Insights from Real estate market trends
How to sell a house by owner is a question that many homeowners ask themselves when they want to sell their home without a real estate agent. First let’s have a look at the market trends.
- According to the National Association of Realtors (NAR), FSBOs accounted for 10% of homes sold in 2021. This is an increase from 7% in 2020 and a decrease from 15% in 1981. Among Millennial and Gen Z sellers, the number is significantly higher
- National Association of Realtors (NAR) also found that FSBO, homes typically sell for around 26% less than other homes.
- 19% of buyers don’t know how to find FSBO homes, according to a survey of 1,000 home buyers in 2022.
- The median selling price for a FSBO home was $260,000, while the median selling price of a real estate agent-assisted sale was $318,000.
- 81% of successful FSBO sellers who knew the home buyer reported that they saved money by not using a real estate agent or broker.
Benefits of selling a house by owner
- Save money on real estate agent’s commission fees, which can be as much as 6% of the sale price.
- For example, if the average sales price of a Chicago, Illinois home is $300,000, the seller could save anywhere from $15,000 to $18,000 by going the For Sale By Owner (FSBO) route instead of using a real estate agent.
- Have more control over the sales process. You can decide how the house is marketed, what the listing price is, and to whom you show the house. This gives you more power and autonomy in the sales process.
- Directly communicate with buyers: You can answer their questions directly and build a rapport with them, which may help facilitate the sale.
Drawbacks of selling a house by owner
- It can be a time-consuming and complex process, especially for those unfamiliar with real estate laws and procedures.
- Many tasks must be completed, which can be a daunting prospect for someone who is not familiar with the process, including
- Preparing the property for sale
- Collecting and preparing the necessary documentation
- Negotiating the terms of the sale
- Your access to resources, networks, and marketing tools may be limited compared to licensed real estate agents.
- Realtors may have years of experience in the local real estate market and a wealth of resources at their disposal, including access to multiple listing services, professional marketing materials, and an extensive network of contacts such as a home inspector or plumber.
- As a new home seller, you may not have similar access to all the resources that a realtor may have.
Selling a house by owner is a viable option for those who are looking to save money on agent commission fees and have more control over the sales process.
Understanding the FSBO Process in Illinois
Legal Requirements and Disclosures
Compliance with state and federal laws in Illinois, including property disclosure laws, is crucial when selling your house by owner. These laws require sellers to disclose any known defects or issues with the property to protect both parties.
To ensure compliance, working with an experienced real estate lawyer who can help you meet all legal requirements during the real estate transaction is advisable.
5 Steps to Sell Your House by Owner
Step 1: Prepare the home for sale by owner, making any necessary repairs, upgrades, and staging the property.
Step 2: Set a competitive listing price by researching comparable homes in the same neighborhood area.
Step 3: Market the property on real estate websites, social media, and through open houses.
Step 4: Negotiate offers to reach mutually agreeable terms and sale prices.
Step 5: Close the sale by signing the necessary documents, transferring ownership, and receiving payment.
Mistakes to avoid when you sell your own house
When selling a home by owner, it’s crucial to avoid certain mistakes that can hinder the selling process. These mistakes include
- Setting an unrealistic listing price,
- Failing to prepare the home for sale, and
- Not properly marketing the property
By setting a reasonable listing price based on market research, making necessary repairs, staging the property, and properly marketing it, homeowners can attract potential buyers and avoid prolonged time on the market.
Get your home market-ready
When it comes to selling a home, first impressions are everything. By preparing your home properly, you can greatly increase your chances of a successful sale.
Indoors and Outdoors: Clean, Declutter, and Repair
To make the home presentable to buyers, start by
- Cleaning the property inside and out,
- Decluttering each room, and
- Making necessary repairs.
This includes dusting light fixtures, washing windows, and cleaning the floors.
- Hiring a professional cleaning service may be necessary to ensure the home is spotless.
- Declutter each room to help prospective buyers envision themselves living in the space.
- Pack away personal items and excess furniture, and consider renting a storage unit if necessary.
- Make necessary repairs, including addressing obvious issues like peeling paint, leaky faucets, and patching holes in the walls.
- Not just focus on the surface but also address any glaring issues with your home’s plumbing, electrical, heating, ventilation, HVAC, structural, or gas systems that could affect the sales price.
By taking care of these details, you can create a warm and inviting atmosphere that will attract buyers and increase the chances of a successful sale.
Set a Realistic Price
Thoroughly analyze local market conditions, FSBO listings, and do a comparative market analysis. Research similar houses in your area, recent home sales, and consider hiring a professional appraiser to get an accurate estimate of your property’s worth.
