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How to Sell a House by Owner California
Saving on commission fees when selling a California home really sounds appealing. That is why some tenacious homeowners choose the for sale by owner (FSBO) path. However, selling independently is a lot of work compared to working with an agent. Mental, emotional, and financial preparations are necessary.
To sell a house "for sale by owner," the owner should set a realistic price, stage the house for sale, photograph the property and promote it, prepare all the documents needed, check the financial background of the buyer, evaluate and negotiate offers, hire an attorney, and close the sale.
Even though this process of putting a home for sale follows the same process as selling with a real estate agent, there is a big difference since the owner has to do everything on his own.
If you want to learn all the nitty-gritty on how to sell a house by owner in California, here's a detailed guide to get you started.
What is For Sale By Owner (FSBO) California?
In real estate, for sale by owner means the California homeowner is selling a home without the help of a listing agent or a real estate agent. For sale by owner is commonly abbreviated as FSBO.
Here are some situations where selling a house by owner is the ideal choice.
- The real estate market in the area is already hot and there's no need for an agent to get bids
- The property already has a buyer— maybe a relative or a friend of the owner
- The owner wants to sell the house as-is to cash home buyers
- The owner doesn't really have a timeline for the sale and just wants to see what offers the property will receive
Realistically speaking, one of the main reasons homeowners sell a house FSBO is to avoid paying real estate agent commissions. What they don't realize is that they usually have to pay for the buyer's agent.
Research also shows that FSBO homes are sold much less than properties sold by real estate agents. Gaining profit from a for sale by owner closing is really a case-to-case basis.
In fact, only 7% of successful real estate sales in 2020 are FSBO, according to the National Association of Realtors (NAR).
This indicates that unless the owner is a real estate agent or the market is really favorable, FSBO is harder than it looks.
How To Sell A House By Owner California
If you plan to sell your house FSBO in California, that means you have to market like a real estate agent. How can you do this? You must have a plan.
Here's how to sell a house by owner like a real estate professional.
Set a Realistic Price
Setting a realistic and appealing price when you put your home for sale is probably the most important step in FSBO. While it is natural to aim for a high return of investment, overpricing the property will scare potential buyers away. This can cause the house to sit on the market for too long.
To get your home's value, you actually have three options.
Real estate agents use Comparative Market Analysis (CMA) when choosing a good listing price. Basically, this means checking out similar homes in your area and finding out how much they are sold for. Since you do not have an agent, you must do "comps" independently.
Here are a few things to keep in mind when running comps for FSBO homes:
- Use properties that are sold in the past three months, so you get an updated price.
- Ensure that the comparable homes are really similar to your property in terms of quality, size, and location.
- Pull comps within your neighborhood or an area near your home.
- Don't use the asking price of comparable homes since this is only the reflection of how much the seller expects their home to sell.
Real Estate Valuation Sites
You can also use real estate valuation sites to check out recently sold properties. Just be cautious since not all websites present up-to-date prices and the properties may be situated in areas with a different real estate market status.
Although expensive, hiring a professional appraiser to give you an accurate listing price when you put your home for sale is well worth the money if you can't determine a price on your own. They'll visit your home and consider comps and market trends before suggesting a value.
Stage the House for Sale
Whether you're selling a house on your own or not, preparing your house for sale is a necessary step. If you give your home some TLC, you'll be able to list it at a much higher price.
Here's how you can prepare your house before the for sale by owner (FSBO) process.
- Declutter shelves, surfaces, and floors.
- Deep clean and make sure everything is dust-free.
- Repair broken door handles, leaking faucets or roofing, etc.
- Repaint if the old paint is no longer presentable. Remove wallpapers and put in a new one if the budget allows.
- Reduce furniture displayed so the buyer can move around with ease. This will also make the property look less cluttered.
- Update light fixtures so the buyer can see the house properly, especially if they want a night showing.
- Give the exterior walls a fresh coat of paint if necessary.
- Fix landscaping for added curb appeal. This may involve adding a walkway, some shrubs, or a flowerbed.
