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Survival Kit For F.S.B.O.
Dear Homeowner, Your have decided to sell your home yourself. You sat down, talked it over with your spouse and felt that the effort would be worth the savings. By now you have mentioned it to people at work and have found that several other people you know have tried it and done it. Maybe you tried it a few years ago and were not successful. Since then you have kept abreast of the trends, read current articles and now you just feel confident in your ability. GREAT! Go for it! We wish you full success. Hopefully, this little booklet will add to your knowledge, give you some tips and explain some of the steps involved from marketing to settlement. Realize your task may not be so easy. Many FSBO's (pronounced Fizz-bos) start with high enthusiasm then either tire of the time demand, the financial burden or lose sight of the end results. Statistics from the National Association of Realtors© indicate that nationwide only 17% of all FSBO's are successful in their efforts. The other 83% either take their home off the market or list it with a Realtor©. We sincerely hope that this is a successful venture for you and your family. We understand that you are striving to achieve new goals in your life whether you are moving from the area or are moving up or scaling down. These goals represent the next chapter in your life. If you find that you are not moving toward these goals as quickly as you would like, we hope you will think of us. As experienced Realtors©, we are sure we can make the next chapter an easier and more comfortable step. Sincerely, The Schemm Team 
What is My Home Worth?
(Is that Market Value?)
One of the most important factors in selling your home is the sales price. In comparative pricing, you should be realistic and careful not to overprice or under price your property. Value is a relative term and every home is in a price range.
To determine the value of any property, there are three tests that are used in the industry. One is 'Market Value' or what other homes have sold for. Another is 'Replacement Value,' i.e. what would it cost to build the home today? And the last determination is based on what someone is willing to pay for your home. When selling in the resale market, the replacement value carries the least amount of weight.
Let's look at the other two.
Market value is determined by comparing your home to similar homes that have: (1) sold and settled in the last six months, and (2) are in the same neighborhood. Because of today's market, the criteria sometimes need to be expanded either to include a longer selling time and/or a different neighborhood. Each exception must be justified. The value is compiled by comparing floor plans, style, age, improvements, taxes and neighborhoods.
The work and cost to maintain your home (you know, all the repairing and replacing) should not be added to the sales price. The cost to maintain the home does not increase it's value. But, it may help you get a higher offer, quicker. The same is true about 'upgrades:' those things you paid a little extra for like carpet padding, better appliances, ceiling fans, custom drapes or professional decorating. This shows your pride of ownership and may help you get a better offer but it should not be added to the value. Remember, we said that value is relative and that every home is in a price range. A well maintained home that is decorated attractively and shows well can be considered in the top of the price range.
The last consideration in pricing your home is market value. What is someone else willing to pay for your property? This doesn't mean price. There are other factors that effect the net worth to you. Market value may include such items as seller's concessions and length of time to sell and other incentives offered to make the sale work.
Pricing your home is not a science. It is an art.
How The Home Looks!
(Curb Appeal)
View your home as a purchaser would. Walk across the street and look at your home. Does the outside need painting? Do the shrubs need trimming? Now is the time to consider throwing out the trash/dead twigs/old flower pots or the broken swing set. If prospective buyers don't find your home appealing on the outside, they won't be interested in seeing what's inside.
How can you turn that initial impression into love at first site? Start with trimming shrubbery and mowing lawns. If your house could use a paint job and you don't have the time or money to do it right away, sometimes repainting the trim will update the entire façade. Or consider painting just the front.
If someone in the family is working on a car or a bike or a boat, never do it in front of the house. That's a negative first impression. Gardening equipment and tools should be put away. The front door should be painted and any brass or metal should be polished bright.
As a prospective buyer walks up the walk, your home should 'smile' at them and invite them to come in.
How My House Looks
(Warm and Inviting)
Once inside, the purchaser will be looking at or distracted by the way the rooms are decorated. Without changing your own personal taste, you can 'spiff' up the way any room looks. First and most important, the room must be clean. For most of us that means it needs painting. Don't forget washing the windows as well as the curtains and cleaning the carpets.
