For Sale by Owner is money saving alternative to selling a house with an agent, and it is not so intimidating and difficult as it looks to many.

Property owners are motivated to take selling into own hands by three main reasons:

1. Saving money on commission seems to be the most important factor, and independent sellers can save more the more expensive their house is. For example, $200,000 house sells for $10,000 commission of 5%. Commission from selling $600,000 house jumps to $30,000 - 3 times as much.
2. Others may have even more compelling reason to sell privately if they accumulated little equity in their home. Let's assume you sell a house priced at $200,000 in which you have 20% equity of $40,000. Commission of 5% charged by an agent would be $10,000. That is 25% of what you actually own in the house.
3. A house is likely to sell for about the same whether sold privately or through an agent, since it is the market which determines value. Private sale becomes more tempting in seller's market where many people search for homes and finding a qualified buyer is much easier.

Think ahead of your FSBO strategy. Decide what you can do yourself and in what areas you need professional help. You should also have a contingency plan in case your house does not sell within reasonable time.

There are number of issues you should consider of when selling on your own :

• Price

Adequate pricing is critical to smooth sale. Have your house appraised, so you know the right market price you can ask for.

• Renovation

1. Light renovations like painting or floor upgrades will pay you off well. They are inexpensive and effective ways to entice buyers. Other good investments (but more expensive though) are renovations of kitchens and bathrooms. These areas attract a lot of attention and can influence buyer's decision. When you renew them you will improve your chance of selling well and can get a decent return.
2. It is important not to increase the value of your home beyond that of other homes in your area. Otherwise, you may price yourself out of the market. Big ticket improvements may be necessary if the home could not sell without them. When small living room or lack of extra bathroom discourages potential buyers you may have no other choice but to undertake major renovation.

• Advertising

1. For Sale by Owner sign placed in front of a house can be very effective provided it looks professional. Avoid using pre-printed signs sold in hardware stores since they look cheap and amateurish. Order or make your own sign looking similar to those used by agents. Provide basic information - for sale by owner, number of bedrooms and bathrooms, special features, by appointment, phone number. Make the sign double sided so that people driving by in both directions can easily notice it.
2. Local newspaper ad can attract many buyers. You can refrain from large size expensive advertisements. Small ads containing a photo and listing basic features can be very effective.
3. Do not forget traditional word of mouth either. Inform your family members, co-workers, friends and neighbours that you want to sell.
4. For better exposure (to reach people who want to relocate) you can turn to the internet FSBO websites. They offer variety of packages at different prices. Some of them will take house photos, prepare sale signs and provide professional support. Visit a number of FSBO sites to compare prices and services before you sign up.
   

• Lawyer's Assistance

Legalities of real estate transaction and paperwork pose the biggest challenge for most people. Hire a lawyer to have a professional who will see to all documents and protect your interest. A lawyer will also increase your credibility since a buyer will feel more confident to make a deposit into your lawyer's trust account. Search for a good lawyer ahead of time and budget for this expense.

• Preparation

First impression really counts. Make sure the house and its surroundings are tidy. The following rules will help you to show it well and sell quickly :

- cut the grass, rake leaves and remove weeds

- wash all windows

- clean all carpets

- if necessary replace them, at least in the most visible places

- make sure your home looks spacious and uncluttered, including closets and other storage areas

- remove all personal items (like family photos) so your buyers could easier identify themselves with the house

- repair dysfunctional door handles, locks and switches

- clear drains and spouts of any debris

- use soft and natural colours like beige, gray, white or off-white for repainting

- open all curtains, shades and blinds to have as much light as possible

- switch artificial lights on (even on a sunny day) when expecting buyers

• House Presentation

Show your home by appointment only. Scheduling visitors will give you time to get prepared. Receive a reasonable number of buyers at the same time to induce competition of offers. Schedule additional presentation dates if you have to accommodate more buyers. Remove all valuable items and let your buyers roam freely around the house. Once they take a look make sure to show them anything special about your property they might have missed, and answer all questions they may have.

• Buyer's Agent

Private sale does not guarantee that you can sell your house without paying commission. Actually, your odds of not paying any commission at all are low. Most buyers have an agent because it is convenient and efficient, and it does not cost them anything. Since commission is usually split 50/50 between buyer's and seller's agent you can claim a half of commission rate for yourself, or even more if you are tough negotiator and market conditions are in your favour.

• Real Estate Broker

Remember that selling a house is your top priority. If you cannot sell within reasonable time, consider hiring a discount broker who delivers selected services for reduced commission or flat fee. Discount broker can market your property on Multiple Listing Service (MLS). This database, which other agents are using to find homes for sale, is the most powerful selling tool in the real estate market.

FSBO can save you money, but you will have to work for it. Therefore, it is not for everyone. When you decide to sell by yourself you will have to become your own agent. That means you will have to learn the basics of real estate and devote your time to marketing the house. If you cannot make a commitment required by FSBO you may be better off by finding a good agent and selling your house the old-fashioned way.

Greg Gralak is the editor of http://www.housepages.ca - Canadian Real Estate Guide and Directory. Visit our website to find more information about property buying and selling, and learn what a smart consumer should know.

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