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  • For Sale By Owner Help

    Hi All,

    Resident here in my final years of training, and thinking about selling our house by owner. We live in a very hot market/price range, and most houses in our neighborhood seem to fly off the shelf at full price and within days for the past 3 years since we’ve moved here.

    We sold our condo by owner in medial school and it worked out really well. I thought with a little extra work on our end, advertising 3% to the buyers realtor, a paying a lawyer for a few hours of time we could do the same for this house and save several thousands of dollars.

    My main question is what would be a reasonable annual appreciation for a house in a very popular Midwest market? It’s a 1950’s house bought for 255k almost 4 years ago. We haven’t put much investment into the house unless you count my $80 fire pit I built ,
    and no major changes to the neighborhood.

    Comparable sales are another thing to consider, but seems like too much variability to give me an exact number. I was thinking more along the lines of picking an annual rate of return and going with that i.e. 2-5% a year. Any thoughts on this?

    I know some people are anti-FSBO, as you can easily lose that 2-3% you potentially save if you’re not careful. But I think in today’s world with Zillow/Realtor.com ect. it’s so incredibly easy to buy and sell houses that the amount we are paying to realtors (although negotiable) is outdated. I also think when houses are selling at full or over asking price within days consistently for the past couple years, there is room to push the envelope a bit.

    Interested to hear peoples thoughts and opinions. Thanks in advance.

  • #2
    Why don't you just get an appraisal?

    Comment


    • #3
      What for Zillow, Trulia, Realtor.com, and Redfin say your place is worth?

      Comment


      • #4
        • Appreciation rate seems rather naive.
        • A formal appraisal with end up being a comparable sales approach (adjusted for your house).
        • Or you and do your own market assessment or use a realtor or 3.
        It will be a SWAG until someone makes and offer. What are you going to counter then?

        Good luck.

        Comment


        • #5
          Real estate is local. If you aren't able to accurately assess comps then you probably aren't ready to accurately price your own house. That is what a realtor and appraiser is going to do. You can't just pick a number and say it appreciated by that much each year. I mean, I guess you could but you likely won't have an accurate price.

          Comment


          • #6
            There's no standard annual rate of return for a home. What if you overpaid for your house by 20%? Then you should have a negative annual rate of return. The same goes in reverse if you got a good deal and underpaid for it. You need comps to price your home. Most realtors will give you a comp for free with the hope that you will hire them in the future. The main problem with FSBO is that when buyers see FSBO, they automatically discount the fees you are saving into your price. I think that's why the studies realtors cite are able to show a loss by going FSBO. You should try one of the discount brokerages like redfin or one of the online ones so that it not listed as FSBO.

            Comment


            • #7
              You can look at the Case Schiller home price index for your metro area. As an example, if you bought in July, 2016 when your metro was at 110 and it’s now 120, then you can justify multiplying your purchase price by 120/110=109%. I agree with the prior post that buyers think they’re getting a bargain with FSBO. On the other hand, if there’s a real dearth of inventory and one of your neighbors has a friend or family member who is trying to find a house on the block, then it could work out just fine, and you could set a fair/justifiable price. If you are in a something of a rush, then you may want to bite the bullet and use a real estate agent, or at least use a discount one such as RedFin. You could also consider getting an offer or two from an iBuyer. It’s kind of like getting a cash offer in hand from CarMax or Carvanna before you try to sell your used car to a private party. It gives you an objective floor and a hard BATNA that will inform your asking price and negotiations. Considering the up to 10% all-in transactional costs of showing and selling a house the traditional way, these FinTech wannabe disrupters can make surprisingly competitive offers, because their AI has such granular data on your home’s value (using similar inputs to Zillow’s Zestimate).

              Comment


              • #8
                3% of 250k is not very much. I’d let the agent deal with it. If you’re an orthopod, you’re going to make that much in a decent day in the OR as an attending.

                My wife and I sold a house FSBO for 900k last year (no buyers or sellers agents). Saving 54k and only needing to show the house 2x was worth it to me (but who knows, maybe the agent would have listed it for more).

                Comment


                • #9
                  Originally posted by Xeno View Post
                  You can look at the Case Schiller home price index for your metro area. As an example, if you bought in July, 2016 when your metro was at 110 and it’s now 120, then you can justify multiplying your purchase price by 120/110=109%. I agree with the prior post that buyers think they’re getting a bargain with FSBO. On the other hand, if there’s a real dearth of inventory and one of your neighbors has a friend or family member who is trying to find a house on the block, then it could work out just fine, and you could set a fair/justifiable price. If you are in a something of a rush, then you may want to bite the bullet and use a real estate agent, or at least use a discount one such as RedFin. You could also consider getting an offer or two from an iBuyer. It’s kind of like getting a cash offer in hand from CarMax or Carvanna before you try to sell your used car to a private party. It gives you an objective floor and a hard BATNA that will inform your asking price and negotiations. Considering the up to 10% all-in transactional costs of showing and selling a house the traditional way, these FinTech wannabe disrupters can make surprisingly competitive offers, because their AI has such granular data on your home’s value (using similar inputs to Zillow’s Zestimate).
                  I second this & the next post below it. For 250K or even 400K house, with the higher interest from buyers and agents, I think you ought to go with a discount broker like Redfin.

                  On a buying front, I would consider going FSBO, as FSBO sellers are typically of 2 varieties: [1] slightly (and more rarely HUGELY) overprice their house, due to diligent market research but also emotional attachment [2] underprice their house due to lack of research and just wanting to get rid of it (say in an estate sale) and/or often hate all middlemen, realtors & car salesmen being prime examples. I look for type #2, which are becoming more rare, but still get-able: look thru FSBO websites, classified ads on craigslist and local newspapers. As a seller in super hot yet with quantifiable property value market, I would consider going FSBO for a property in the 500K-1milion range (as poster above). Over 1 mil (unless all other properties are over 1mil, like NoCal), there is probably a marginal benefit of an agent to vet and schmooze with other agents on that top end of the scale. On the lower end (under 250K for sure), it is just not worth my time.

                  Comment


                  • #10
                    Pay for an appraisal.

                    Then, if you really are set on a FSBO, try to find a property attorney that has their own title company. They can handle all the legal, insurance, and escrow stuff.

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                    • #11
                      What are the comps?

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