March 21st, 2008 by Michael Oliver

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WOW, YOU MADE IT TO PART 2! You actually have a chance of producing a real sale of your home.

Let’s not stop now. OK, PRICING IS THE ABSOLUTE MOST IMPORTANT PART OF EVERY SALE. You can mess up all the other stuff and still sell the property if the price is low enough. No doubt about that! But what you NEED to have is the highest price that will still allow a sale to happen. For instance, pricing a 250k house for 260k to allow some “wiggle room or negotiation room” is absolutely the dumbest way to sell anything and absolutely the best way to kill your entire “just placed on market” momentum. Yet, I would be willing to bet a lot that 95% of FSBO’s do exactly that. I could write a book on pricing alone, but here are the highlights. People, for the most part, know what is in the ballpark. If you price too high and attract no takers, it looks like desperation when you lower. Keep in mind that the first 30 days in which a home is on the market are 100 times more important than the rest of the time the home is on the market. Why? Well, because all the neighbors and their friends and relatives and all buyers looking in that area will immediately take notice of your home going up for sale. If you disappoint them with too high a price, these potential buyers will grab the flyer and promptly dismiss your home. You probably will not get a second chance with them. You missed. When pricing, EMOTION HAS TO BE LEFT AT THE FRONT DOOR! Only stats and true comps can be used! Don’t be like every other seller who thinks, “My house is worth more because of x,y,z.” It’s probably not true. If you’re using honest and true comps, you can decipher the price difference between homes with pools and those without, and homes with granite and those without. Just to make myself clear: only true comps and sales statistics should be used to establish a market price.

How do you get those? Well, you could go to Zillow.com, which is somewhat accurate. Or you could ask a real estate agent for comparables and see what price they think they can get you. Or you could even pay an appraiser to see what he predicts your home is worth. Of these strategies, I think the appraisal is the most useless and the real estate agent providing comparables is the best since they will have the most accurate and available info. Do remember one thing. Past sales are exactly that — past. You MUST consider where the marketplace is trending. If it is trending downward, you must account for this and price less then the numbers suggest. If your market is advancing and prices are in an uptrend, the opposite may be true and you could try pricing a little higher than the numbers suggest to bring you closer to the true market price of your home. There is a lot of guesswork in proper pricing, even for me, and I have hundreds of sales’ worth of experience. The best piece of advice I can give is that you will know your pricing is not correct if your advertising does not result in calls and showings. In that situation, unless your marketing is just completely off, you will need to lower the price quickly and aggressively. DO NOT WAIT! JUST RE-PRICE FAST so that you don’t lose more momentum than you have to. Lets move on to marketing of your property.

When you are preparing to set the marketing plan for your home, it is important to consider a couple factors. First, what type of home do you have and who would be the most natural buyers of such a home? A multi-million dollar estate and a starter home are completely different marketing animals. You must try to stimulate excitement in that particular type of buyer. For instance, if you have a starter home, you could focus on using incentives like helping buyers with closing costs and making it easy for them to get qualified. Most won’t be pre-qualified for a home loan, and you may need to assist with that. You should have a lender already lined up to help get potential buyers fully approved before any contracts, serious discussions, or negotiations are entered into. If, on the other hand, you happen to have an estate, you will need to have premium marketing materials.If you want to command top prices, you must have the entire package. High-end homebuyers are not satisfied with just ordinary things. You want them to perceive your estate as stunning. I would recommend a deluxe “For Sale” sign, double-sided color flyers, and newspaper ads. Be forewarned, though. Newspaper ads are expensive. The smallest ads cost hundreds of dollars a WEEKEND for The Arizona Daily Star. Make sure your headlines are simple and get the point across. Long-winded ads just put people to sleep. Seriously, DON’T DO IT! Hit the important features of the home and the location, price, and contact info. In addition, you should try to get some Internet exposure since it is at a premium these days. Craigslist is free, so that is a no-brainer. But as a FSBO, you should also go to www.ForSaleByOwner.com and sign up there. I think prices run roughly $300 for an “until it sells” advertisement. That should be the ABSOLUTE MINIMIUM FOR MARKETING. Other approaches to consider include open houses, additional internet exposure, larger newspaper ads, direct mail, bandit signs (the ones you see all over the road pointing to homes for sale), smaller local newspapers, blogs, community forums, local magazines, virtual tours online of your home, and other publications like church bulletins or work newsletters. My costs of marketing a listing run at least 1% of the home price, and I have every tool imaginable to market my listings. I have invested over $45,000 of my own money on my website alone (www.SellingTucsonRealEstate.com) to produce the absolute best real estate site in Southern Arizona –specifically Tucson. That alone can give you an idea of how much marketing can cost. One percent of the sales price is approximately what you should budget for marketing, though you may find you need more than that. It really depends on how good you are at marketing and — more than anything — the pricing of your home. You could spend a billion dollars marketing an overpriced $250,000 house and never sell it, so be careful. To give you a bottom line as to what good marketing should be producing, here in Tucson AZ my listings on average are getting 8-10 showings per month. If you are not getting at least half of that, you are doing something wrong. Review your ads, your price, etc., to see where you are lacking.

