For Sale By Owner (FSBO)

The Real Estate Connection website is paid for and maintained by Realtors. With that in mind we realize that many people are hands on, do it yourself types, and that's OK with us! We are willing to help.

The fact is, there is more involved in selling Real Estate than most people realize, so we have put some useful resources together here for you to make sure you get on the right track.

Getting your home ready for sale.

You know all those things you said you would get around to some day. Well today is the day!

• JUNK!  Get rid of it, have a garage sale, give it away
• loose handles, knobs, missing mouldings, dripping taps, squeaks etc
• Make sure all the doors close properly
• You know all those cool stars and stuff you put on the kids bedroom walls - paint over it
• Clean up outside and do some gardening
• If your front door does't look like new - paint it
• Pressure wash the exterior and driveway

How much is it worth?

• Your tax assessment is not a good guide, it can be way high, way low and everything in between, although assessments for condos are usually more accurate. 
• Your neighbours have no idea what they are talking about .
• Asking prices have no relation to selling prices
• You can get tax reports at http://www.bcassessment.ca to find out what a house actually sold for
• You can call a Realtor and get him to do a cma for you
• For about $30.00 you can get a report from landcor.com

Getting prepared legally

• Contact your lawyer and ask him for a Contract of Purchase and Sale in a form that he recommends
• Ask your Lawyer to advise you about what conditions should be in the contract
• Find a Lawyer that is willing to give you advice over the phone
• Ask your Lawyer to prepare a disclosure statement for the property (this will help protect you should the deal go bad and you end up court. Always disclose any defects in your property)
• When you get an offer don't be pressured to sign it without being reviewed by your Lawyer, no matter how good it looks
• Make sure you see identification from anyone that makes an offer on your home, make a copy if you can
• Ask your potential buyer if they have been pre-approved for financing - ask for proof
• Talk to your lawyer about timing and paperwork required for removal of conditions
• Be wary of anyone asking for vendor take backs or for some kind of note to be held on the side - talk to your lawyer in detail before agreeing to anything along these lines

Marketing Your Home

• Get proffessional photos taken
• Make up some color feature sheets with photos and the highlights of your home
• Measure your home. Make sure the room sizes are on your feature sheet. You can get it done proffessionaly by PixiLink, Measuremasters or BC Floor Plans and attach the floorplan to your feature sheet
• Spend a few bucks and get a custom sign made (about $100), this helps you look like you know what you're doing
• Advertise for free - you can use free services like craigslist or kijjiji - be prepared for an onslaught of calls from scammers wanting to make a "creative deal" and Realtors wanting to list your home
• Newspaper - this is still an effective medium, you will get more qualified calls
• FSBO service -  The Property Guys, Usellahome.com
• Listing Only Service from www.therealestateconnection.ca

Showing Your Home

• Allways be consious of your safety. You are letting strangers into your home. DO NOT SHOW YOUR HOME ALONE.
• Make sure you have any valuables put away
• If you feel uncomfortable about someone, ask them for ID before you let them in
• Try to keep an eye on people while they view your home without hovering
• Don't talk too much, let people look and let them know you are available to answer questions, Point out important upgrades but don't talk about how much you spent on them, this appears as if you are justifying asking price
• Try to get contact info from people who view your home - you may want to call them if you adjust your price

Making a Deal

Although you are selling the home yourself there are still costs involved. One of them is paying a buyers agent. You may be tempted to tell all realtors to get lost as you do not want or need their help. The reality is that the majority of Buyers do want the help of a proffessional and you would then be saying no to all those Buyers reducing the number of prospects dramatically for your property. Less prospects equals less money. The more people that see your home the better price you will get. It is that simple. Don't worry about what a realtor makes to put a deal together, just think about your bottom line. Make deals with as many Realtors as you can, this will result in a quicker sale.

