Selling a Home in Virginia Without a Real Estate Agent
How Our Fairfax Real Estate Lawyers Can Help
Congratulations on your big decision to sell your home! Hopefully, you will be able to make some money from the sale, and you can put it to good use. Real estate agents play a very important role in helping you buy or sell your home, but they are not always necessary. Real estate agents are not attorneys and can’t provide specific legal advice. They can help you market your home and negotiate contracts, but many sellers today cannot afford to pay real estate brokerage commissions in the current real estate market.
Selling your home can be very confusing, and hopefully, this informational sheet can help provide some guidance. Although we tried to provide as much information as possible within a few sheets of paper, we can’t possibly assemble a “one size fits all” document for you. Rest assured that the attorneys of Keithley Law, PLLC are here for you if you have other questions.
Most of our Fairfax real estate lawyers at Keithley Law, PLLC have lived in the Northern Virginia area for many years; as such, we know the area very well. Remember, you have choices, and you should never sign any agreement without consulting us first. An ounce of prevention is worth a pound of cure, and unless you have significant real estate experience, an experienced real estate lawyer (like one in our firm) is worth the investment.
What is a For Sale by Owner Transaction?
For Sale by Owner (“FSBO”) homes are sold without using real estate agents and their brokerage companies. Typically, in Virginia, listing agents (sellers’ agents) earn up to three percent of the sales price as their commissions; another three percent goes to the selling agents (buyers’ agents) as their commissions. Selling FSBO allows you to save at least three percent in brokerage commissions, which can represent substantial savings.
Should You Pay a Broker’s Commission to Buying Agents?
Are you going to offer a commission to real estate agents representing buyers? You will likely have more traffic if real estate agents help their clients find you, and it may be worth the money to have this volume of traffic from prospective buyers.
At What Price Should I List My Home?
List your home at a reasonable and fair price. Your sales price should be based on Fair Market Value (“FMV”), which in turn, is based on surrounding home values, location, age of the property, condition of the property, and other economic factors. Appraisers define FMV as the most likely price at which a prospective buyer would expect to pay in an arms’-length transaction and competitive market. Most buyers are smart enough to do their own research as to what homes are worth in specific neighborhoods. Chances are that when you price your house too high or higher than FMV, you’ll end up with lengthier negotiation periods because buyers will likely think that it is overpriced and it might not appear in online searches for their preferred price range.
Appraisal Process to Determine Market Value
To determine a fair and reasonable sales price, you may want to consider hiring an appraiser. Listing it below a certain round figure is a good strategy (for example, if your home appraises at $500,000, listing it at $499,900 can help you find more prospective buyers using the upper limit in their online searches). Remember to be as objective as possible and to leave sentimental or emotional considerations out of this transaction. You may also want to consider building in a “cushion” for potential negotiations so that you can negotiate the price, if necessary.
3 Methodologies Appraisers Typically Employ to Determine FMV
- Sales Comparison Approach
Residential property appraisers typically utilize the Sales Comparison Approach for homes used as primary residences, as opposed to commercial or income-earning properties. Using this approach, appraisers compare your property to comparable properties (“Comps”) in nearby areas that have recently sold taking into account special considerations such as, size, remodeling efforts, improvements, proximity to schools, and other considerations.
Make Sure You Can Dedicate Time and Some Financial Resources to Your FSBO Transaction
Make sure you have the time to do the work that a real estate agent would otherwise be responsible for providing. This involves dedicating time and resources to marketing, providing the necessary disclosures, holding open houses, if appropriate, showing your home, and finding prospective buyers.
Make sure you give potential buyers different ways to contact you. Provide email addresses, phone numbers, and make sure you are available for them. Be ready to answer questions about your home.
Remember that real estate agents are always looking for new business, so it is almost a certainty that they will try to earn your business. FSBO sellers are prime candidates for agents hungry for new business. Gently remind these agents that although you appreciate their efforts, you have made up your mind to sell your home without the assistance of an agent.