Second on the list is the need to create the appearance of space. Open your closet doors. Are they overcrowded with clothing, boxes and other things just stuffed in? An overflowing closet is proof that there in not enough storage space in your home. As you straighten it out, start your packing. Box up things you won't need until next season; put them under a bed or in your mother-in-law's basement.
Do you have a lot of furniture? Would the room look more open without the extra table? Would the dining room look larger if you removed the table leaf and two chairs? The size of the bedrooms is always a concern for purchasers. Use light and mirrors to create a feeling of openness.
Flat space should be for forget-me-not-treasures, not old newspapers. You know, all those special magazines that you are saving because of articles you want to read or cut out. They need a new home now.
Special attention should be given to kitchen and bathroom counters. Shine is the word here. A purchaser will remember dirt and clutter in these rooms more than in any other room.
In the kitchen, weed out casual use items you absolutely don't use every day. Everything else should go into cupboards or be packed. Should the cabinets be waxed? Would new door knobs help? Consider similar actions with bathrooms. If there are items on counters that you don't use daily, please put them away. How about new shower and window curtains with a matching rug on the floor?
These are the little details that help to make the purchaser feel comfortable in your home.
Marketing Your Home
(So Where Are The Buyers?)
Now that the work is done and your home sparkles, you are anxious to start showing it. Our advice is: Advertise. Advertise. Advertise. The local newspapers or internet are the main method of communicating the sale of your property to the buying public.
At first your ad will probably be long ' there is so much you want to say about the home. Because of the cost of advertising you may soon want to cut back on the length of the ads. Use other ads as a guide to catchy headings and appealing phrases. The purpose of advertising is to install curiosity in the buyer. What can you say that will make them want to call you?
Your ad should be specific about location, price and bedrooms. Use romance words to describe the fireplace, deck, pool, woods and family room. When you get a call about the property, remember to ask what attracted the buyer to your ad.
(Are There Other Things I Could Be Doing?)
This is when you have pulled it all together. The home has curb appeal, it looks open and spacious inside, the lights are on, the music is soft and it smells good too. You have put together brochures about the home and neighborhood. Let us remind you of a couple extra things to do please. Remove any and all pocket size items, especially your jewelry box. All prescription medicines should also be removed from cabinets and the tops of dressers.
When purchasers and lookers come to your home, it is pleasant to greet them, request their name, address and phone number. (We never allow anyone through an open house without recording who they are.) You then should consider letting the purchasers go through the home unescorted. They want to talk among themselves, open closet doors and in general get a feel for the house while noting room sizes and colors. When you meet back in the living room or kitchen, then offer to explain the extras about the home such as low utility bills, replacement windows, new carpeting, extra storage or anything else they won't immediately notice during a walk-through.
Buyers will often ask if you intend to do more to your home. Be careful not to commit yourself now. Let them put their request in writing when they make an offer.
Open houses can be fun and you meet interesting people, but not everyone who comes to your home is qualified to buy and many may just be lookers. Don't be bothered if they seem cool or uninterested after seeing your home. Keep advertising and others will come.
Yes! Yes! Yes!
(They Like Your Home, Now What?)
Because you are selling your home you will need the counsel of a real estate attorney or settlement title company. An offer to purchase will generate many forms, some of which are mandated by the state. A typical sales contract for a conventional loan consists of the offer to purchase, and a minimum of five addenda. If the offer is either VA or FHA, the paperwork increases. Remember, a contract stipulates the terms and conditions with which you are willing to sell. You need to carefully review all the related forms. It is best that you do not let the purchaser's attorney write the contract.
Some items to pay special attention to:
1. Sales Price
2. Transfer tax clauses
3. Purchaser's loan commitment date
4. Settlement date
5. Appraisal conditions
6. Inspection conditions
7. Items to convey
8. Conditions governing earnest money deposits
9. Condition of house at final walk through
10. Required H.O.A. documentation
Inspections
(Is That A Bug Or What?)
Most contracts are written conditional on the outcome of several inspections. If a new loan is being secured by a purchaser, the loan company will require an appraisal. The appraised value of the property must be equal or greater than the sales price. If it isn't you need to re-negotiate the terms of the contract.
