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Consider the Challenges Before Selling Without Agent

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SPECIAL TO THE TIMES

The National Assn. of Realtors reports that fewer than 20% of residence sales do not involve a real estate agent. These do-it-yourself home sales are called “for sale by owner.” Among realty agents, they are known as “fizzbos.”

Although a few of these fizzbo sales are among friends and relatives, most are not. The primary reason a homeowner wants to sell without an agent, of course, is to save the sales commission. Perhaps a better statement is that the seller wants to “earn” the sales commission by doing the work normally performed by a professional agent.

Statistically, most for-sale-by-owner transactions fail. Within 30 to 60 days, most sellers hire an agent. That’s why smart agents love to give their listing presentations to these do-it-yourselfers. These agents know they have an excellent chance of being called when the homeowner gives up and hires a professional agent.

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Many naive homeowners think it’s easy to sell a home. Just run a few newspaper classified ads, put a “for sale by owner” sign on the front lawn and hold a few Sunday open houses.

The do-it-yourself seller’s major disadvantage is competing against local agents who have hundreds of homes to show prospective buyers. Through the local multiple listing service and the huge nationwide https://www.realtor.com Web site, agents can expose listed homes to thousands of local and out-of-area potential buyers.

There are a few for-sale-by-owner Web sites, but none has proven very effective. There are several franchise realty brokerages that, for discounted fees, will help sellers willing to do much of the sales work. Assist-2-Sell and Help-U-Sell are among the leaders.

If you are considering selling your home alone, here are four key self-test questions to ask yourself:

* How will I comply with the legal requirements and obtain a legally binding sales contract from a buyer?

Most do-it-yourself sellers are not aware of today’s complicated state and federal legal requirements and disclosures regarding home sales. Depending on local customs and laws, sellers might need a printed purchase contract, defect disclosure form, required and optional inspection forms, pest control or termite inspection report, lead-based paint disclosure, building code compliance, energy-efficiency inspection and radon inspection.

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A critical question most for-sale-by-owner sellers ask themselves is: “Who will prepare the legally binding purchase contract?” Real estate attorneys who are available on weekends, when most home sales are made, are hard to find.

* How will I market my home alone?

Running newspaper classified ads, installing a “for sale by owner” lawn sign and holding Sunday open houses usually are not enough to sell a home.

If you overprice your home, savvy buyers won’t waste their time looking at it. If you underprice your home, you’ll lose thousands of profit dollars.

* If a buyer makes a legitimate purchase offer, how can I be sure the buyer is financially qualified to complete the purchase?

Do I know all the mortgage finance alternatives for today’s buyers? If a buyer wants a VA, FHA, private mortgage insurance or conventional mortgage, who will handle the loan qualification details? Or is my current mortgage assumable?

* Who will handle the details of the sale closing?

Finding a buyer and signing a legally binding purchase contract are just half the work of a home sale.

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The other half involves overcoming problems, such as the appraisal, professional inspections and arranging a successful closing, including title insurance issues. These obstacles can test even the best professional agents.

Before deciding whether you can successfully sell your home alone, educate yourself by interviewing at least three successful realty agents who sell homes in your vicinity, preferably agents recommended by friends and business associates.

Here are the key questions to ask each agent you interview:

* How much can you get for my home?

Before answering that question, each agent should prepare a written comparative market analysis (CMA) after inspecting your home. Some agents won’t let you keep their CMAs. Don’t do business with those agents. You need to study each CMA to determine if the agent is using truly comparable recent sales prices of similar nearby homes.

* What are the names, addresses and phones of your five most recent home sellers?

After each agent leaves, phone those sellers to ask, “Were you in any way unhappy with your agent, and would you list another home for sale with the same agent?” Also ask each agent about their expired listings that didn’t sell, and phone those sellers to learn why the agent didn’t get their home sold.

* What is your marketing plan for my home?

The best agents you interview will prepare specific marketing plans. At least 50% of today’s buyers use the Internet for preliminary home shopping, so pay special attention to each agent’s Internet marketing activity. Check his or her Web site to see how homes are listed.

* How long a listing do you need to sell my home?

The best agents ask for 90-day listings. If they do a good job but the home is unsold after 90 days, expect to be asked to renew. Be wary of any agent who insists on a 180-day listing. With a 180-day listing that doesn’t have an unconditional cancellation clause after 90 days, you might get stuck with a bad agent for a long time.

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* How long have you been selling homes in this area?

Although new agents often have a lot of time to devote to their few listings, it’s usually best to go with an experienced, successful agent.

* How many listings do you now have?

If the agent has more than 15 to 20 listings, he or she usually cannot do a good job servicing all those listings. Watch out for “numbers agents” who take many listings and have lots of personal assistants, knowing only a percentage of their listings will sell.

Most sellers, after considering the pros and cons of selling their homes alone without a professional agent, realize expert help is usually needed to sell the home for top dollar in today’s market.

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Robert J. Bruss is a syndicated columnist as well as a real estate investor, lawyer, broker and educator in the Bay Area.

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