the tools and resources you need to get your home sold. All that's left to do is to get started!

Step 1: Learning the Local Real Estate Market

Learning the Local Market

Understanding the current state of the real estate market is critical to the successful sale of your home. Selling a home in any type of market often involves trade-offs. Those trade-offs revolve around two key issues: 

• How quickly you need to sell your home; and 
• How much money you need to profit from the sale of your home

The local real estate market conditions will help you determine realistic expectations for both issues.

If you need to sell your home quickly (faster than the average “days on the market”), you may need to price it below most comparable homes in your area. The trade-off in this scenario would be that you may not make the maximum profit on your sale. Conversely, if you are not pressed for time you may be able to price your home on the higher end of comparable properties in your area. The trade-off in this case is that it may take more days on the market to sell your home. 

Real estate markets work on the general financial principle of supply and demand. When there are relatively few homes on the market and there are many eager buyers, the market is termed a “seller’s market”. When there are relatively few buyers and several months’ worth of inventory (houses for sale), the market is termed a “buyer’s market”. Remember, regardless of whether your local market is a seller’s market or buyer’s market, you will likely get the benefits of either if you sell your home and then decide to buy another in the same market.  The bottom line is know your market, but don't be intimidated by a buyer's market or overconfident in a seller's market.

To learn about the local real estate market, browse your local real estate board's Multiple Listing Service (MLS) for the latest statistics on comparable homes. Ideally, it would be useful to know the average days on the market, average sales price and number of other homes on the market that are comparable to yours.  Real estate boards commonly list this information on their websites.

Step 2: Pricing Your Home

Pricing Your Home

A comparative market analysis (CMA) is an important tool for properly pricing your home and determining the fair market value. A CMA uses location, key characteristics (size, rooms, ammenities, etc.) to help in determining value and is based on similar properties in the area. The market analysis takes into account the amount received from recent sales of comparable properties and the quantity and quality of comparable properties currently on the market. The desired end result is to find a price that will attract a willing and able buyer in a reasonable amount of time.

There are essentially three categories of comparable homes that you should use to help determine the value of your home. The first category is comparable homes that are currently on the market (i.e. available to purchase). This category represents the competition for your home. There are likely several homes in this category that potential buyers will cross-shop while they are considering your home.

The second category of comparable homes to consider is homes that have recently sold (i.e. within the last year). This category represents what buyers were (and hopefully still are) willing to pay for a home that is comparable to yours.

The third category of comparable homes to consider in your CMA is homes that were for sale but did NOT sell. Real estate agents often refer to these homes as “expired listings”. More often than not, homes that do not sell are overpriced. Therefore, this category represents what buyers were NOT willing to pay for a home comparable to yours.

All three categories of comparable properties are readily available to the public through popular real estate websites (and mobile apps) such as zillow.com and trulia.com.

Once the value of your home has been determined, you can decide on an asking price that will achieve your goals. Generally, the price should not exceed the value by more than 5% or potential buyers may not even make offers. Naturally, if you want to sell quickly your asking price should be very near the actual market value.

Some people also use taxable value, state equalized value (SEV), and appraisals to try and determine market value, but these are all very often inaccurate and are generally created for a purpose other than selling a home.  True market value is most accurately estimated by using the comparative market analysis method described above.

The following are a few things to keep in mind about pricing:

• Realistic pricing will achieve maximum price in a reasonable time.
• Your cost or profit desire is irrelevant; the market determines price.
• The costs of improvements are almost always more than the value they add.
• Houses that remain on the market for a long time do not get shown.
• A house that is priced right from the beginning achieves the highest proceeds.

Determining the best asking price for a home can be one of the most challenging aspects of selling a home. It is also one of the most important. If your home is listed at a price that is above market value, you will miss out on prospective buyers who would otherwise be prime candidates to purchase your home. If you list at a price that is below market value, you will ultimately sell for a price that is not the optimum value for your home and risk “leaving money (profit) on the table”. More buyers purchase their properties at market value than above market value. The percentage increases as the price falls even further below market value. Therefore, by pricing your property at market value, you expose it to a much greater percentage of prospective buyers, thus increasing your chances for a sale while ensuring a final sale price that properly reflects the market of your home.

Another critical factor to keep in mind when pricing your home is timing. A property attracts the most attention, excitement and interest from the real estate community and potential buyers when it is first listed on the market. Improper pricing at the initial stages of trying to sell your home misses out on this peak interest period and may result in your property languishing on the market. Eventually, this may lead to a below market value sale price or even worse, no sale at all. Therefore, your home has the highest chances for a successful and profitable sale when it is new on the market and the price is reasonably established.