- Deal with grass and weeds. Make sure to mow the lawn before showings or open houses.
- Fix any gates or garage doors since old-looking or damaged ones lessen the curb appeal of your property.
Photograph the Property
The majority of home buyers these days are searching for FSBO homes online. This means that marketing your home through the web using high-quality photos of your home is essential. The buyer's decision is highly influenced by this factor.
Hire professional photographers, especially those who know how to take real estate photos. You'll pay a few hundred dollars, but you'll get stellar photos in the end.
If you cannot afford a real estate photographer when you set your home for sale, you can also DIY. However, take note of the following:
- Use a great camera, preferably with a wide-angle lens.
- Use proper lighting.
- Take a lot of pictures so you'll have options.
- Never miss a room.
- Experiment with different house angles.
Market Your Home
Once your home is staged for listing and you have taken professional photos, it's time to market. Here are some ways to effectively market your for sale by owner property.
Craft an Appealing Listing
To supplement the nice photos of your property, you should craft an enticing listing description. It should be comprehensive and include some keywords referring to certain features of the houses.
Here are some other things to include when you market your home through a listing:
- Basic information like the square footage of the property, the number of rooms, bathrooms, kitchen, etc.
- The features that give the house an edge like a marble countertop or a fireplace feature.
- Details about the neighborhood, like if there is a nearby school or hospital.
List on Your Local Multiple Listing Service (MLS)
Your local Multiple Listing Service (MLS), the largest database of for-sale houses, is the perfect flat fee service to list and market your home.
Although this isn't free, you have a high chance of selling your home here since this is the buyers' first option when searching for homes.
Put a Physical Sign Outside the Property
Some people underestimate putting a sign on their yard when they market their house without a realtor. They forget that most buyers drive by the neighborhood they want to live in.
Get a professional custom yard sign to avoid handwriting a sign. But before doing this, check with the local MLS. Some MLS does not allow for sale by owner FSBO signs while it is listed.
Post on Social Media
Social media is really powerful, so you might want to harness it when selling a house. Post professional photos of your property along with a detailed description on Facebook, Instagram, Twitter, and others. Then, ask your friends and family to share your post.
Consider a Print Ad
Publishing an ad in the local newspaper may also land you some offers, that is if a lot of people still read print in your area. This isn't cheap, so make sure that your ad will be read.
Tell Your Circle
More often, FSBO homes are easily sold because owners market them through their families, colleagues, and friends. Even if your immediate circle has no interest in your property, they may know others who are looking to buy a house.
Hold Open Houses
An open house is a period when your house is available for viewing by interested buyers. To stage an open house event while selling a house by owner, you can do the following:
- Post the details on social media.
- Add the open house details to your DIY for sale by owner (FSBO) listing or to the flat fee MLS listing.
- Place an open house sign in your yard or at nearby intersections.
For open houses to be successful, your house must be in great condition. This is when repairing, cleaning, and staging is vital.
When visitors check out your house without a realtor, provide them with an information sheet that contains details about your house. Also, if you can, ask for their contact details so you can follow up with them.
If you've done great work marketing your California home, be prepared for the busiest phase of selling a house by owner— managing showings! This is the point when most homeowners rethink going solo because of how showings impact their schedules.
For showings to be successful, responding to buyers' inquiries immediately is recommended. You should also set end times if you want to fit in several showings in a day. This is also strategic because the buyers will feel that they have competition for the property.
Moreover, ensure that all your valuables are secured. Remember that your house will be open to strangers, and you don't want to take any chances.
Here are some more tips for landing a buyer during showings:
- Make sure that the house is really in great condition.
- When the buyers enter, share some highlights of the property.
- Don't hover around the buyer all the time. Let them explore freely.
- Answer the buyer's questions in detail.
- Follow up with the buyer.
Most buyers have their own real estate agents. If this is the case, the agent will typically point out everything they have observed around the house to their client.
