For Sale By Owner
Help for Minneapolis FSBOs
Are you considering selling your home by yourself? Well, you are in good company. Thousands of Minnesota homeowners consider this possibility every year. What is my take on this? Hey- if you can do it, more power to you. I can’t fault you one bit. I know that selling Minnesota homes takes a lot of time, money, and effort, so if you need a little help or free advice, please call me. I mean this sincerely. There is no obligation for this. Also, I would like to point out a few things to consider when selling your home.
Establishing price
You will need to determine your home’s competitiveness in today’s Minnesota real estate market. I have discovered that most homeowners believe that their home is the nicest one out there. Of course, this pride of ownership is natural, so get an objective opinion on your home’s condition.
Compare your home with similar homes that have sold in your neighborhood by using Minnesota MLS data. This is important because your buyer’s bank appraiser will be looking at this sort of data. Keep in mind that by the time the sales are reported in the newspaper, the sale is already several months old.
Also, compare your home to the active market. Your average buyer will look at many other Minneapolis homes before making a purchasing decision. Many times sellers will point to other properties that are being offered at a much higher price than theirs. Keep in mind that those homes have not sold, so they may not be useful for determining price. Also, those homes are not your competition; the competing homes are the ones with more square footage, amenities, and better price. Also, buyers are not all that tied-in to a particular neighborhood. They are looking at surrounding suburbs as well. You might want to find out what is being offered in the surrounding Minnesota real estate markets.
Now, for sale by owners (fsbos) will factor in potential savings from not paying out realty commissions. But, the buyers are thinking that way, too! FSBOS attract bargain hunters, and those people are thinking they will get the house for your price minus 5%-8% commissions, and whatever other discounts they think they can get. Also, beware of people who have watched too many Carlton Sheets infomercials and various scam ads. Watch out for people who ask for “owner financing.” These sorts of buyers will target FSBOS because real estate professionals don’t want to work with them.
If your homesale is a distressed situation, be aware of varous equity stripping schemes, and sell-with-rentback options. In Minnesota, real estate law makes it illegal for investors and buyers to say things like “I can save your house,” or “I can stop foreclosure.”
A rather unsavory phenomenon is the “dummy buyer” scam. Savvy but unprincipled investors will send a phony buyer to look at your property. They will act exceedingly difficult, unreasonable, and will offer an outrageously low amount of money. Of course you will refuse. But then, the investor himself comes to visit, as if riding in on a white horse. He will offer a better but still low offer, hoping that you will think he is an angel compared to the last guy. Sometimes the investor can get this ruse to work.
Marketing.
This means:
1) -establishing a very strong internet presence. Keep in mind that people don’t read the newspapers anymore. You still may want to spend money on classifieds, and pay about $50 for a small three line ad, but the ROI for this is becoming increasingly dismal. People just don’t search for Minneapolis homes in newspapers any more. On the other hand, one million new websites hit the net every day, so that presents another challenge. Yet, the internet is becoming the most popular place to search for homes.
2)- print marketing, mailings, brochures, signs, etc.
3)-holding open houses
4)-getting the home exposed to real estate agents (90% of buyers are under contract with a buyer’s broker.)
5)-networking and word of mouth exposure
Showings.
1)- screen buyers from “lookers” or persons that might pose a security risk.
2)- prequalify buyers and make sure they have financing.
3)- overcome objections and make an agreement before they start looking at more Minneapolis homes.
4)-negotiate without emotion
Drawing up the contract.
Contracts should include all terms, inclusions, exclusions, and all disclosures required by law, including seller transfer disclosure statements, methamphetamine production disclosure, lead paint disclosure, townhome association documents, and well/septic disclosures. Arrangements should be made to assure smooth transfer of title. Check with your local municipal goverenment to see what kind of pre-sale inspections are required. Also, make sure the contract addresses financing contingencies, deadlines for final loan commitment, 48-hour contingencies, private inspection contingencies, and any other terms that may be important to you. Spell out how contingencies are to be removed or called. Also, determine how problems with inspection reports will be handled. Is personal property included in the sale? Check to see if the lender will allow that to be spelled out in the purchase contract. Will the property qualify for FHA or VA financing? Will a gift letter be required by the buyer’s lender for contributions for down payment from the buyer’s family? Is the buyer going zero-down? Do they need help with closing costs? (Most lenders will allow a seller contribution of up to 3% of sale price toward buyer’s closing costs. If they are getting financing that is asking for more closing costs than 3%, they may be going with “sub-prime” mortgage.)
Be sure to collect an earnest check that can be depositied immediately. The purchase agreement should dictate who holds the earnest money, and under what condtions it may be refunded. Also, ask for a solid pre-approval letter with no unusal “subject-to” language. You may want to see a letter stating that the buyer has passed “desktop underwriting.”