When negotiating, remember that nothing you say is binding. Put everything in writing, get the Buyer to sign it first and then take the deal to your lawyer and ask for advice. Once you have accepted an offer you are legally bound. If for example the Buyer did not put a date for subject removal and you accept this offer he could back out of it right up to closing day without consequence. There are many loopholes that involve dates. Most slick investor types know a lot more about this than you do, they also know that people focus mostly on price and don't give full attention to the conditions.

If the deal has bean drawn up properly the buyer will have a period of time to do their due dilligence (maximum 2 weeks). During this period the Seller is bound by the deal but the buyer is not. Typical conditions are for financing, inspection, insurance, title search and approval of your disclosure statement. Other conditions which if worded improperly will be very dangerous, such as subject to the sale of another home (this could tie up your home indefinately). If the Buyer is satisfied he will "remove subjects", this is an addendum to the contract that says the conditions that were in the contract are no longer binding. When the Buyer gives you this paper (which he needs to give by the date and time specified in the contract), take it to your lawer and make sure it is in the proper form to insure that the contract is binding on the Buyer. You should also get a bank draft for the deposit at this time. The deposit can be paid directly to you, in trust to your Lawyer or in trust to the Buyers Lawyer. Typically the deposit is 3 to 5 percent of the purchase price.

Your closing date is the day that the money changes hands. Make sure you are in contact with your lawyer at least a week ahead of time and make sure everything is on track. Thats it, you are done and can start packing.

Cautions

Be aware that FSBO homes are the prime target of "real estate investors" who will approach the Seller with all kinds of "creative" deals that are rarely in the owners best interest. They know that the Seller is often frustrated by the length of time it is taking to get their home sold and know that they are not experienced at dealing with non traditional deals. Some of the most popular methods involve offering more than the home is worth and then deducting traditional costs (like realtor fees) and then suggesting one of the following:

• Vendor take back mortgage (1st, 2nd or both)
• Lease option or rent to own
• Sandwich Lease Option
• Gifted down payment done in a side deal outside the contract
• An option to purchase at some later date

All of these options can be used legally and provide a fair deal for both parties but are most often used to take advantage of an unsuspecting seller. There are many groups working across the country that meet regularly to tell of the latest deal that they bought 20% or more below market value with little or no money down. You will see ads in the media claiming to "Buy your house for full price - no fees" or a variation, these are professional people that are experts at closing deals. If they don't mind paying full price for a property why don't they just call any of the homes listed for sale and buy one - no need to place an ad, there are lots for sale.

Getting financing on a home that is "for sale by owner" is getting more difficult. Lenders are aware that this is where the majority of Real Estate Fraud is taking place. If the deal is being insured by CMHC, they are being extremely cautious sometimes calling for 2 appraisals. A good way to protect yourself from having the deal fall through on completion day is to put a seller subject requiring a copy of a lender commitment letter.

The Real Estae Services Act (RESA) was put in place to protect the public. It requires that anyone acting on behalf of another to aquire or dispose of Real Estate obtain a licence. The Real Estate Council of BC protects consumers through the licensing of all REALTORS® and brokerages engaged in real estate sales, rental and strata property management. The Council enforces entry qualifications, investigates complaints and imposes discipline under the Real Estate Services Act. Unfortunately there is nobody regulating, investigating or prosecuting people who engage in these activities without licence. They like to call themselves "Real Estate Investors" who encorage people to unwittingly get involved with everything from giving away control of their property for next nothing to mortgage fraud. Some of these activities are legal (some loopholes are well used) and some are not, most are certainly not fair to the Seller.

A "Creative" deal may be the solution for any home and can be fair to both parties. If it is fair, the Buyer will certainly be comfortable with you discussing the deal with a Lawyer before signing. Beware of anyone one that pressures to make a decision NOW.

Summary

Selling a home yourself is not like selling a car, it is more complex, involves a lot more money and is subject to a lot of emotional stress. If you have decided that this is not the best option for you please feel free to give us a call for a free consultation.