Setting a competitive price will increase your chances of attracting interested buyers and negotiating a successful sale.
FSBO sellers often struggle with their emotional attachment to their property, which can lead to unrealistic pricing. While it’s understandable to have sentimental value for your home, it’s crucial to be realistic about the value it holds for potential buyers.
A price that is too high can deter buyers, while a price that’s too low could result in a loss. By analyzing local market conditions and comparable sales, you can set a competitive price and increase the likelihood of a successful FSBO sale.
Photographing Your Home
When selling a property, high-quality photographs play a crucial role in creating a good first impression with potential buyers. To capture the essence of your home, use professional-grade photography equipment or hire a professional photographer to showcase its best features.
Begin by taking a series of photographs that highlight the property’s exterior and unique features such as swimming pools and outdoor spaces. Then, photograph each room in a way that accentuates the best features. Using high-resolution and proper lighting techniques will ensure that your photos are eye-catching and attention-grabbing.
Invest in professional-grade photography equipment or hire a professional photographer to capture the best angles and lighting of your home. Professional-grade photography equipment can also show attention to detail, which can make buyers more interested in the property.
By presenting your home in the best possible light, you will be more likely to generate interest and entice buyers to come and take a closer look. This is especially true in today’s world where most prospective buyers are introduced to properties through photographs.
Creating a Compelling Sale by Owner Listing
To create an attractive For Sale By Owner listing, start with a detailed property description that highlights its unique selling points, such as
- The number of bedrooms and bathrooms,
- Square footage, and
- Special features like a fireplace or hardwood floors
Use high-quality photographs to visually showcase these features, and provide clear and concise information about the property’s condition and recent upgrades.
You can also include relevant local area information such as nearby schools, shopping, and dining options.
Here’s a sample compelling listing you can take inspiration from:
“Stunning Chicago Colonial in the Heart of the City!
Nestled in the heart of Chicago, this stunning colonial-style home is the perfect blend of old-world charm and modern amenities. From the moment you step inside, you’ll be wowed by the spacious living room, complete with a cozy fireplace and ample natural light. The kitchen has been fully renovated with top-of-the-line appliances and granite countertops, making it the perfect entertainment space.
Upstairs, you’ll find three spacious bedrooms, each with its own unique character. The master suite boasts a luxurious en-suite bathroom and a large walk-in closet, while the other two bedrooms share a beautifully updated full bath.
But it’s not just the interior that’s impressive. Step outside and enjoy the fully-fenced backyard, perfect for summer barbecues and gatherings with friends and family. And the location can’t be beaten – just steps away from all the best shopping, dining and entertainment options the city offers.
Don’t miss your chance to make this stunning Chicago colonial your own. Contact us today to schedule a viewing!”
By presenting a complete listing, you can attract serious buyers and increase the chances of a successful sale.
Promote Your FSBO House
Get ready to sell your house by owner with our expert marketing guide. Discover tips and insights to reach a broad audience, increase visibility, and create an appealing viewing experience for prospective buyers.
Maximize your reach by listing your home on popular online platforms like Zillow, Redfin, and Realtor.
- Post high-quality photos from different angles and provide a virtual tour.
- Use the listing description to highlight your home’s best features and the local area, including any recent upgrades.
- Use relevant keywords in your listing to improve the chances of potential buyers finding your home online.
Example: Imagine you’re selling a 3-bedroom, 2-bathroom house in the Lincoln Park neighborhood of Chicago, Illinois.
Your online listing might look like this:
“Welcome to this charming 3-bedroom, 2-bathroom house located in the sought-after Lincoln Park neighborhood of Chicago! This unit offers a spacious living room with hardwood floors, perfect for entertaining guests. The updated kitchen features granite countertops, stainless steel appliances, and a breakfast bar. The private backyard is perfect for summer barbecues and gardening. This house is conveniently located near top-rated restaurants, shops, and parks. Don’t miss this opportunity to own a piece of Lincoln Park!”
MLS – Multiple Listing Service
MLS, or Multiple Listing Service, is a database used by real estate agents to list and share information about properties for sale. It contains detailed information on homes such as location, price, size, and features.
Typically, only licensed agents have access to the MLS, but some flat-fee MLS listing services allow homeowners to list their properties for a fee without hiring a traditional listing agent.
- Work with a licensed real estate pro to write an optimized, accurate listing.
- Fees for MLS listing include listing agent fee or flat fee, buyer’s agent’s commission, and a few hundred dollars for a flat listing fee.
Social media platforms such as Facebook, Instagram, and Twitter are effective in marketing your home.
You can use high-quality photos and videos to display your home’s unique selling points and attract potential buyers.