Step 3: Creating a Property Profile

Creating a Property Profile

The following features will help in identifying properties that are comparable to yours for proper price determination. As you read through the list, write down the specifics about  your home. Many of the features listed below are the subject of commonly asked questions by prospective buyers, so try to be as thorough and accurate as possible.

• Assessed Value (check your tax records)
• Year Built
• Design Style (Ranch, 2-Story, etc.)
• Number of Bedrooms
• Heating Source (Gas Forced Air, Radiant, etc.)
• School District
• Total Square Footage (Above Grade + Finished Below Grade)
• Number of Bathrooms (Full + Half)
• Air Conditioning (Yes or No?)
• Fireplace (Yes or No?)
• Garage (Number of stalls, attached or not)
• Basement (Full? Finished?)
• Other Rooms (Rec. Room/Dining Room, etc.)
• Pool (Yes or No?)
• Acreage/Lot Size
• Water (City or Well?)
• Sewer/Septic
• Out Buildings

After you've created your property profile, try to incorporate most of the data into a brochure, flyer or website about your property. The flyer can be posted in online listings, placed in a handout box in your front yard, and also given to interested prospects.

Many states require a Seller's Property Disclosure Statement which tells the condition of the home and associated property (appliances, etc.) and other factual details. Check with your state and local real estate board to obtain a disclosure and the requirements.

Step 4: Determining Yours Costs & Profit

Determining Your Costs and Profits

The following is a partial list of costs that may be associated with the sale of your home. Once you have calculated your total costs, simply subtract that number from your sale price to determine your profit (or loss). 

Costs to consider:

• 1st Mortgage (Get your payoff from your lender)
• 2nd Mortgage (Home Equity Loan/Line-of-Credit)
• Title Insurance (Get a quote from a local title company)
• Closing Fee (Ask a title company, but typically ~$500)
• Legal/Attorney Fees
• Property Survey (Most lenders require a survey to verify legal property boundaries)
• Home Warranty Policy (optional, but potentially useful for marketing)
• Inspection Fees (mechanical, structural, pest, radon, etc.)
• Document Preparation Fees (Attorney, Realtor, or Title Agent can assist with these)
• Appraisal Fee 
• Recording Fee
• Property Taxes (Prorations, etc.)
• Local Transfer Taxes (Typical a state tax)
• Local Revenue Stamps (Sometimes a state or local municipality fee)
• Advertising/Marketing Fees

Step 5: Preparing Your Home for the Market

Preparing your Home for the Market

Your home has only one chance to make a great initial impression with each potential buyer. If it doesn't make a positive first impression, you'll either lose interest from the buyer or not receive the price you're hoping for. The following “tricks of the trade” will help you keep track of what needs to be done. The whole idea is to present a clean, spacious and clutter-free home – the kind of place you would like to buy! Accomplish a little everyday and before long your home will be ready to make the impression that can make the sale.

To help your home’s curb appeal…

• Mow the lawn
• Trim the shrubs
• Edge gardens and walkways
• Weed and mulch
• Sweep walkways and driveway, remove branches, litter or toys
• Add color and fill in bare spots with plantings
• Remove mildew or moss from walls or walks with bleach and water or other cleaner
• Take stains off your driveway with cleanser or kitty litter
• Stack woodpile neatly
• Clean and repair patio and deck area
• Remove any outdoor furniture which is not in good repair
• Make sure pool or spa sparkles
• Replace old storm doors
• Check for flat fitting roof shingles
• Hose off exterior wood and trim, replace damaged bricks or wood
• Touch up exterior paint, repair gutters and eaves
• Clean and remove rust from any window air conditioners
• Paint the front door and mailbox
• Add a new front door mat and consider seasonal door decorations
• Shine brass hardware on front door, outside lighting fixtures, etc.
• Make sure doorbell is in good working order
• Repair broken windows and shutters, replace torn screens, make sure frames and seams have good caulking

General Interior Tips...

