FSBO Selling in Annapolis: Is it for You & Who Should Be on Your Team?

Realtors are an extremely useful professional to have available, when you need them.  The fact is that with the Internet, their utility in some markets--particularly this one--is indeed questionable in many but the most atypical cases.  A couple of caveats/disclaimers before we begin.  1. For Sale By Owner (FSBO) isn't for everyone.  If you're a nervous Nellie, suffer from one or more anti-social personality disorders, or you are just too busy and need to have someone else handling potentially problematic minutae, then it isn't for you.  2. Only a professional who doesn't rely on Realtor referrals will ever tell you this, of which I am one.  3. There will be those who will throw out all types of excuses and accusations regarding this article (particularly folks who need the gullible to continue to pay exorbitant amounts of their hard earned equity for their "services").  I'm sure that the afflicted and impuned can attest that they earn every single penny of their sales commission ad nauseum.  To them, as well as the rest of the offended in the studio audience, I say do what I do and prove it.   Just because something has always been done (like lemmings jumping over the cliff to their collective doom), or it's repeated or chanted over and over again does not make it an advisable course of action, much less make it a fact or true... Finally, this article assumes that the seller is not in an upside down, pre-foreclosure, or other unique/atypical situation.  The majority of FSBO sellers have been in their home for some time and have built up some equity (their house is worth more than they owe on it), know their house has a few, potentially significant maintenance or repair issues (they are non-delusional), and understand that their preferences and tastes are not necessarily shared by others (they are reasonable).  If this doesn't describe you or your situation, then you should seek the services of a professional Realtor. 

Mindset is the first order of business.  The five-Ps--Proper Planning Prevents Poor Performance--is particularly useful in getting from the decision to finally sell your "asset," to the closing and eventual property transfer.  In other words, it takes a lot of work to get to market both efficiently and effectively.  To begin with, this is no longer your home, it's an asset (if it's a real liability, then go back to the first paragraph and reread for advice).  The second order of business is to realize that you need a "team" to perform several of these functions.  Note that FSBO has more letters in it than DIY.  I like to think that's because it takes the efforts of a few more people than yourself to make the sale happen.  So, who should be on your dream team?

In order to compete effectively in the market, you must hire an appraiser to find out the asset's current value prior to listing.  Realtors claim to be able to do this as part of their service, and most have a general idea of what a particular home may go for (and how long it will take), but they ARE NOT TRAINED NOR LICENSED TO PERFORM THIS FUNCTION.  Don't want to see your house languish on the market for months on end? Hire someone who has no ulterior motive than to properly valuate your property...  1st TEAM MEMBER-APPRAISER: Getting an accurate, timely appraisal is the most critical step to accomplish prior to listing.  Having this report helps you figure out what to price the house for and this information will also assist greatly in determining cost-benefit of potential repairs/renovations/upgrades and future negotiations with potential buyers. Note that an appraisal is an evaluation of an asset's value vis-a-vis other, similar assets nearby.  It doesn't magically negate years of wear and tear, dated appliances, or neglected maintenance or repairs.  Also note that an appraisal is a snapshot in time.  Getting one too early might negate its utility.  Finally, note that your buyer will probably have to have another appraisal done if they're getting financing.  They will rarely have a say in which appraiser the bank will use, and it's highly unlikely that your appraisal will do for this purpose.  There's nothing wrong with giving your buyer this information for their own use--including their forwarding it onward to the next appraiser.  The next appraiser can choose to review or discard it entirely, but at least they know it's been done recently before they begin their own evaluation.

2nd TEAM MEMBER-INSPECTOR: Getting an honest evaluation of the asset's material condition is the best way to identify the "delta" between the market value of the home and the inevitable devaluation offset caused by required repairs and replacements.  The best way to get this is to find a licensed, reputable home inspector that can find the defects prior to listing in order to get them corrected.  The inspection report then becomes the "to do list" that can then be shopped around to licensed contractors to get their repair proposals in order to make the selection.  A little Internet research is key to selecting the right professionals for your "team."  Don't have a clue as to who might be available in your area?  Click here to go to MD DLLR's REAL and MHIL lookup page.  Oh, by the way, make sure the home inspector releases the report for your unrestricted use.  Some agreements restrict distribution to the primary client, which could get problematic if you want to use it in your marketing efforts later on (i.e. if you wanted it available for review by potential buyers).  A final word: don't hide knowledge of material defects hoping nobody will notice.  Even if everyone else, including your infallible inspector, misses something significant (like your hidden, abandoned underground storage tank) you could be held liable for failure to properly disclose this information to the buyer.  Blaming the inspector isn't going to magically transfer the liability for lies of omission (feigning lack of knowledge) any more than it will for lies of commission (overt attempts to hide or deceive).  You don't want to be on the receiving end of this type of litigation, so bring up these issues to the inspector -preferably in writing via e-mail, etc.-before the inspection and make sure to transfer this info to the required real estate disclosure forms and your attorney/title company.

