• How to Sell Your Own Home in 2014

    Brandon Cornett

    By Brandon Cornett, Editor
    © 2014 All rights reserved

    Welcome to the home selling tutorial for do-it-yourself homeowners. You've just found one of the most complete guides to selling your own house.

    Table of Contents

    Step 1 -  Your Home's Value
    Step 2 -  Measuring Your Equity
    Step 3 -  Preparing the Home
    Step 4 -  Setting the Price
    Step 5 -  Marketing the Home

    Step 6 -  Reviewing Offers
    Step 7 -  Choosing an Offer
    Step 8 -  Appraisals and Inspections
    Step 9 -  The Closing Process
    Step 10 - Going Forward

    Is it wise to sell your own home in the current economy, or is it best to hire a real estate agent? What forms do I need when selling my own house? How do I get my home listed where buyers can see it?

    These are common questions among do-it-yourself homeowners, and we will answer all of them in this tutorial. As you can tell by the length of this lesson, it covers almost every aspect of the process. So if you have questions about selling your own home in 2014, you're bound to find the answers below.

    Each year, more and more homeowners choose to sell their own homes, instead of hiring real estate agents. I believe the Internet has a lot to do with the rising trend. For one thing, there's plenty of excellent information online about selling your own home (such as this article). You can also find a variety of for-sale-by-owner (FSBO) websites online, and they can help you sell your house on your own.

    If you're familiar with the overall process and ready to begin, use the link provided above. If you'd like to learn the steps involved in the process, keep reading below.

    10 Steps to Selling Your Own Home

    This process will vary slightly from one seller to the next, and it will also vary based on the type of real estate market you are in. With that being said, it usually goes something like this:

    Step 1 — Determine Your Home's Value

    One of the first things you need to do when selling your own home -- if not the very first thing -- is find out how much your home is worth in the current economy. "Current" is the key work in that last sentence. What you paid for your house two, five or ten years ago is irrelevant in today's real estate market. A lot has happened since then. We have had a mortgage meltdown, a housing crisis, and a full-scale economic recession. So your home might be worth less than you realize in the current market -- especially if you live in a state like California or Florida.

    If you live in a part of the country that did not experience a huge real estate bubble -- a place where home prices rose more slowly and steadily -- you can count yourself lucky. You might not have lost any value or equity in your home. The home might even be worth more today than when you bought it. But you won't know any of this until you determine what your house is worth. That's why it's such an important first step when you sell your own home today.

    Learning what your home is worth will help you set the asking price (step #5), but it will also reveal how much equity you have in the property (step #2). So you should do it as early as possible in the home selling process.

    There are several ways to find your property value, with some better than others:

    • Home Appraisal -- This is the best way to find out what your house is worth in the current economy. This is what I recommend for people who sell their own homes. With this option, a licensed appraiser will visit your home and compare it against recent sales data. In the end, you'll get an appraiser's report you can use to justify your asking price.
    • Home Value Websites -- There are several websites online today that can give you a ballpark range of home values in your area. These websites get their data from sources that are available to the public (but often hard to find). They use recent sales data to give you a range of what your house might be worth. But unlike a home appraiser, a website cannot account for upgrades and improvements you've made to the property.
    • Real Estate Agent -- An experienced agent can help you determine your home's value as well, much like an appraiser would. But this is a lesson on how to sell your own home, so I won't spend any more time discussing this option.

    Here's my best advice for people who plan to sell their own houses. Use one of the home value websites to find out what's happening in your area, in terms of home sales and prices. Ignore the listing price and focus instead on the selling price. This will help you understand your local real estate market, which in turn will help you set realistic pricing and expectations.

    Next, you should pay for a professional home appraisal to help you set your asking price. There is no substitute for having a licensed appraiser evaluate your home, and it will help you succeed when selling your own home.

    If you sign up for one of the leading FSBO services, and choose one of the deluxe packages, you'll get a pricing report sent to you. Our recommendation is below:

    The pricing report is just one of the benefits you'll gain by using the service offered above. You'll also put your house in front of thousands of potential buyers. If you plan to sell your own house and handle the marketing as well, do yourself a favor and check out the link we have provided above.

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    Step 2 — Determine Your Equity

    How much ownership do you have in your house? This is known as equity, and it's a key factor you need to understand before you can sell your home. This will determine how much of a profit you might make from the sale, if any. And remember what I said earlier about the economy. Most homeowners lost equity in their homes through 2008 and 2012, so you need to find out where you stand.

