Selling your home (or any property in general) can be very stressful and any wrong legal step in the sales process can land you into a self-dug pit—can be injurious to your emotional and financial health.
The most common approach to selling homes is by hiring a realtor or agent to sell it for you. But, with the average realtor commission rate at Utah set between 5-7%, you might want to explore other options.
If you are reading this post right now, that means you’re planning to sell your home in Utah and looking at different options of selling. You probably might have heard of the possibility of selling your home yourself (known as listing For Sale By Owner) but you want to know if it’s the right way to go.
Before we proceed, understand that everything has its pros and cons and no approach to selling your home is perfect. You just have to find the one suits you best. Although, selling your home on your own can yield greater returns without the extra costs of hiring a realtor, you’ll have to handle the marketing, pricing, paperwork, and legal procedures on your own—requires a lot of time and effort.
In this article, we’ll explain the nitty gritty of selling your house without an agent including the benefits, pricing strategy, necessary paperwork and documentation, and more. But first, let’s become familiar with the concept of selling your house without a real estate agent.
What is FSBO?
For sale by owner (FSBO) is a term that refers to a method of listing a property for sale. When a house has an FSBO listing, it means the owner is selling the property without the help of a listing agent or broker. One reason sellers choose this option is to avoid paying the real estate agent a commission on the sale.
How For Sale by Owner (FSBO) Works
Though the details of each real estate transaction vary, here are some of the tasks the seller is responsible for in an FSBO transaction:
• Determine the asking price by researching neighborhood property values for homes with similar features (aka comps), such as the number of bedrooms and the home’s square footage.
• Stage the home for sale and make any necessary repairs.
• Manage the marketing, including advertising, online listings, brochures, flyers, and listing the home on the Multiple Listing Service (MLS).
• Schedule and host all of the showings and appointments.
• Negotiate the price and terms of the sale when an offer has been made and accepted.
• Prepare the legal documents, such as the sales contract, residential property disclosure form, mineral and oil rights form, occupancy agreement, and lead-based paint disclosure (if the home was built before 1978). Sellers may also need to track down other documents, including the property survey, permits, certificates of occupancy (COs), loan documents, utility bills, property tax bills, homeowner association covenants and agreements, and the property title.
• Prepare the deed (e.g., quitclaim, warranty, or some other type of deed), and ensure it’s signed, witnessed, and notarized.
• Close the sale. Depending on the state, the closing will take place at a title company or a real estate attorney’s office.
Benefits of selling FSBO
1. Cut Out Realtor Costs
With real estate agents or realtors, everything is DFY (Done for you) but you’ll be paying them for their services. The average commission most realtor would charge you for a successful sale of your house is 4-6% of the selling price. This means, if your house sells for the median house value in Utah ($161,878), you have to pay your real estate agent $9,750 max., that’s a huge chunk of your profits—you can avoid this by selling FSBO.
The amount saved from selling without a realtor can be used in the purchase of your next home, saved, or invested.
2. Stage Your Home and Decide the Extent of Repairs/Renovations
Most realtors would require you make lots of repairs and renovations when trying to sell your home—that’s extra costs apart from their commission fee. The reason for these repairs is to increase the appeal of your home and make it look attractive to potential buyers.
Since these repairs doesn’t affect the overall value of your home, you should be wary of realtors that ask for too much in this area.
By selling FSBO, you’ll have control on the extent of repairs needed to keep it at its best before showcasing it to a potential buyer. You also get decide when someone (potential buyer) come into your home for viewing. This saves you from a lot of unnecessary costs of repairs and renovations.
FSBO pros and cons
Weighing the pros and cons of selling your home by owner will help you make well-informed decision about which type of selling option is the right choice for you.
Pros—Why you should
• More control: The ball is in your court, the pricing, showing schedule, negotiation tactics, listing timeframe, and marketing tactics—you decide all that and more.
• No competition with other clients: These real estate agents or realtors have more clients on their hands, which means there isn’t enough attention to go around and could possibly deter your home-selling goals.
• Lower commission: The main attraction of being a FSBO seller is that you get to save money on real estate agents commissions. Selling your home by owner can keep up to 7% of your sale price in your pocket—which would have gone to your realtor instead.
Cons—Why you shouldn’t
• Less visibility with buyers: This is a major problem when selling FSBO, finding buyers for your home can be a daunting experience—unless you are using the service of a flat-fee MLS service. These MLS platforms are where most realtor find listed properties for their clients. Without your house getting listed on an MLS platform, the chances of people seeing your listing is lower.
• Risks of inaccurate pricing: Pricing can be a tricky thing for most FBSO sellers. Price your house too high and risk scaring off potential buyers, pricing it too low isn’t profitable either. You need to employ a pricing strategy to be able set a price that reflects your home market value.
