In summer of 1948 a man gathered some friends, a carpenter, and some blueprints. In the following months he erected a beautiful home in the SE Heights of Albuquerque. Years went by, deeds transferred, and finally in late 2006 my wife and I bought his house. It was in bad shape, but we had the time and energy to bring it back to life- and we did, one project after another, restoring its original charm while adding a few conveniences. This December the last home improvement project wrapped up- the claw foot tub from now-defunct US Porcelain
. We were almost done; we had a single project left: Selling the house FSBO-style. This is how we did it.
It's my perception that there is a great deal of fear, uncertainty and doubt
surrounding real estate. Ultimately it's a possession, like a car, or a candy bar, although real estate tends to cost more. All the fuss surrounding real estate is due to the fact a lot of money is involved, rather than it being particularly complicated. Whenever there's money, there's middle-men, and they very badly want to get some of it.
The single most expensive service in the real estate business is the real estate agent
: Between the buyer's agent and the seller's agent, they'll take 6%+tax of your net profit (As in, 6% of the sales price, not 6% of the profit after paying off your mortgage and expenses). We bought our home at the market peak in 2006 and decided to sell near the presumed bottom of early 2010. Likewise my home improvement habit was so excessive we paid 45% again the purchase price just on fixing and improving the house. With that much money invested, we really couldn't accept 6% going down the drain.
Step 1: Figure out about what you can sell your house for. Almost any realtor will be happy to give you a free estimate on this, in the hopes of convincing you to let them sell the place. If you think you might want to have somebody else do what follows but are on the fence, go ahead and talk to some. I found talking to Lamaia
(an old friend), Jim Maddox
(specializes in my neighborhood), and Jennifer Knight
to be extremely helpful and would gladly have used their services if FSBO hadn't work out for us. If you want to be a purist, you can simply do what they do: Look for similar houses that recently sold in your neighborhood, calculate the average dollars per square foot, plug in your home's square feet, and you have a rough approximation of what your house could sell for. Sites such as zillow.com
will show you just about everything you need to know to do this for yourself. They'll even tell you what houses are typically listing for vs what they're actually selling for.
Step 2: Make your house ready to be seen. There is a ton of online information on doing this, but let me share two words with you: Craig's List
. Get rid of all your clutter. Sell it if you can, donate it to charity if you can't, recycle it if they won't have it, take it to the landfill if it's the only way. Taping a "FREE" sign to various things and putting it on the curb resulted in a lot of headaches disappearing in 30 minutes flat. The free sign really is important- we left something out without one and it sat around for 2 days. I figured it was a coincidence, but rigorous freecycling bore-out that people would only take large items if they were marked as free. Cool, eh?
Step 3: Advertise. The Realtor-way is to put your property in the MLS
. That's really what you're paying a seller's agent 3% for. As it happens, many realtors will take a flat fee to do this for you- much cheaper than going full service. But there are other options: Craig's List
, The Weekly Alibi
, FSBO NM
, and of course, the trusty sign in the yard.
We put our home up on Zillow for $10. We spent another $50 creating a web site
for the house. We used 2mhost
, but you could go local and use the fine folks at Southwest Cyberport
and get really excellent customer service for about the same price. Finally we spent $15 on one of those "For Sale By Owner" cardboard signs at the local office supply store.
Step 4: Field questions on the phone and email, and only show the house to pre-qualified buyers or neighbors you're friendly with. You'll get a lot more curious neighbors than serious inquiries, but maybe they have a friend who wants to move to the area. Be honest about what you're looking for in an offer, professional in showing people your house and you'll save yourself wasted time and bad feelings. Our buyer got in touch with us, through a realtor, the morning after our Zillow advertisement went online. This was much faster than anticipated- we hadn't even put our contact information in yet! One of the things about being a seller is that sometimes buyers who have agents are going to be interested even though you're not using a realtor to sell. Agents expect to get paid, but their fee is negotiable. If you're willing to work with a buyer's agent (In the worst case scenario, 3% is better than 6%) you will have access to more potential buyers, but at the cost of their commission. We really liked our buyer and her agent (Margaret Keller
)- this was our buyer's first purchase and having an agent really helped the buyer handle the FUD.