3rd TEAM MEMBER-HOME IMPROVEMENT CONTRACTOR: Finding a licensed, reputable, RELIABLE, and reasonably priced contractor is key to "getting r dun"...  This project needs to be focused and time-bound.  Insist on a no-kidding MHIC compliant contract with a firm fixed price for the work.  Ask for references, and above all, make sure that you have a good contractor point of contact to reach out to in the event problems/issues arise.  THIS IS NOT THE TIME TO GO TO THUMBTACK OR TO CRUISE THE HOME DEPOT PARKING LOT FOR HELP.  A prospective buyer is going to want to see evidence of proper permitting and required licensure on any significant work performed.  This also moves the liability for potential future problems with the work to the tradesman--where it belongs!  Don't risk a DIY nightmare or lawsuit.  Just do your due diligence and find the right guys for the job.  Click here to inquire about MHIC license holders in your area.  It goes almost without saying that you want to keep complete, legible receipts of all paid invoices (along with their appropriate license number); copies of cleared permit paperwork; and, if applicable, any contractor/subcontractor lien releases to provide future buyers.  You really don't want this to become an issue later (before or after closing), and if the contractor you're considering isn't willing to provide or doesn't know what a lien release is, find someone else... 

4th TEAM MEMBER-HOME STAGER AND/OR PHOTOGRAPHER: This profession has limited regulation, so you're going to have to do some research to find someone who really knows what works, and most importantly, what doesn't work to effectively prepare and present the asset for the Internet market.  Oh sure, there's other ways to advertise--in lah-lah land--but, unless you're ready to hit the Multiple Listing Service (MLS) with everything you've got from day one, you're adding needless frustration and delay to an already stressful process.  Even if you're pretty good with a camera and think you're all that and a bag of chips with interior decorating, I don't recommend that you DIY.  Remember, this should be a dispassionate, professional protrayal of your asset with the sole goal of getting it sold for the highest dollar--it's not the time to show the world your creativity...  Be sure to ask for references and to request a viewing of their portfolio.  Two reminders.  1. You get what you pay for; and, 2. Watch out for their follow-on referrals to other real estate consultants (you can figure out why on your own). 

5th TEAM MEMBER-REAL ESTATE ATTORNEY:  There are several good ways to find a competent real estate attorney and title company to handle the inevitable contracts and documentation required to complete the closing and property transfer to the new owners.  There are lawyer referral Web sites and the Better Business Bureau can recommend local title companies, but there are other resources out there as well.  Make sure you inform the folks you're considering that this will be a FSBO sale.  This helps them with figuring out the overall costs of doing business with you, and they're going to be much more helpful in most cases knowing that you don't do this every day.  A word of advice.  These folks live in the billable hour world.  If you call them with every single question or concern (most of which you can find out on your own), expect to pay their rates for this service ($150-$450 an hour in the DC area).  Maybe your time and money could be better used doing your own homework for the more germane information gaps.  Of course, if it's a matter of contract law or state/local required documentation, it's best to leave this type of thing for your attorney.  Please note that it's a matter of law that the seller can ask to switch or independently hire their own team members too, but being diplomatic, flexible, and reasonable during the purchase agreement negotiations (in the beginning) will help negate most conflicts.

6th TEAM MEMBER-ONLINE ADVERTISING & THE MULTIPLE LISTING SERVICE PROVIDER:  You MUST BE ON THE INTERNET TO EFFECTIVELY MARKET YOUR HOME.  FSBO services are available locally and on the Internet, and you should exercise due diligence in making a selection.  We have sold several properties without using a Realtor in four different states over the past few years, and we have had good luck with this provider For Sale By Owner.com Web Site, but there are other providers too.  The important thing is to make sure that you're going to be comfortable with the services being provided and their support throughout the process.  Some advice: 1. If it won't post your listing to the MLS, walk away.  2. Make certain that all contract documents and disclosures are reviewed by your attorney/title company BEFORE you attempt to use them.  Buyers are a skittish lot and trying to get them to redo paperwork, no matter how seemingly trivial, is anything but.  Try your dead level best to get this right the first time by reviewing these requirements with the folks you'll be closing with beforehand. 

OTHER TEAM MEMBERS-YOUR SOCIAL NETWORK: The fact that your former home is for sale should be spread like a middle school rumor.  We've seen several instances where Realtors were paid thousands of dollars in commission for almost effortless, quick sales made to the seller's own friends, family, and associates.  Easy money for them, lost equity and profit for the seller.  You just never know who you know that might know someone, anyone, in the market for a house like yours.  In short, let everyone know and be as candid as possible without shooting yourself in the foot.  For example, stating that the unfinished basement has always reminded you of a Mediveal torture chamber (dark, foreboding, etc.), is probably going to be rebroadcast or taken out of context in any number of really creative ways that could be prejudicial to your efforts to sell the property.  Maybe a few comments about how much your kids really enjoyed the school, how your neighbors are saints, etc. might be apropos.  Of course, watch out with the puffery.  The charming pit bull chained to rusty bumper of your neighbor's derilict 1967 Impala isn't really going to get any better no matter how you try to sugar coat it...

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