Using relevant keywords in your post will help buyers find your home easily, and tagging local real estate groups and neighborhood pages can boost visibility.
Creating a separate Instagram account for your home can provide a detailed view of your property with pictures, virtual tours, and other relevant information, allowing potential buyers to envision themselves living there.
Open houses allow prospective buyers to see the property in person, creating a positive impression.
- To make the most of your open house, clean and declutter the property, or hire a professional stager to help.
- Creating a welcoming atmosphere with refreshments and background music can help buyers envision their lives in the property.
- Be prepared to answer questions about the property’s age, condition, and location, and have brochures and information available.
Flexibility with your schedule is also important to ensure that you can show the property when potential buyers are available.
Showing the Home
To manage showings when selling a house by owner (FSBO), set clear expectations for potential buyers such as refraining from smoking, bringing food or drinks, wearing masks, and removing their shoes.
You may also want to consider hiring a professional showing service to handle the showings for you. After each showing, follow up with potential buyers to increase the chances of a successful sale.
By doing this, you can ensure that showings go smoothly and that your property is well-protected during the sales process.
Negotiating and Closing the Sale in Illinois
Selling your home can be a complex and emotional process, and it’s important to be prepared for all the steps involved, especially when selling FSBO.
From evaluating offers to securing professional help for closing, there are several key considerations to keep in mind.
When you receive an offer on your home, the first step is to determine if it’s fair and reasonable.
- This may involve negotiating with the buyer to reach an agreement that works for both parties.
- It’s important to have a good understanding of the current real estate market and the value of your home when negotiating.
If the current market is strong and homes in your area are selling quickly, you may be able to ask for a higher price.
- On the other hand, if the market is slow, you may need to be more flexible and negotiate with the buyer to reach mutually beneficial terms.
One tip when evaluating offers is to consider the buyer’s financial qualifications.
- If the buyer makes a cash offer or is pre-approved for a mortgage, they are likely a more serious buyer who is ready to proceed with the purchase.
- Not all buyers are created equal – a cash offer means it’s in hand, and pre-approval means that they won’t get denied after you accept their offer.
- If a buyer is particularly interested in beating out the competition, they might waive the inspection, motivating you to choose them.
- You should also consider the terms of the offer, including the closing date and any contingencies the buyer has included, such as a contingency on selling their current home.
- Professional Help for Closing
Professional help from Real estate attorney
While you can technically handle the closing process on your own when selling FSBO, it is advisable to seek professional help from a real estate attorney.
- They can help you navigate the legal aspects of the sale and ensure that all the necessary documentation is completed accurately and in a timely manner.
- A real estate lawyer can also help you understand the terms of the contract, draft documents necessary for the title transfer, engage a title company’s services, and prepare the closing documents to ensure everything is in order.
- It’s also important to understand the costs involved in closing a sale.
- There may be title search fees, title insurance premiums, transfer taxes, recording fees, and other expenses that you’ll need to pay – in the arena of thousands of dollars.
An attorney can help you understand these costs and ensure that everything is taken care of.
Alternatives to FSBO
If you’re not comfortable with the process of selling FSBO, there are other alternatives that you can consider.
Agent assisted sales
- This can be a good choice if you don’t have a lot of time or experience in selling real estate.
- An agent can help you price your home correctly, market it effectively, and negotiate with buyers to get you the best possible deal.
Sell your home to a home-buying company
They will buy your home for cash, usually in as-is condition.
- This can be a quick and convenient way to sell your home, especially if you’re facing a tight deadline or need to sell your home quickly.
- However, you should be aware that these companies may offer a lower price for your home than you could get if you sold it on the open market.
Or instead of working with a real estate agent, look for discount brokers like Houzeo, CleverRealEstate, Redfin and ListingSpark, who provide limited service at lower fees.
Pros and cons of Discount brokers
Using a discount broker can be a cost-effective way to sell your home, as they typically charge less commission than full-service agents. You may also have the option of a flat fee, allowing you to pay a predetermined amount regardless of your home’s final sale price.
However, there are some downsides to consider.
- Using a discount broker may mean you receive limited services, which could require more involvement on your part, and you may not be offering a buyer’s agent commission, which could limit potential buyers.
Additionally, the sale process can be complicated, and you may need to find your own title company to complete the sale of your home.
Working with Experts
As a real estate attorney, I have seen firsthand the importance of working with experts during the home-selling process. Whether you’re new to FSBO or a seasoned pro, having the right team in place can make all the difference in the outcome of your sale.
Approval for Mortgage:
One of the first things to consider when working with prospective buyers is their ability to obtain a mortgage.