    Fortunately, it's fairly easy to find out how much equity you have in your home. You should already have a good idea of what the property is worth, because we covered that in step #1 above. Next, you need to find out what you still owe on your mortgage (i.e., the unpaid balance). You can get this information by contacting your lender. Subtract the remaining balance from the current value of your home, and you'll know how much equity you have.

    But therein lies the rub for many people. If you owe more on your mortgage than the home is worth in the current market, you have negative equity. This is referred to as being underwater or upside down in your mortgage loan. It's also a roadblock to selling the home. It doesn't make the selling process impossible, but it does mean you'll have to pay the remainder of the mortgage balance out of pocket -- not to mention saying goodbye to any profits.

    Some homeowners in this situation choose to stay put, hoping that values will start going up again. Others homeowners, who simply have to move, will do whatever it takes to sell the home, or they'll walk away from the homes altogether.

    If you plan to sell your own home, let's just hope you are in a positive equity situation. For the rest of this tutorial, I'll assume that you are.

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    Step 3 — Prepare the Home for Selling

    So let's assume you've followed the steps up to this point, and you now know what to ask for the property and what you stand to gain from the sale. The numbers look good, so you are ready to continue with the home selling process. What next? Well, you'll need to prepare the home for the market before you start promoting it. The last thing you want is for potential buyers to visit the house when it's in bad shape. So let's talk about repairs, home staging, curb appeal, and other aspects of preparation.

    Preparing a home for the market is always important, but it's absolutely critical in a buyer's market. When there's a surplus of homes competing for the attention of buyers, you have to work harder to make yours stand out. This is where home staging and curb appeal come into the picture. When used properly, these techniques can help you sell your own home quickly, and for the best possible price.

    But before you get to the aesthetic and cosmetic side of things, you should start by making any repairs that are needed. Remember, the buyers will hire a home inspector to review the property before committing to it. And you can be sure the inspector will find anything and everything that's broken -- it's what they do for a living. So fix the leaky faucet, the wobbly railing, the broken roof shingles, or anything else that needs repair.

    Once you get past the basic repairs, you can move on to the aesthetic side of things. Home staging is the art of presenting a house in the best way possible. The bottom line is that a staged home will sell faster (and for more money) than a home that has not been staged. For specific advice on how to stage your house, check out our room-by-room list of home staging ideas. Here is a summary of the tips presented in that tutorial:

    • Neutralize your internal paint scheme so that it appeals to a larger audience (the goal of home staging). Avoid colors and wallpapers that are too specific to your tastes.
    • Clear all rooms of excessive clutter. This includes family portraits, knick-knacks, and other personal items. They might be treasures to you, but potential buyers won't view them this way. Limit each room to three decorative items or less, such as a flower vase or a small sculpture.
    • Remove any oversized furniture that takes up too much space. Reposition furniture as needed to open up a space and improve access. This will make your rooms seem larger.
    • Updated any outdated light fixtures, cabinet knobs, etc. This is a low-cost technique that can help modernize the home.
    • Get dozens more home staging tips in this tutorial.

    Curb appeal is another key aspect of the preparation process. In certain respects, it's the most important part of the process, because it's the first thing potential buyers will see when they pull up to the house. If you make a good first impression with your yard and/or the front of your house, the buyers will carry that positive impression inside the house with them. Of course, the opposite is true as well. A bad first impression will turn them off from the start, before they even enter the home.

    The thing about creating curb appeal is that you have to start early. This is especially true if you have a lawn that needs work, because it takes time to turn around a bad lawn. You can find plenty of helpful tips for curb appeal in the home staging link provided above.

    Here's the bottom line on the preparation stage. If you plan to sell your own home, you need to do everything you can to increase the likelihood of a quick sale. Staging the house and boosting the curb appeal will help you accomplish this goal. So they are well worth the effort.

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    Step 4 — Determine Your Asking Price

    Continuing our lesson on how to sell your own home, we need to talk about the asking price. This is also referred to as the listing price, and it should be based on the research you did in step #1 of this tutorial.

    If you price the home right, you'll be able to sell in a reasonably short time. But if you price it wrong (i.e., too high), your house may stay on the market for a long time. It's not uncommon for overpriced homes to stay on the market for a year or longer.

    If you've paid for an appraisal, like I recommended earlier in this tutorial, you'll already know what to ask for the home. Keep it within the ballpark of the appraised value, and you should be in good shape. If you're in a seller's market (high demand but low supply), you might even list the home above the appraised value at first. If you're in a buyer's market, you'll need to set your price at or slightly below the appraised value.

    I can't stress the importance of this step enough. If you get the pricing part of the process wrong, the rest of your efforts will be in vain. So do the necessary homework and set the right asking price.