Prepare All The Documents
When working with an agent, they'll handle most of the paperwork. This is also true for investors and cash home buyers. But since you're selling a house by owner, you would need to prepare a lot of documents such as the sales contract, property survey, title, etc.
The documents you need to prepare are based on where you are in the process of selling your home. There is paperwork needed before listing, during launch, during an offer, before closing, and in the actual closing.
We have listed all this paperwork in a later part of this article, so be sure to check it out.
Evaluate the Buyer's Financials and Negotiate Offers
Once you have received a great offer when selling FSBO, you need to confirm if the potential buyer can really afford your home for sale.
You can do this by asking them to provide proof of funds or a mortgage pre-approval letter. The latter is usually preferred since it will tell you how much the buyer is allowed to borrow from the lender.
If, for instance, they have conditional loan approval, find out what conditions they need to meet so their loan can be approved.
Once these are all cleared, you can negotiate with the buyer with a counter offer if you think their offer is not enough.
Find a Real Estate Attorney and Close the Sale
When it's time to button up the home deal, close at a title company or pay a real estate attorney to help you with the legal documents. The real estate transaction would be less at risk with an attorney's help, especially if you don't know the legalities of how to sell a house by owner.
The laws of selling a house vary state by state-- some have title companies while others require attorneys. Confirm the laws in your state before selling FSBO.
FSBO Mistakes To Be Avoided California
The process of selling for sale by owner (FSBO) can be challenging, and if you are inexperienced, there is a high chance of making some mistakes. Luckily, through a bit of research, you can avoid these pitfalls.
Here are the 10 most common mistakes made by homeowners when putting their California home for sale by owner:
- Letting the house sit on the market for too long: If your house sits on the market for longer than the average time on market, potential buyers will assume it is in bad condition or something is wrong with it.
- Not listing your home on the MLS: A flat fee MLS service is the best place to list when selling a house by owner because it is the first platform buyers' agents look when searching for homes for sale. Not posting your home on an MLS could mean missed opportunities to sell your house.
- Under- and over-pricing: Over-pricing is still the top reason why most houses don't sell. If you want your property to attract buyers, set a realistic listing price. Also, you want to avoid underpricing your house to sell it quickly. Often buyers will wonder what's wrong with the property if you price too low.
- Being too greedy: If you were offered close to full price, it's usually best to accept unless your house has a lot of potential buyers. Often, thinking that you can get more if you wait leads to not selling your home at all.
- Selling during winter: Winter is a slow time for the real estate market because fewer buyers are searching for homes. With the weather being cold and a lot of holidays happening, your property may be listed for longer than average.
- Using low-quality photos: When you decide to sell an FSBO house, using poor-quality photos for your home listing can mean two things to potential buyers— you don't really care much about the property, or the house is not that nice. Most successful sellers hire a professional photographer to avoid this mistake.
- Selling as-is: Not cleaning or fixing the house is one of the biggest mistakes of FSBO sellers. It would mean a lesser sale price or the property staying on the market longer.
- Failing to stage the home: Staging a home is expensive, but can attract buyers in both the listing pictures and in person. You don't need to stage until the home is sold-- you could stage for the only the first week if money is tight.
- Not accommodating potential buyers: Since you are selling your house independently, you have to make room for viewings on your schedule. Failing to do so because it can be an inconvenience to you could mean missed opportunities.
- Closing with an unqualified buyer: Not asking for proof of financials and signing with a buyer right away is very risky. Once they've signed the contract, they have an agreed number of days to get the funds and close. However, if a buyer fails to get approved by their lender, the closing may fall through and delay your sale by several weeks if not months.
Benefits Of Selling Your House By Owner California
While most real estate professionals frown upon selling a house by owner, this way of selling a home has some benefits, especially if the owner is knowledgeable and the home sale market is hot in the California area.
In this section, we'll take a deeper look at the advantages and benefits when you sell your home on your own.
Avoid Paying Agent Commission Fees
Avoiding agent commission is the main reason why many home owners choose to sell for sale by owner. Closing costs are already expensive and agent fees are added on top. The average commission fee of a listing agent is 6%, but this can be avoided when the owner sells on his own.