Organize and Declutter Your Home; Consider Improvements
Consider making some improvements, at least cosmetic changes. For instance, a fresh coat of paint and new carpeting can go a long way. If you have a limited budget for painting or cannot hire professional painters, pick neutral colors, flat-paint which is cheaper than glossy or eggshell paints, and paint the rooms that people notice most like foyers or entryways, master bedrooms, master bathrooms, and kitchens.
Fix Broken Things
Fix the things you need to fix like electrical, mechanical, and plumbing concerns. Most buyers want home inspections, and most banks require them so any deficiencies will be pointed out to you. Now is the time to think of some things that people will notice, like large amounts of pet hair or dust. People also notice broken fixtures and things that don’t work, like light switches.
To Stage or Not to Stage
You may want to consider renting furniture to stage your home, but if you do, you should also consider hiring a stager or interior designer. Staging is a larger expense item, so only do it if you think it’s necessary. You can also virtually stage your home by adding furniture to your online photos.
Organization and Decluttering Can Make a Big Difference
Clear your home and make it free of clutter. Make sure your home shows well. Often, empty homes are better than furnished ones. Consider landscaping and first impressions. Also, keep in mind that some people are not always honest, so hide and safeguard your valuables.
Decluttering your home is a must, and you should spend a little money on hiring a maid service to help you. We have great referrals if you need them. Great, reliable, professional housekeepers can clean behind appliances, clear vents, and dust.
The Little Things Count
Consider hiring a professional carpet cleaner if you have draperies and carpets that need to be cleaned. Imagine how much people appreciate your sense of pride in showing your home when coming in the front door to see evidence of carpet cleaning and vacuuming “lines.” Place a bag of plastic or paper “footies” near the front door and create a sign for people to use them. People understand the inconvenience of putting them on to keep the carpets clean.
Consider what people will smell or hear when entering your home. Use cinnamon and apple air fresheners to give your home a “cozy” feeling. Use citrus fragrances to make your home smell clean and fresh. Use soft music to convey classiness or to mask traffic sounds.
People have to go through the outside to get to the inside. Your yard will tell people a lot about your home. Consider hiring professional landscaping services or lawnmowers to keep your grass maintained. Replace light bulbs and use brighter and softer lights to highlight certain areas or rooms of your home that you want to showcase. Open blinds and curtains to bring in lots of daylight.
Advertising Your Home for Sale
List Your Property with Online Listing Services
Most people look for their dream homes online and use these online listings to further narrow down potential listings before ever visiting them. List your property online on multiple websites, if possible. Craigslist, www.owners.com, www.forsalebyowners.com, www.zillow.com are some possibilities. There are numerous others. Most of these sites, with the exception of Craigslist, will list your home on the Multiple Listing Service (“MLS”) for a flat-fee. This is the service most buyers use when searching for homes.
Great Photo Opportunities
Take great photos and upload them on the aforementioned websites. You should take pictures during the day, or use landscaping shots to highlight cozy winters if you have a wood-burning fireplace or live in a country setting. Use a high-quality camera to take photographs of your home and upload as many of the best ones, as possible. Wouldn’t you skip over a listing with only a few photographs? Remember to take the photos after you have decluttered and organized your home, and if you’ve made cosmetic improvements or renovated your home, make sure to post the photos that show the new additions and improvements.
Consider using social media to your advantage and let your friends know your home is for sale. Social media is free and can be an effective marketing tool.
Consider Uploading Floorplans and Video Tours
People like to see floorplans showing the actual dimensions of each room and how they connect to one another. You can purchase software to help you with this or call around for estimates from contractors or architects to prepare one for you.
Professional or high-quality video tours convey your pride of ownership and some people love them. You can upload one pretty easily or combine multiple pictures together to make one, continuous slideshow or video. Make sure you consider the fact that more people today look at these listings on their smartphones or mobile devices, not on their desktops so make your videos and photos smartphone friendly.