Other inspections could be for wood boring insects, excessive amounts of radon gas, mold, structural soundness, presence of lead based paint, on-site well and on-site septic (where necessary) and the condition of the heating, wiring, and plumbing. When the contract is written it should address the time frame for completing each of these inspections and who will be responsible if there is a problem with any of the results.
Additional inspections may include the proximity to high power tension lines, historical areas and critical zones for noise control. The contract can also be conditional on information from the master plan at the county administration office.
If well written, inspections can create a safety valve for both buyer and seller. If not properly written, the results can be heartbreak and law suites.
Mortgeease*
(*The Language of a Mortgage Loan)
Perhaps you are moving to a new home and securing a new loan yourself. You will then certainly understand the frustration of the loan processing, and it has changed dramatically in the last few years. The paperwork has increased, the documentation repeats itself and there seems to be no rhyme or reason for the questions asked.
If you do not have an agent running interference for you, then you should plan on calling the purchaser's mortgage company yourself. You have a right to know and should want to know the status of the purchaser's loan. Remember, the Privacy Act. The lender should give you a status as to what documentation they are waiting for but will not discuss details of the loan with you.
We'll Settle in 60 Days' I Think.
(The Pitfalls of Processing)
Marketing your home and ratifying a contract is just part of the sale to settlement process. Within the next 60 days (the average time it takes to process a loan) there are fourteen different times someone could write 'REJECTED' across the purchaser's application. As you prepare for the upcoming move, be attuned to the possibilities of delays and extra documentation required by the mortgage company. Although there is almost nothing you can do to assist in the processing, you should be aware of the current loan status as it proceeds from application to settlement. That means a lot of phone calls both to the purchaser and to the loan company. So of the questions to ask are:
1. What is the credit worthiness of the purchaser to secure the loan?
2. Did the house appraise for full value & are there any conditions to be met?
3. Is the house free of any wood boring insects?
4. Are there any items to be replaced or repaired?
Remember, the Privacy Act will preclude your knowing the details of the purchaser's credit history but you certainly have a right to know if the loan processing is on tract for the projected settlement date.
Additional time problems may be created with addenda that have 72 hour kick-out clauses, settlements that are 'back-to-back,' or reinstating your VA eligibility or unforeseen conditions discovered during your final walk through.
Be flexible and always look for workable alternatives.
I Did It! I Did It!
When you first started to market your home, your concentration was on the sales price but sales price alone does not determine what your true net will be. The actual cash you will receive at settlement is determined by conditions stipulated by your mortgage company, the buyer's mortgage company as well as county and state laws. At the time of ratifying the contract your net amount will be estimated based on some known facts and the 'best guess' on other items. Examples of items that impact on your bottom line are:
1. Your mortgage balance
2. Your escrow balance
3. Utility balances
4. The day of month you settle
5. Loan discount points
6. Payment of transfer taxes
7. Courier fees
8. Seller assist credits to buyer
9. Notary fees
10. Attorney fees
11. Conveyancing fees
12. Recording fees
13. Tax certifications
There are others that may come up, but these are the usual items we see on the settlement sheet. By law, the purchaser has the right to choose both a mortgage company and a title/settlement company. You should call both and ask for a breakdown on the charges they will require you to pay.
Well, we are finally at the end of this booklet. We have given you just a brief sketch of what's involved in the market-sale-settlement process. We hope you have found it helpful and maybe even picked up a tip or two. As you can see, this process is not a simple one. Much effort, endless days and many people are involved in it.
We sincerely hope you are successful in the sale of your home.
The Schemm Team
P. S. One final, but extremely important, thought - SECURITY. If you were listed with a broker your home is always shown by a Realtor and therefore you and your family are not at risk. However, since you are advertising and marketing your own home you will have to develop some way to determine that the people that are setting up appointments to preview your property are really potential buyers and do not have an alliterative motive. There is no price that you can put on the well being of your family, so please be extra cautious and contact your police department to ask for their guidance.
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