Full Control of the Listing
Not working with a listing agent means having full control of the listing when sellers put their homes for sale. This means deciding on the listing price, marketing strategy, and listing details.
Flexible Showing Schedule
Being in charge of private showings when selling a home by owner means sellers get to have some flexibility. Even if there are a lot of potential buyers who request a house tour, FSBO sellers won't be caught off guard since they're the ones who will set the schedule.
Since there is no middleman when selling a home by owner, there can be fewer complications. The sale can be closed faster and both buyers and sellers can move on to their new lives. In fact, according to NAR, 77% of FSBO homes are sold in less than two weeks.
Drawbacks Of Selling Your Own House California
As with any huge real estate transaction, FSBO has pros and cons. Depending on the situation, the cons of selling FSBO may outweigh the benefits. To decide if you should really push through, review these cons of selling your California house on your own.
Difficulty in Setting the Price
Real estate agents know how to set an appealing but fair selling price. This task can be difficult when a seller decides to sell the home by owner since emotions can influence the price negatively.
Sellers may make the mistake of setting an unrealistic sales price for the home for sale, which may detract potential buyers.
Lower Sales Price
Although sellers will avoid paying agent commission fees when listing a house without a realtor, selling FSBO could also mean netting less money when they put their home for sale.
This is because FSBO home sellers are inexperienced in dealing with offers and negotiating, unlike real estate agents who do this for a living. Also, it is common that the seller pays for the buyer's agent during closing. This is deducted from the sales price.
Stressful Selling Process
The process of selling a house can be overwhelming especially if there are issues with the title company and buyer financing. Going FSBO and selling without an agent would mean that sellers have to deal with all these headaches by themselves.
Real estate agents already pay for MLS access and have networks of people to contact as soon as they list a home. This won't be the same for most home sellers when they sell FSBO. FSBO sellers should set a budget when marketing their homes without an agent.
Costs To Sell A Home By Owner California
Although selling for sale by owner can help save on agent commission fees, it doesn't mean that you won't spend money while selling your California home. In fact, if you add up all these expenses, you may realize how financially exhausting for sale by owner is...
Costs of selling your home for sale by owner
- Survey and Home Inspection: When selling, homeowners would need to present the exact lot area of the property to the buyer. Thus, sellers would have to pay for a land survey. Similarly, home sellers would need someone to inspect their home so they know what to repair or improve before listing. Survey and home inspection can incur $200 to $400.
- Home Repairs: If the home inspector discovers major issues in the house like bad plumbing or damaged roofing, the lender required repairs will set the sellers back financially. On average, this can cost $1,000 to $10,000 depending on how bad the problem is.
- Appraisal: To decide on a realistic price for a property, home sellers may need to hire a professional appraiser. The appraiser would visit the home and give the seller its fair market value based on their inspection, comps on recently sold houses, and other factors. The fee of most appraisers is between $350 to $400.
- Photography: Professional photos are necessary to complete a listing and market a home effectively. If the sellers do not have great photography skills, they would need to hire a professional photographer which can cost around $110 to $300.
- Marketing: Marketing a property is not only labor-intensive but also financially demanding. Expect to pay anywhere from $50 to $2,000 for flat fee listings, signages, print ads, social media ads, etc. Of course, this depends on how much the sellers need to market their property.
- Real Estate Attorney/Sales Contract: Sellers who need guidance when closing a home deal would find themselves hiring a real estate attorney. This legal professional can also draft the sales contract when one chooses to sell by owner. Usually, their rate is per hour, averaging between $150 and $350.
- Home Warranty: Although a home warranty can be expensive, it will offer the buyer peace of mind. Home warranties are required in most states and they often cover septic, roofing, etc. Sellers should expect to pay $300 to $600 for a home warranty.