• Add a fresh coat of interior paint in light, neutral colors
• Shampoo carpeting, replace if necessary
• Clean & wax hardwood floors
• Clean & wash kitchen & bathroom floors
• Wash all windows, vacuum blinds, wash window sills
• Clean fireplace
• Clean out & organize closets, add extra space by packing clothes and items you won’t need again until after you’ve moved
• Remove extra furniture, worn rugs, and items you don’t use: keep papers, toys, etc. picked up.
• Repair problems such as loose door knobs, cracked molding, leaking taps and toilets, squeaky doors, closets or screen doors which are off their tracks
• Add dishes of potpourri or drop of vanilla or bath oil on light bulbs for scent
• Secure jewelry, cash and other valuables

In The Living Room…

• Make it cozy & inviting, discard chipped or worn furniture and frayed or worn rugs

In The Dining Room…

• Set the table for a formal dinner

In The Kitchen…

• Make sure appliances are spotless inside and out (try baking soda for cleaning Formica stains)
• Make sure all appliances are in perfect working order
• Clean often forgotten spots on top of refrigerator and under sink
• Wax or sponge floor to a brilliant shine, clean baseboards
• De-clutter all counter space, remove countertop appliances
• Organize items inside cabinets, pre-pack anything you won’t be using before you move

In The Bathrooms…

• Remove all rust and mildew
• Make sure tile, fixtures, shower doors, etc. are immaculate and shining
• Make sure all fixtures are in good repair
• Replace loose caulking or grout
• Make sure lighting is bright but soft

In The Master Bedroom…

• Organize furnishings to create a spacious look with well-defined sitting, sleeping and dressing areas

In The Garage…

• Sell, give away or throw out unnecessary items
• Clean oily cement floors
• Provide strong overhead light
• Tidy storage or work areas

In The Basement…

• Sell, give away or throw out unnecessary items
• Organize and create more floor space by hanging tools and placing items on shelves
• Clean water heater and drain sediment
• Change furnace filter
• Make inspection access easy
• Clean & paint concrete floors & walls
• Provide strong overhead lighting

Step 6: Marketing Your Home

Marketing your Home

Before Officially Putting the Home on the Market

1) Property preparations: See detailed description in step 5 above.

2) Take property/home photos: Be sure to take both exterior and interior photos for websites, brochures and newspaper/television ads. For exterior pictures, make sure the sun is at your back (preferably in the morning or late afternoon but not when the sun is directly overhead). For interior photos, be sure to remove clutter, turn on all lights and use a flash.

3) Prepare property flyer/brochure: Many computer programs (Microsoft Word, Publisher, Adobe PhotoShop, etc.) have this capability. Additionally, your local office supply or copy store should also be able to help. Vflyer.com provides an excellent freee online resource for creating professional looking flyers.  Be sure to use high quality paper.

4) Order preliminary title work: Contact a local title insurance company to get started and find out what services they offer.

5) Obtain paperwork (purchase agreements, disclosures, etc.): Purchase agreements and disclosures specific to your state or local area are often available online or in office supply stores. Additionally, you can sometimes obtain the necessary paperwork for free from a local attorney or Realtor®.

First Week on the Market

1) Put up “For Sale” sign: Hardware stores usually have a good selection. Local real estate boards also often sell “For Sale” signs and other marketing tools. 

2) Run an advertisement: The local newspapers, internet (craigslist.org, zillow.com, fsbo.com, etc.) and television channel’s are all good places for a first ad.  Additionally, some real estate brokers will allow individual property owners to pay a flat fee to get their property listed on the local MLS.  Just ask!

Second Week on the Market

1) Mail postcards/property flyer to neighbors: This will help get the word out about your home and possibly bring a buyer if one of your neighbors knows of someone who might want to move to the neighborhood.

2) Schedule an open house for an upcoming weekend: Be sure to advertise the open house with an internet ad, newspaper ad and a yard sign.

Ongoing

1) Show property to prospective buyers

2) Review price and marketing strategy based on buyer input, activity and market conditions

Step 7: Showing Appointments

What to do when a Showing Appointment is Made

When you put your house up for sale, both agents and individuals will want to view your home if you have it priced and advertised correctly. Obviously, showing appointments are extremely important for a successful sale since no one is going to purchase a home they haven't visited. The following is a list of suggested ideas to help increase the chances for a successful showing:

• Open all draperies and window shades during daylight hours.
• Turn on all lights and replace bulbs with high wattage bulbs where needed.
• Open windows halfway before showing to circulate fresh air.
• Open all the doors between rooms to give an inviting feeling.
• Place fresh flowers on kitchen table and/or in the living room.
• If possible, bake cookies or bread to add an inviting aroma. 
• The kitchen and bathrooms should be sparkling clean.
• Pets should be confined or restricted from view. Be sure to eliminate pet odors. Not everyone may share your love of animals and some people may even be allergic to them.
• All jewelry and small valuables should be stored in a safety location.
• Replace any items not included in the sale, or tag them appropriately with “to be replaced with…” or “not included” signs.
• Beds should be made and clothes picked up. Bathrooms should be clean with towels folded and the toilet lid down.
• When you leave the house, leave it as if you know it is going to be shown. You never know when the right person is going to look at it!
• Make sure your property profile folder, utility bills, house locations survey, etc. are available.
• Add some strategically placed fresh flowers
• Turn off the television and turn on the relaxing music at a low volume
• Make a fire in the fireplace if appropriate

Step 8: Negotiating the Sales Contract

Negotiating the Sales Contract

Preparing your home and marketing your home are only half of the complete selling process. Negotiating the sales contract (purchase agreement) is every bit as important. Once you have found a buyer who is interested enough in your home to make an offer, you need to ensure that your interests are protected in the purchase agreement.  History and statistics have shown that the first offer on a home is usually the best offer, meaning the longer the homes sits on the market, the weaker the offers become, if they come at all.  That’s why it is extremely important to be competent in contract negotiation.

At this critical stage it is imperative that you fully understand your personal reasons and motivation for selling the home. For example, you may be more motivated to sell and willing to accept a lower price and concessions if you are moving due to a job transfer or job loss. However, if you are simply selling so that you can use your current equity as a down payment on your dream home, you may be less likely to deviate from your asking price.

When dealing with an offer from a prospective buyer, make sure that every detail is in writing. Once the offer has been submitted, you have three possible choices: 1) Accept the offer as written; 2) Reject the offer outright; 3) Propose a counteroffer. The following is a list of points to consider when reviewing an offer.

• Price
• Earnest money deposit
• Buyer financing: 
• Do they have an approval letter from a lender? 
• How much is their down payment? 
• What interest rate are they seeking?
• Closing and possession dates
• Prorations for taxes/association dues/etc.
• Closing costs: 
• Who will be paying? 
• Are the costs split between buyer & seller?
• Home Warranty/Home Protection Plan: 
• Who is paying for it? 
• What company is supplying it?
• Inspections: 
• What inspections will done and by whom?
• Fixtures/Improvements: 
• What items are included in the sale (appliances, drapes, etc.)?
• What title company and/or attorney will handle the closing?
• What contingencies are involved? (i.e. the sale of another home, financing, new roof, etc.)

While all of the above points may seem overwhelming, almost all real estate contracts have these issues explicitly mentioned in the standard contract language.  Therefore, if you’re using a contract from online, an attorney, a Realtor, or one that you purchased at a local office supply store, these issue are probably covered but variable details should be examined closely.  Remember, once you (the seller) sign a purchase agreement or counter-offer, most of the contingencies in the contract serve to protect the buyer’s interests.  This isn’t necessarily something to be concerned about, but you do want to make certain all the details of the offer are to your liking before signing!

Step 9: Closing the Transaction

Closing the Transaction

Congratulations, you made it to the final step!  Real estate transaction closings are typically done through an attorney or title company.  Title companies fill the role of an independent, neutral party that coordinates the closing and ensures that the interests of all parties to the transaction have been satisfied.  These parties include the buyers, sellers, mortgage lenders, and any real estate agents that were involved (potentially a buyer’s agent for FSBO transactions).  Specifically, the title company’s closing agent will be looking at the following items:

• Property title: Property history and ownership are verified to ensure a clean and marketable title without any liens.
• Property taxes: Payment of local and state property taxes is verified to ensure no delinquent taxes are owed.
• Title insurance: A title insurance commitment for the lender’s policy is prepared and both the owner and lender are issued coverage.
• Property survey: Many lenders require a property survey showing the property’s legal boundaries.
• Loan/mortgage documents: The title agent will coordinate with the lenders to make sure all required loan documents are available for closing.  A legally required settlement statement is also completed to show all of the costs associated with the purchase and sale of the property.
• Disbursement: When the closing is complete and all parties have signed and settled, monies are collected and used to pay off the mortgage release and any other vendors that are owed (survey company, title company, etc.)
• Document recording: Title companies also typically take care of properly recording the sale and purchase with local taxing authorities, courthouses, etc.

The services provided by the title company are essential for closing and well worth the nominal fees involved.  Unless you have prior real estate experience or legal expertise, it is strongly recommended that a title company or attorney are used to close the transaction.