For Sale by Owner – FSBO

If, for whatever reason, selling with the help of an agent is not an option, you can attempt to sell your house yourself.  You’ll save the 6% commission, but you’re going to have more work to do on your own. On the other hand, if you don’t have enough equity in your home to pay the commission, most agents won’t help you anyway.

Make It Look Good!
 Make sure you clean up your home and make it attractive and welcoming to prospective buyers.  Get on the web and search for “how to sell my home” and you’ll quickly find articles on how to make your home more attractive to prospective buyers.  Be sure to keep it neat and tidy, the lawn well-trimmed and picked up, etc.  Make your home look like a place your prospects would want to live! 

Get The Phone Ringing
Now that your house is looking good, here’s how to get plenty of calls in a hurry!
1) Buy a big “For Sale by Owner” sign at Home Depot or Lowes and stick it in your front yard.  Put your cell phone number (if possible) on it in BIG numbers.  Buy a couple of the smaller, arrow signs to put on major cross streets to direct people to your home.

2) Set a reasonable price for a quick sale.  Put an ad in the paper that says “By Owner: (brief description), must sell fast, serious inquiries only, 555-1234″.  Your phone will ring, mostly from investors.  Depending on your time constraints, you may want to talk to anyone who calls right away because you are desperate to get a deal done before the lender sells your house.  If you have some time, I’d advise asking flat out “are you interested in this house for yourself, or are you an investor?”  If they are an investor, you can either politely tell them you’re not taking offers from investors just yet and get their name and number in case you decide to.

3) Consider using a service like ForSaleByOwner.com.  For a very reasonable amount, they will help you come up with an ad for your house, which then prints into a full-color flyer you can leave in a box on your front yard sign for prospects to take with them.  Additionally, you can place an ad in the paper with a link to your flyer on the ForSaleByOwner website.  This will make your house stand out from all the others for sure!

At this point, don’t tell any potential buyers that you are close to foreclosure, as they might use your situation to drive down the price.  On the other hand, if you set your price too high you may not attract a buyer in time.

Doing the Paperwork
Find a local title company with a good reputation.  You may want to ask friends or neighbors who have recently bought or sold property who they used and if they recommend them.  Once you’ve identified a title company, call or drop by and ask for a “single family resale packet”.  This will contain the necessary forms that you and the buyer will need to fill out and turn in to the title company. The title company will not be able to give you any legal advice, but they can instruct you on the normal way things are done.
 Once you and a buyer agree on a price, you should sit down and fill out the forms in the packet.  Ask the buyer for an earnest money check.  Usually this will be an amount between $500 – 1% of the sale. The check should be made out to the title company, not you. The title company holds the money in escrow, and credits it to you when the sale goes through. Most contracts allow the buyer to back out and get their interest money refunded, but at least you know they were serious enough to write the check to begin with. Or, if you really want to see if they are serious, you can modify the contract by putting the special provisions section “Earnest money is non-refundable, and will go to seller if buyer terminates this contract.” This is a delicate balancing act – you don’t want to run off a buyer, but you don’t want to waste your time with tire-kickers either.  Your buyer or their lender may request a survey, appraisal or inspection.  If they do you should agree, but those are expenses that should be paid by the buyer.

Lease-Option
Something else you might consider is a “Lease/Option”.  In this scenario, you offer to lease your house to a new tenant-buyer, with an option, but not the obligation, to buy.  Perhaps you can find someone who wants your house and has a down-payment that would cover what you need to stop your foreclosure. But, for whatever reason they are unable or unwilling to get a loan and buy it at the moment. By utilizing a lease/option, you can stop the foreclosure by using the option fee paid to you, to pay your lender. You then have a tenant in your house that will cover the loan payment every month, and hopefully they will eventually buy your house.  Two tips: First, be sure to negotiate a sale price so that you make a profit when the sale goes through. Second, be sure to collect their rent and then make your mortgage payment – don’t let them send it directly to the mortgage company.  You want to make sure the payments are getting made!
All in all, hoping your house will sell in time to avoid it being foreclosed upon can be a very nerve-wracking experience — but never fear, there is always one other option to keep your house from being sold on the steps of the Courthouse - which we’ll cover in the next chapter.