- Closing Costs: Closing costs include an assortment of fees such as title insurance, homeowner fees, transfer tax, escrow fee, etc. These costs may vary, but typically, this is 8% to 10% of the home's sales price. If the buyer has an agent, the seller typically pays that fee, which is 2.5 to 3 percent.If the seller wants to skip all of these expenses and fees, contacting a cash home buyer is a great option because they buy homes as-is and cover the closing costs.
Paperwork For Selling A House By Owner California
Given that a home sale is a significant real estate transaction, expect a lot of paperwork. In this section, you'll learn about all the legal documents that are involved when selling by owner, from the ones needed before the listing up to when you are closing the deal. We recommend working with a local California attorney in your county to include state-specific real estate documents.
Generally, the documents you need before the listing are those that can give you information about your house and the upgrades you've made since you moved in.
- The Title: A house title is a document that lists all the legal owners of the property. Most buyers ask for this to ensure that there are no other legal claims against the house.
- Original Sales Contract: The original sales contract proves the current and previous ownership of the house. It details all the disclosures regarding the property before the original sale.
- Property Survey: Also called the plat survey, this details the exact boundaries of the property. If in case you do not have a copy, the buyer would have to get a copy from your local housing authority.
- Professional Appraisal: You need to provide the original professional appraisal of the property or any subsequent appraisals in case of house improvements or refinancing.
- Floor Plan or Blueprint: To help with the inspection, preparing the blueprint or floor plan is necessary. This also allows the buyer to see the changes made to the property since it was built.
- Homeowners Insurance Record: The Homeowners Insurance Record proves that the house is insured and shows the claims since the house was bought. This is needed for added transparency and the protection of both buyers and FSBO sellers.
- Mortgage Statement: You'll need this when you sell your house before paying the whole mortgage. Aside from this, you may also need to provide a statement of the payoff amount.
- Records of Repair and Maintenance: These records may include receipts of major repairs, appliance warranties, records of annual upkeep like gutter cleaning and painting, and utility maps of gas and electrical lines.
- Homeowners Association (HOA) Documents: If your home is a townhouse or condominium, you would need to provide HOA documents. This will inform the buyer about some fees, rules and regulations, or even voting privileges.
- Manuals and Warranties: If you're selling the house with all the appliances in it, you should give all the manuals and warranties to the buyer. This is especially necessary for large items.
- Capital Improvement Receipts Plus Permits: These documents detail and validate the improvements or upgrades you made to the property.
- Utility Bills: Some buyers want to see the cost of running the house so they can set an operating budget. Provide at least a year of bills so expense increases are seen.
When you decide to sell by owner, these documents are needed in listing your house on the real estate market.
- Comparative Market Analysis (CMA): CMA compares sold homes in your area that are similar to yours. This will help you set a good and realistic price.
- Net Sheet: This is a worksheet that computes how much you'll pocket for each offer when deductions for taxes, remaining mortgage, and other fees are made.
- Pre-inspection Report: This document will give you a checklist of what you need to repair or update in the house before listing.
- Prelim Report: This report summarizes existing liens, taxes owed, and all other financial claims against the house.
- Mandatory Disclosures: This document lists all the hazards that affect the house such as environmental issues, neighborhood nuisances, defects in heating, etc.
When There is an Offer
The following documents are essential when negotiating sales prices. Note that the negotiation begins when you receive your first offer.
- Offer and Counteroffer Forms: These forms are crucial to documenting negotiations. The purchase offer form is submitted by the buyer and if the seller wants to make a counteroffer, he would need to use a separate form.
- Final Purchase and Sale Agreement: When the seller and the buyer already agreed on a price, these legal documents are written. Details such as the sale price, terms, and closing date are included in these documents.
The documents below are all part of the sale. Mostly, they detail the current state of the house.
- Home Appraisal Report: This comprehensive report shows the considerations before arriving at the sale price.
- Home Inspection Report: This detailed report should also be shown to the buyers so they'll be aware of any issues with the house. Often, buyers use this to negotiate the sale price, especially if the property is in a bad condition.
The majority of these documents ensure that the right dollars go to the right people when selling a home.