• Safety issues: Part of the house-selling process involves showcasing your home to potential buyers. Inviting a stranger into your home can be risky because of cases of harassment and theft. You should consider this factor before deciding to sell off your home by yourself and take appropriate safety measures while selling FSBO.
• More work and stress: Trying to sell your home yourself is like taking on a 9-5 job. This can become a hassle for people with tight schedule and taking an alternative route to selling your home might be the right choice.
How to Price Your Home when selling FSBO
Getting the best deal for your hinges on your pricing strategy. Price your home too low and you’ll be losing money from the deal. Pricing it too high isn’t good either, buyers would avoid your home like a plague—forcing a price drop. Setting the right price is a matter of getting the accurate value of how much your house is worth.
One way of determining your house worth is by comparing your home with similar listings on MLS platforms (like Zillow). Below is a checklist to finding the right comparison to your house.
• Is the school district better or worse?
• Does it have the same number of bedrooms and bathrooms?
• Has the house been renovated more recently than yours?
• How do the neighborhoods and nearby amenities compare?
These and more will help you come up with a rough estimate of how much your house is worth. The right pricing strategy can pave way for sweet deals for your home.
Paperwork to sell a house by owner in Utah
Finding a buyer for your house is one thing, closing and getting the paperwork out of the way is another. Utah is one of the state that require you to hire a real estate lawyer when trying to sell your house. The necessary documents and forms required to close a real estate transaction in Utah includes:
• 2 Forms of ID: In most cases, a valid passport, driver’s license, or other form of Utah-issued ID.
• Copy of Purchase Agreement and Any Addendums
• Copy of the original, signed sales agreement as well as any agreed upon changes.
• Closing Statement: A detailed list of all the costs associated with the sale and who pays them. This is often prepared by your escrow agent or title company.
• Signed Deed: To legally transfer your property, you’ll need the deed that proves you’re the rightful owner. At closing, you’ll sign the deed over to the buyer.
• Bill of Sale: This is basically a receipt that includes both your information and the buyer’s. It will also list the final price of the home and what was included in the sale.
• Affidavit of Title: A notarized document that states you own the home, that there are no liens on the property, that you are not simultaneously selling the home to someone else, etc.
Possible additional documents
• Loan Payoff Information: If you have a mortgage on your home, you’ll need documentation of exactly how much you still owe and any payoff fees. If you’ve already paid your mortgage in full, you’ll need documentation proving that.
• HOA Forms and Guidelines: If your home is part of an HOA, you’ll need to give the buyer documentation on the HOA’s Covenants, Codes, and Restrictions, financial history, required fees, approval process, etc.
• Survey Results or Survey Affidavits: A survey (or an affidavit verifying a previous survey) proves exactly where the property lines are.
• Home Inspection Results: If you had a pre-sale inspection, you’ll want the results to compare to the buyer’s inspection. If having a buyer inspection was part of the sales agreement, you should receive a copy of the results before closing.
• Proof of Repairs or Renovations: Documentation proving any major repairs or changes to the house help verify its value. These receipts also provide the buyer with information about who to contact if they discover issues with the repairs in the future.
• Home Warranty Information: The home warranty service agreement will explain what is covered, for how long, and any costs associated with the policy.
• Copies of Relevant Wills, Trusts, or Power of Attorney Letters: If you are selling an inherited property, you’ll need copies of all legal documents that passed ownership to you.
• Relevant Affidavits (Name Affidavits, Non-Foreign Affidavit Under IRC 1445, etc.): You may need additional affidavits like a name affidavit (which lists all of your or the buyer’s previous names) or an affidavit proving you are not a foreign citizen and therefore exempt from certain property sales taxes.
• Closing Disclosure: If your buyer is taking out a mortgage and you agreed to certain seller’s concessions, you may need a copy of their closing disclosure to verify the lender approved your concessions.
• Correction Statement and Agreement: In the event forms are lost or errors are discovered in the future, a correction statement and agreement require you, the buyer, or their lender, to replace or fix those documents if need be.
• Utah disclosure forms
• Seller’s Residential Real Estate Sales Disclosure (Form 46234): The seller disclosure statement details any known issues with your home and its major appliances and systems.
• Flood Zone Statement: With some mortgages (like federally backed ones), your buyer’s lender might require information of the property’s flood risk.
• Lead-Based Paint Disclosure: Federal law requires that if your home was built before 1978, you disclose information about the dangers of lead-based paint to your buyer.
Going FSBO may be the right choice for you, it all depends on your ability to find the right interested buyer and closing the deal. Selling by owner come with lots of benefit but it’s not easy peasy. It takes a lot of work and time which could have been spared if you’ve hired a real estate agent.
If you want to sell your home fast and don’t want to go through the hassle of selling by owner or paying a large sum of money to realtors, there are other options available you can explore.
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