Choosing between selling a home yourself or hiring an agent is a big decision. Preparation is the key in either case; however, the preparation pointers are different in each situation. When you decide to sell your home in a for sale by owner arrangement, consider these five tips to help you get ready.
#1: Know the home’s market value
The home’s market value and listing price go hand-in-hand. You must determine the market value, check the comparable listings in the area and decide the price at which you will list the home. You don’t want to price the home too high because the first two weeks are the timeframe during which you will usually see the most interest in the home. You also don’t want to price the home too low and end up not getting what it is worth.
#2: Get your paperwork together
You need to get your paperwork together before the first showing of the home. When you hold an open house, have a sign-in form where you gather names, phone numbers, and email addresses of people who come to view the home.
Find out what disclosures you need to make about the condition of the house so you can include that information in your documentation as required. Before any private showings, make sure you have the contact information for the person and that you pass it on to a friend or family member so that they know whom you are with. Other documents to gather include forms regarding offers, counteroffers, contracts and similar documents you might need if a party shows interest.
#3: Check for prequalification or payment abilities
You must decide how you are going to vet out buyers. This can include asking people for prequalification documents from a lender, asking for an earnest money deposit or asking for proof of ability to pay. While this is important in every case, it is especially important if you are offering a wraparound form of financing. You need to ensure the purchaser can pay you so you can pay the mortgage on the property. It is also important if you are offering owner financing like rent-to-own or land contract options.
#4: Be prepared for negotiations
A buyer will likely write an offer that is lower than your asking price. This is normal, but don’t let the offer insult you. Many buyers opt to lowball the first offer just to see what kind of deal they can work out with you. Take a deep breath, read the offer you receive, and decide how you will respond. Typically, you should offer at least one counteroffer to each offer.
#5: Include a contingency clause
Include a contingency clause in the contract if you don’t already have another home. This gives you a way to keep the house if you can’t find another house. Don’t be surprised if the buyer includes a contingency clause for financing, house condition or similar f actors in the offer.