- The Deed: This is a legal document that transfers ownership of the property from the FSBO seller to the buyer. Both parties are identified in the deed and the property is thoroughly described.
- The Closing Statement: This shows the closing costs and other fees related to the home sale. This is usually done by a real estate attorney in for sale by owner.
- Recent Tax Statement: This is provided to calculate how much outstanding tax needs to be paid during closing. This will also give the buyer an idea of how much tax they will owe once they own the property.
- Exclusion v. 1099-S Tax Form: This form is required in reporting the sale of the house. This is essential whether or not your house qualifies for tax exclusion.
Should You Sell A Home Without A Realtor California?
Whether or not you should sell a house without an agent depends on a lot of factors. If you're lucky to have someone you know looking to purchase your California property, then selling for sale by owner makes sense.
Meanwhile, if the property is really old, needs a lot of repairs, or the real estate market in your area is not that active, work with an agent or cash buyer.
While for sale by owner is really tempting with the "no agent commission fee", it is also stressful. It is best to weigh the pros and cons carefully before jumping in.
Since most retail buyers use an agent, even if you sell FSBO you aren't avoiding all agent commission.
We would only recommend going without an agent and taking the for sale by owner path if you are really knowledgeable in the real estate business and are in a hot market with many potential buyers.
Alternatives to Selling FSBO California
If you don't have the time, skills, and energy to take the for sale by owner (FSBO) path in California, there are 3 alternatives that you can choose instead.
Asking the Help of a Real Estate Agent
Ultimately, working with a real estate agent may help you put your home for sale without stressing you out. There are so many documents involved in real estate and if you're not in your element, selling FSBO could be disastrous.
There's also the possibility of a higher home sale when you hire a real estate agent. These professionals are experienced in negotiations; thus, you can expect that they'll get you a better price for your property than doing it yourself with little experience.
Another great thing about hiring an agent is that they do not have any emotional attachments to the house. They can set a realistic asking price and handle negotiations without emotional interference unlike when you sell your own home.
Requesting an Offer from an iBuyer
iBuyers or instant buyers are tech-driven companies that can determine your home's value through an automated valuation model (AVM) and give you an offer within 48 hours.
This is for you if you want to sell your home fast and you value convenience. There are several types of iBuying that you can choose and they are the following:
- Traditional iBuying: Traditional iBuying means asking for an offer from an iBuying company and receiving cash payment in a matter of days or weeks.
- Trade-in: This works for people who want to buy another property while selling a home. The iBuying company will make a cash offer on the house you're eyeing and when you move in, they'll sell your old house to pay for the costs of your new house.
- Bridge Financing: Bridge financing works for homeowners who want to maximize their profit. Similar to trade-in, the iBuyer would make a cash offer on the house you want and after you move in, they will lease it to you. You then proceed to selling your house in the traditional real estate market to earn more from it. If it isn't sold in a given time, the iBuyer will purchase it at a pre-agreed sale price.
Getting an Offer from a Cash Home Buyer
Cash home buyers are exactly that— they buy houses for cash! This option is highly recommended if you want to sell an inheritance or a distressed property.
Selling your home to a cash home buyer means there is no need to prepare your home or make repairs. You can also expect a fast closing because they do not work with mortgage lenders. Often, they also cover closing costs!
Cash home buyers will buy any property including FSBO homes with odd layouts. Usually, these FSBO homes sit on the market for too long because they turn off retail buyers. But with a cash home buyer, the process is fast and you can skip all the stress of marketing an odd home.
Final Thoughts: How To Sell A House By Owner California
Going solo when selling a California home is complex and stressful at times. Before trying to sell your house on your own, make sure that you have weighed the pros and cons a hundred times.
If you're ready to sell or your house is already on the market, be patient. Don't grab the first offer if it is too low or be too greedy and pass on an offer that is close to asking.
You can also sell your house to a cash home buyer if you need fast cash! Here at Sell My House Fast, we'll make your FSBO journey easy by giving you a competitive offer and covering all the fees for you! Contact us at (844) 207-0788 to know more.