Come Up with Catchy Headlines and Descriptors –Catchy Headlines
Make a list of benefits and considerations most buyers would use when looking for homes in your area. Are you near the beltway or the city? Are you near great schools? Are there property tax advantages? Write honest, but favorable, property descriptions highlighting the positive attributes and characteristics of your home. Use catchy headlines or one-line descriptors that would catch your eye. “Great renovated home in sought-after neighborhood,” “5 minutes from D.C.,” “Great price for a wonderful home in a quiet neighborhood,” or “Spacious home, great neighbors, wonderful schools” are some examples of catchy headlines. Describe your home using concrete variables such as square footage, number of bathrooms, number of bedrooms, etc, and make sure that your descriptions are accurate.
Write detailed listings to describe your home. Spend some time going through other listings for nearby homes for sale. Some listing services allow you to see how many people have viewed them so maybe these sellers are on to something. Borrow from them. Be honest, but highlight the positives.
Invest in High-Quality Signs and Brochures
Create or purchase “For Sale By Owner” signs or “For Sale” signs that people can see from the street or at major intersections. We have all seen signs that were handwritten, and we’ve probably ignored them or thought they were signs for distressed home sales. You don’t want to make the same mistake. You may also want to order directional signs to help people find your home from main roads.
Publish high-quality informational brochures and other marketing materials. Spending a little money on printing can go a long way, so consider engaging professional services or visiting your local copying centers for quality, glossy brochures. Have these ready for potential buyers online and at home – you can simply purchase plastic boxes from local copying and office retailers, and you can place them next to your “For Sale By Owner” signs on your lawn.
Is an Open House Worth the Effort?
Most often, open houses are held by sellers using real estate agents and brokers. An open house event held by an FSBO seller is rare because an open house is typically a simple advertising tool for real estate agents to pass out their cards to prospective clients visiting the open house. Open houses also attract nearby prospective sellers hoping to use your house as a way to gauge the FMV of their own homes or to obtain selling tips by looking around to see what you’ve done – or even worse, potentially poaching prospective buyers.
Offer, Acceptance, and Ratified Contracts
Discuss contingencies and contract language with us. You may also want to have us draft contracts for you to use for people interested in putting offers on your home.
If you are trying to sell your home as quickly as possible in order to purchase another home, you should be less willing to accept contingencies, which are conditions that need to be satisfied for the transaction to proceed to closing. Because there are so many factors and variables involved in contract negotiations, it’s generally a better idea to take contingencies into account on a case-by-case basis. For example, a prospective buyer without a financing contingency who is offering to make this an all-cash transaction may have a lead-inspection contingency. In this case, it may make financial sense to accept the contingency as a trade-off for a financing contingency.
An earnest money deposit is a showing of good-faith or “consideration” to show how serious a prospective buyer is in purchasing your home. Typically, a title company will hold a buyer’s earnest money deposit in escrow. You’ll also need preapproval letters attached to offers, which we can help you decipher.
Find a settlement agent to consummate the final part of this transaction and help you gather and process mortgage payoffs, title work, pro-rating homeowners’ association dues, and pro-rating property taxes. Once you locate a trustworthy and experienced settlement company (we can help you locate one), you can ask for a good-faith estimate of your closing costs. Your closing costs should be nominal compared to the buyer’s closing costs. Most Virginia real estate contracts require sellers to pay the costs of any real estate brokerage commissions, and most often, up to three percent of the purchase price goes to the selling agent (buyer’s agent), which the settlement company will deduct from your proceeds. The closing or settlement company will coordinate the entire process for you but will not provide specific legal advice and will be acting as an impartial party. You can expect to spend at least an hour or two at the settlement agent’s office, usually with the sellers, and each side’s agents, which can include your attorneys. We will help you understand what you’re signing.
We want to help you maximize your profits and provide the best service possible without compromising your legal rights. Contact the real estate attorneys at Keithley Law, PLLC to schedule a consultation today.