As a FSBO seller, you should have a basic understanding of what a lender will require for approval, including an appraisal of the property and a credit check for the buyer.
To expedite the sale process look for a buyer with a mortgage pre-approval letter and work with a title company.
This can be a complex process, but it’s essential to have a good handle on it to be prepared for any questions or concerns that may arise.
Buyer’s Agent Commission:
If a buyer’s agent is involved, they handle negotiations, advise on the purchasing process, and assist with the paperwork.
As a FSBO seller, you may be responsible for paying buyer’s agent commission, typically 2-3% of the home’s sale price. However, they can offer valuable insights and information about the buyer, which can help you make an informed decision about an offer and lead to a successful sale.
In a recent FSBO sale in Oak Park, Illinois, seller received an offer from an agent of the buyer, offering valuable insight into the buyer’s intentions and needs.
This included information about their necessity to close by a specific date, motivation for purchasing this particular property, and the status of their financing.
Armed with this information, the seller was able to make an informed decision about the offer, ultimately leading to a successful sale.
This serves as a reminder of the importance of having knowledgeable professionals involved during the selling process.
In-Depth Home Inspection:
Before a sale is final, a home inspection is usually conducted to determine the property’s condition.
The inspection will cover the major systems of the home, such as plumbing, electrical and HVAC, as well as identify any potential problems.
- As a FSBO seller, you can request to receive a report from the inspector outlining any issues and recommended repairs.
- Be prepared for the home inspection, as it can be a make-or-break moment for the sale.
- Recently, a FSBO seller in Evanston, Illinois, agreed to a home inspection as part of the sale of their property.
- The home’s plumbing, electrical, and heating, ventilation, and air conditioning (HVAC) systems, as well as any other possible problems, were all checked out by a professional home inspector.
- The inspector found several minor issues, such as a leaky faucet and a clogged drain, and recommended upgrades to the home’s electrical system to ensure it met safety standards.
- At the buyer’s request, the seller agreed with the inspector’s recommendations and fixed what needed to be fixed. This made the sale go smoothly.
Making an Offer:
Once a buyer has completed the necessary steps and is ready to purchase the property, they will make an offer.
- As a FSBO seller, evaluating the offer carefully, considering the terms, conditions, and price is important.
- If the offer is accepted, the next step is to move forward with the closing process. When evaluating an offer, it’s important to think carefully about your goals and priorities.
- A FSBO seller in Skokie, Illinois, received an offer that was lower than their asking price but included a faster closing timeline, which was a priority for the seller.
- In such a situation, the seller had the option of accepting the offer, as it met their expectations and needs.
Close the Sale:
The final step in the FSBO process is closing, which is the process of transferring ownership of the property from the seller to the buyer.
This typically involves fulfilling all the terms of the purchase agreement and transferring the property title.
- As a FSBO seller, you will be responsible for paying various closing costs, such as title insurance and transfer taxes, as well as any other seller-side fees associated with the sale.
Closing can be a complex and time-consuming process, but with the help of an experienced real estate lawyer, you can ensure that everything is done correctly and efficiently. A lawyer can also assist with resolving any disputes that may arise during the closing process.
A Case Study from My Experience
In my experience as a real estate attorney, I have seen many FSBO sellers overlook the importance of working with experts during the closing process.
They think they can handle it all on their own, but the truth is, there are many legal requirements and processes involved in transferring ownership of a property, and it’s important to have a professional guide you through it.
- In one case, a FSBO seller was selling a property in the highly desirable neighborhood of Wilmette, Illinois. The buyer made an offer, and everything was progressing smoothly.
- However, during the closing process, a prior lien was discovered on the property, which the seller was unaware of. The seller would have been responsible for paying the lien, which could have cost them thousands of dollars.
- With the help of a real estate attorney, the issue was resolved, and the sale was successfully completed. This serves as a reminder of the importance of working with experts during the closing process.
While hiring a Realtor is not a necessity, consulting with some kind of real estate professional is highly recommended.
By working with experts such as a lawyer or an agent from the buyer’s side, you can ensure that the process goes smoothly and that all the necessary legal requirements are met.
The Bottom Line
Weighing the Pros and Cons
FSBO can be a viable option for those who are confident in their ability to sell their home and those looking to save on the cost of a real estate agent’s commission.
However, it can also be a time-consuming and complex process that requires an ample amount of knowledge and preparation. Sellers should carefully consider both the benefits and drawbacks of FSBO before deciding.
Seeking Professional Help
Although FSBO is possible without the help of a professional, many sellers choose to work with minimum services agents, attorneys, or other professionals to help them navigate the process.
These experts can provide valuable guidance and support throughout the sale and can help sellers avoid costly mistakes.
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