ByOwnerPros.com | FSBO Math - How to Save Your Equity in Today's Market
FSBO Math - How to Save Your Equity in Today's Market |
By Lawrance Morrissey & Angie Mager
In today's real estate market, finding an advantage is a must if you want to sell your home at fair market value and in a reasonable amount of time. So we've put our popular eye-opening 'FSBO Math' portion of our seminar down on paper to show you how you can sell your home faster than an agent, and net a lot more money...
The "by-loner" (an unassisted by-owner) seller knows how expensive agent representation is and thinks their home is worth about $150,000. They decide to price it at $155,000 because they know everyone wants to negotiate a little. "I'm going start high, because I can always come down in price." This is the #1 mistake home sellers make. Home buyers are smart. They've been doing their homework, and when they see an overpriced home, they will likely go buy your neighbors | house before coming back in a month to see if you've come to your senses.
They spend about $100 on one newspaper ad and the least expensive For Sale By Owner signs they can find. They only receive a few calls, almost all from agents wanting to list the home and get 1-2 showings in the first month. They determine that selling by owner does not work, and often list with an agent in 3-4 weeks time.
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By-Loner
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Fair Market Value
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$150,000
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By Owner Price
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$155,000
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Advertising Investment
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$100
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Gives up after 1 month
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Net Proceeds
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-$100
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Sellers would like to sell by themselves to save equity but others have told them about the value of the Multiple Listing Service. They decide to interview three agents. They really like one of them. The agent is really complimentary and believes that they should price the home at $158,000. This way, the majority of the commission is paid for!
There are no showings in the first month. The impatient seller calls the agent and together they decide to reduce the price by $5,000 (Very common for agent-listed properties).
A buyer whose agent knows the fair market value negotiates a sale of $148,000. The net proceeds add up to $135,140 a whopping $22,860 off the initial price tag of the home.
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Agent Listed
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Fair Market Value
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$150,000
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Agent Listed Price
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$158,000
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Reduced Price
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$153,000
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Accepted Offer
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$148,000
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7% Commission**
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$10,360
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Taxes/Closing Costs
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$2,500
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Net Proceeds
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$135,140
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Seller knows that prices in the neighborhood are priced around $155,000. We do a CMA and determine that although similar homes in the neighborhood are listed from $150,000 to $170,000, actual sales prices are $140,000 to $155,000. We recommend pricing at $149,000.
Prospective buyers know the prices in the neighborhood and see that it's a good deal in this market. Several make an appointment to see the home.
Everyone wants a good deal so after negotiation, a purchase price of $147,500 is agreed upon. Taking out our marketing fees of $595, plus the taxes and closing costs, the seller nets $144,405. That's $9,265 in saved equity. If the home had a fair market | value of $250,000, the equity saved would be about $16,015!
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ByOwnerPros Program
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Fair Market Value
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$150,000
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By-Owner Price
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$149,000
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Accepted Offer
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$147,500
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Advertising Cost
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$595
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Taxes/Closing Costs
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$2,500
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Net Proceeds
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$144,405
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1. Price Your Home Correctly.
2. Prepare Your Home To Sell - Clean, De-Clutter, Update.
3. Shop Wisely for Advertising (If You Can Find a Better Deal than we offer, Take it!)
4. Be patient. - Agents ask for 6 months. You should allow the same to sell by-owner.
5. Sell Without Paying Commission
** 7% Commission is a common amount. All commissions are negotiable with each broker.
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