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    Step 5 — List the Home on the MLS

    In order to succeed when selling your own home, you need to put it in front of as many potential buyers as possible. And the best way to do this is to list the property in the Multiple Listing Service (MLS).

    This is something a real estate agent would do for a seller. But when you sell your home by yourself, you'll need to find another way to get it into the MLS. We recommend using a for-sale-by-owner website, such as the one listed below:

    In a competitive market, you have to work harder to reach as many buyers as possible. Let me rephrase that -- you have to work smarter. This is especially true when you sell your own house (and act as your own promoter). Use the link we have provided above to reach as many buyers as possible.

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    Step 6 — Review Offers from Potential Buyers

    So you've had your home appraised, prepared it for the market, set the asking price and listed it within the MLS. What's next? Well, if you've done everything right up to this point, you should have buyers visiting the home before long. Eventually, you'll be getting some offers as well.

    Many people who choose to sell their own homes find this part of the process intimidating. After all, there's a lot of information to read through in the standard purchase agreement. You have to review the amount being offered, the contingencies, the timeframe and more.

    But you shouldn't be intimidated by this process. With a little bit of homework, you can familiarize yourself with the purchase agreement / contract used in your state. You can probably even get your hands on a sample contract. Much of the information within these documents is standard. There are entire sections (known as standard disclosures) that are pretty much set in stone.

    The parts you need to pay the most attention to are the areas mentioned above -- purchase price, contingencies, agent's commission, and the closing date. Aside from these items, most of the contract will be standard boilerplate information.

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    Step 7 — Choose the Best Offer

    When researching how to sell their own homes, many homeowners overlook the negotiation process. So be sure you have a plan for this. Again, this will largely depend on the type of market you're in. If you're in a buyer's market, you'll have less room to negotiate. If you're in a seller's market, you'll have much more leverage.

    The important thing is to do your market / pricing research in advance, so that you don't sell the home for too little (when all the negotiating is said and done). In the end, the offer you choose should have the following traits:

    • The amount offered should be realistic, based on current property values and sales data in your area.
    • The offer should include a realistic timeframe for closing, usually agreed upon in advance between the buyer and the seller.
    • The person making the offer should be pre-qualified for a mortgage loan, up to the amount of your sale price (or more).

    Again, if you can get your hands on a sample real estate contract for your state (even a blank one), you'll be much more familiar with it when the real one comes your way.

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    Step 8 — Lots of Visits - Inspections, Appraisals, etc.

    Next, let's assume you've accepted an offer, and the home is now under contract. What happens next? On your end, you'll have to make the home accessible for a variety of "visitors." This will include the buyers' home inspector, the bank's appraiser, and possibly a few others as well (termite inspection, radon, etc.). Aside from allowing people into the house, there's not much you have to do at this stage.

    The appraisal is where you might need to get involved. If the home appraises for less than what the buyers have agreed to pay, then they might have trouble getting approved for a mortgage loan. In this scenario, one of three things can happen:

    1. You can lower the sale price to match the appraisal (so the buyers can get their mortgage loan).
    2. The buyers can pay the extra amount out of pocket.
    3. The contract can be nullified, and all parties can walk away.

    If the appraisal "comes back good," meaning the home appraised at or above the sale price, then you're golden. In this case, all that's left to do is start packing and wait for the closing date (next item).

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    Step 9 — The Closing / Settlement Process

    Now that the inspections have been done and the appraisal satisfactory, the buyer's lender will work on scheduling the closing. During the next few weeks, the title work and other legal items and paperwork will be done. The lender and title company will work together to complete this process on or by the date in the purchase agreement.

    The buyer's agent should contact you to let you know the date, time and location of the closing, and to let you know what to bring. Usually the only thing required of the seller is one or two forms of identification and the keys to the home.

    Any costs due from the seller (such as the agent's commission and seller-paid closing costs) will be deducted from the proceeds of the sale. You should thoroughly review the settlement statement at closing, if it has not been previously made available, in order to ensure the amount deducted from your proceeds is correct.

    You may sign your paperwork before the seller arrives, or at the beginning of the closing process, and then be given your cashiers check and sent on your way. Or, you may be required to stay while the buyers sign their portion of the documents as well. It all depends on the company and individual coordinating the closing.

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    Where to Go From Here

    So there you have it, a ten-step tutorial on how to sell your own home in 2014. I hope you have found this guide informative, and that it helps make your selling process a smooth one. If you're wondering where to go next, my advice is to check out our blog. It has a lot more information on this subject. You'll also find our FSBO Matrix helpful.

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