Selling your home FSBO

by Dan Krell © 2005
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The real estate market has been a sellers market for the last few years. It has been so good for home sellers that many people have opted to try to sell their home without a Realtor. These For Sale By Owner (FSBO) sell their homes on their own for one reason-to save money on Realtor commissions. However, before embarking on such an endeavor, one should take an inventory of the pros and cons of becoming a FSBO, as well as the tools necessary to sell FSBO.

The obvious reason to sell your home FSBO, as stated above, is to save on Realtor commissions. Seasoned real estate investors may find it natural to sell a home FSBO because they control the communication as well as being able to communicate directly with potential homebuyers. First time FSBO’s may find it a bit awkward at first, but can find the rhythm necessary to complete the transaction.

How much money can you realistically save? Traditional Realtor commissions have always been around 6%, which pays the listing (homeowner) agent and the selling agent (homebuyer). However, in the last few years, there as been a trend of reduced commissions, so actual savings for a FSBO have been reduced. I have seen Realtors list a home for 4% (if you don’t believe it, send me an e-mail)! Additionally, FSBO’s are contracting and paying commission with more Realtors and their homebuyers in this environment of limited home inventory. In the end, the FSBO’s savings from Realtor commissions may be marginal.

You might think that saving money outweighs all negative aspects of selling your home FSBO. However, there are some real negative aspects of selling your home FSBO, such as time, expense, and contractual obligations.

How much is your time worth? Selling a home requires the application of time to tasks. Among the many tasks of selling a home, the top things that a FSBO may do include (and is not limited to) preparing the home for the open house, contacting the paper to advertise, putting up signs, meeting potential homebuyers, and negotiating contracts. The time quickly adds up.

Selling your home FSBO is supposed to save you money right? Well, there is a bit of expense that is necessary. A FSBO must have signs in the yard, as well as directionals (the small arrow signs) to point homebuyers in your direction. Additionally, you might consider paying the local paper for advertising, as well as paying for an internet advertisement (although there are many websites that will allow you to post for free). Another expense may be to have your attorney to review the contract to make sure it is legal and enforceable. It seems that the expenses also quickly add up.

Selling your home FSBO relieves you of certain responsibilities under the law right? Wrong. The most important thing a FSBO forgets to check is the law. That’s correct, even FSBO’s are responsible to adhere to certain federal and local laws pertaining to the sale of real estate (i.e., equal housing, lead paint, Maryland disclaimer-disclosure). This is the one area that FSBO’s get themselves in trouble because of the lack of knowledge and expertise. There is an increased liability potential.

FSBO sales are steadily increasing in the community. However, if a home owner actually does a cost analysis they may find that selling FSBO may actually not be saving them money, and actually may put them at a higher liability risk because of the lack of information and knowledge of the law. So, before you sell your home FSBO, do your homework and consult a professional.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This comlumn was originally published in the Montgomery County Sentinel on 5/30/2005.
Copyright Dan Krell 2005.

Why you need to conduct a home inspection

by Dan Krell © 2005
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A home is the largest investment most of us will make in our lifetime. It seems, then, unwise to spend so much money without having a professional opinion of the status of the investment. For example, would you purchase company stock without looking at the status of the company? Wouldn’t you at the very least look at the recent performance, cash on hand, leadership, etc.-and possibly discuss the purchase with a professional investment counselor? So too it is with a home. A home inspection can reveal much about the home you are about to buy.

A typical home inspector will check the status and condition of the home structure including the foundation, basement, roof, gutters, attic, chimney, siding, windows, doors, ceilings, walls, floors. The inspector will also check the operation and condition of the mechanical systems in the home, which includes the heating system (furnace), central air conditioning, ventilation, hot water heater, plumbing and pluming fixtures, electrical system (including electrical outlets). Additionally, the inspector will check all appliances that will convey as well as checking the condition of cabinets and countertops. Other factors checked include the exterior grading around the home, excess moisture in and around the home, any additional structure or system that conveys with the home.

A good home inspector will be able to give you a list of concerns that need to be addressed. Additionally, the inspector may be able to give you an idea of price for any necessary repair or replacement. Recently, it has become popular for home inspectors to provide home maintenance manuals. The manual provide repair and replacement timetables for various items around the house, as well as general Mr. Fix-it tips if you need to make a minor repair.

When choosing a home inspector, you should interview them and make sure they have credentials. Although the state of Maryland does not license home inspectors, there are several bodies that do provide training and certification. The most popular organization that provides training and certification is the American Society of Home Inspectors or ASHI. ASHI has been around for twenty-eight years, and was the first to provide home inspectors with a code of ethics and standards of practice. You can search on the ASHI website for ASHI certified home inspectors as well as getting additional information about the home inspection process. AHIS’s website is www.ashi.org.

Up until the past few years, it was almost a given that a homebuyer would have a home inspector conduct a standard inspection on the home they were going to purchase. However, because of the recent seller’s market providing much competition among buyers, many people have waived their right to have a home inspection.

At what cost are you willing to pay for future structural repairs and/or systems replacement to get into that home? It is not uncommon for defects in mechanical systems to show themselves within the first couple of years of ownership. The furnace or air-conditioning compressor is the first to go on older homes. Whether you are a first time homebuyer or a seasoned homeowner, you might want to think twice before waiving that home inspection.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This column was originally published in the Montgomery County Sentinel 5-23-2005.
Copyright Dan Krell 2005.