Step 5: When you get an offer, read it carefully. If you don't understand it, have an attorney review it. If you don't have an attorney and don't understand it, you are in over your head. While you're waiting for those offers to come in, go to your Local Library
assuming you haven't done so already. Any offer will have the following characteristics: It will include the price they would like to pay, evidence they can afford to pay that (IE, a lender's letter), earnest money (A check for 1% of the offer price), a list of inspections/services that need to take place, when they must take place by, who will do them and who is going to pay for them. It's a buyer's market in Albuquerque right now, so most offers will suggest the seller pay for nearly everything (inspections, home warranty, appraisal, etc) and the offer price will be lower than the asking price. Don't get emotional- look at the big picture, which is, when everything is said and done, will you get enough for your house after everything is paid for? If so, that's a good offer. If not, you can ignore the offer. In either case you can counter-offer.
Speaking of paperwork, realtors have free access to most documents like standardized offer/counter-offer forms, disclosure statements, etc. If you end up working with a buyer's agent, don't be shy in asking them to provide these forms. If not, the title company can provide most of the forms you need (And they'll be glad to provide them if you bring them your business). Failing that, office supply stores or The Internet can provide
Step 6: You've accepted an offer: Take the offer, including earnest money, to the title company for safe keeping. Find out who will be handling the transaction and ask them what they need you to do. Do this every day. The dirty secret of realty is that the title company (Escrow company) is the only outfit in the business whose opinion matters- everybody else is doing what they need done. Now get on the phone and schedule all the inspections, surveys, appraisals, and whatever else the buyer needs to have happen. When the inspection turns up problems (it will) the buyer will tell you which of them need fixing (I needed to plane
a couple doors that wouldn't close), at which point you can fix them or offer money to get them to leave it as-is. Somewhere along the line your appraisal will come in- hopefully for at least as much as you're selling the house for. If it's less, you will probably need to drop the price to match. Again, whether it be a problem with repairs or appraisal value, be honest about what you're willing to do and why and you'll find people will try to accommodate you (Our garage had a cracked window- we gave the buyer a small credit since we didn't have time to fix it).
Step 7: Pack your stuff! Hopefully you've been doing a few boxes every day since the moment you thought you might like to sell your house maybe. If not, get going! Speaking of boxes, some advice: Use packing tape (not mailing tape), it's thicker and stickier. Also, use recycled boxes- they're free and and it's better for the environment. We took many boxes from the cardboard recycle cage outside La Montanita, also outside of the Pier 1 next to Le Peep on Louisiana. If you're using a moving company, they'll typically offer you all the used boxes they have laying around.
Like the Girl Scouts, we used All American
to move our stuff. That's the entire supply of Samoa Girl Scout Cookies in Albuquerque, stored right next to their used box supply. Oh yeah. Between these three sources of boxes we went 100% recycled.
Step 8: The house is empty, but is it clean? Your offer probably has a "final walkthrough" clause that means the buyer will make sure the house is in acceptable condition a couple days before they sign. When you move out, leave behind some cleaning supplies and make it nice for them. When the day comes to sign documents, bring your ID and prepare to sign your name a dozen times. It shouldn't take more than 15 minutes- as the owner you'll just sign confirmation you want to sell, that you are who you say you are, and where the money is supposed to end up. You're done. I'm done. After putting so much work into making our house nice, it was wonderful to interact with our buyer who really appreciated the house the way we appreciated the house, to answer questions directly and share enthusiasm. Even though it was a big transaction, it was human, attached, real. That is the FSBO experience.
Epilogue: For the last 3 weeks I've been living in Fullerton, CA. The only New Mexican restaurant within 500 miles is just down the road from us (Related to Little Anita's), but for NM-food, it's low-quality. I've never known food-panic like the first couple days here, in search of a real breakfast burrito. We found Bueno medium-hot in the 1 quart tubs and El Pinto's green chile sauce in jars, but it just can't compare to 10 pound frozen bricks or fresh bushel bags, or Sarah's special at Loyola's
. Forget about finding pinion roast coffee. Finally, there's nothing like DCF out here, much less real estate for under $200 per square foot. While I'm glad to be on a new adventure, I can't wait to fly back and visit family and friends often. Thank you to admins and regular contributors alike for making Albuquerque so much accessible- this is a great community. I'll still be around, but my blogs will be further and farther between.