Commissions are also important to consider. (WHAT? I THOUGHT I WAS SELLING FSBO SO I DIDN’T HAVE ANY!) Are you willing to pay one to buyer’s reps (real estate agents who work solely for the buyers and NOT YOU THE SELLER)? I’m not certain of the exact number (and I would not trust the National Association of Realtor’s numbers anyway since they always seem inflated), but I am willing to wager that at least 80%-90% of real estate transactions involve a real estate agent. The agent may be on the buying side, selling side or both, but most likely, sooner or later, a real estate agent will be involved in a home sale. PERIOD! Why? Well real estate transactions are very complex and sophisticated. Lenders, title companies, sellers, buyers, appraisers, inspectors, municipalities, and possibly attorneys (depending on where you live) will all be involved in your home transfer. Each of these entities has its own view of what it wants and needs, which guarantees that conflicts will arise. In most situations without a real estate agent to help move the buyer and seller through the process, the process breaks down. The buyer and seller will come to a point where they cannot agree or do not possess enough knowledge to get through a conflict. Real estate agents are there to help. Honestly and truly, you may not like the idea of paying a commission, but as a rule, you will probably end up paying one to the buyer’s agent. In Tucson, that commission is normally 3%. Buyers do not like to purchase without someone to help them if they get stuck, just as most people would not like to defend themselves in a court of law. So, you might as well get these wild thoughts of not paying any commission out of your mind. If you truly are trying to sell your own home, you will need to budget for a commission. This isn’t always the case, but 80%-90% of the time it will be.

Now we are getting somewhere. If you have made it this far, you are on your way to being able to sell your own home and save yourself some money. The last thing I want to cover will be showings of your home. I think this is where a FSBO hurts him/herself the absolute most. Buyers cannot act natural or say what they want while viewing your home because they are looking at it with YOU! Even if they are head-over-heels in love with your home, if they are smart, they will not indicate that because they know it will cost them in the negotiations at which tens of thousands of dollars will be at stake. As a FSBO, you are between a rock and a hard place on showings. The best advice I can give is to make your home very available to prospective buyers. If you are not willing to show your home, you can’t sell it. Potential buyers will just go somewhere else and buy something else. NO ONE IS JUST POUNCING FOR YOUR HOME! I hear the “we already have someone wanting to buy our home” speech 95% of the time I ask a potential buyer about what they are going to do with their current residence. Yet, it rarely happens. The person who got their hopes up was just talking idly and will not go through with the sale. If you are trying to sell your own home, I bet there is a 99% chance you thought you had it sold to someone and it never came to pass. When trying to make a sale on a showing, you must break the ice with potential buyers and SELL THEM. Try to close them down on making a deal without making yourself sound desperate or needing of a sale. If you have any question about this part, I would seriously consider hiring a listing agent to handle the sale. You can cost yourself a ton of money by not conveying the correct message to the buyers. Act as if you couldn’t care less about a sale and you might push buyers away because they think you’re not serious about selling. Act too desperate and watch for a super low offer to come from that buyer who thinks you have to sell ASAP and will try to exploit you. A balance has to be struck, and this is, by far, the hardest part of selling your own home and a problem that cannot be easily fixed. It’s just a difficult part of the process. It will take some practice to get comfortable with the best way to deal with potential buyers.

Use these tips and recommendations when trying to sell your own home and, while I never guarantee a sale, I am willing to say you will do better than almost every FSBO in your area. These tips are intended to help FSBO’s have a better chance of selling their own home and are by no means the only way to do it. They come from my years of experience selling hundreds of homes. If you know others who might find this information useful, please send them the link to this page so that they can also obtain a better understanding of what will be needed to sell FSBO. If you are currently selling FSBO and have had enough or have decided that the FSBO route is a lot of time, money, and work that you feel is best left to a professional, please consider me and my real estate sales team as the first choice for listing your property. In addition, if you have questions, comments, or concerns about this blog post leave a comment below and I will be more than willing to help those struggling with selling FSBO.