Many homeowners choose to sell their property without hiring a realtor. Sometimes they already have a buyer in mind. Sometimes they want to avoid paying a commission. Sometimes they simply believe they can handle the process themselves.
Selling a home without a realtor can be successful, but many For Sale By Owner (FSBO) transactions encounter problems before the property is ever listed.
Here are five common mistakes that can create unnecessary headaches later in the transaction.
1. Pricing the Property Based Solely on Zillow
Online valuation tools can provide a useful starting point, but they are not appraisals.
Automated valuation models often miss factors that significantly affect value, including:
- Property condition
- Recent renovations
- Unique lot characteristics
- Local market conditions
- Comparable sales that are not truly comparable
Overpricing can discourage buyers. Underpricing can leave money on the table.
Before setting an asking price, sellers should review recent comparable sales and consider obtaining a professional opinion of value.
2. Using Generic or Outdated Contract Forms
A real estate contract is more than a simple agreement on price.
The contract should address issues such as:
- Earnest money
- Inspection contingencies
- Financing contingencies
- Closing dates
- Possession dates
- Tax prorations
- Attorney review provisions
Using outdated forms or contracts downloaded from the internet can create ambiguity and lead to disputes later in the transaction.
3. Waiting Until a Buyer Is Found to Address Title Issues
Many sellers assume title issues are discovered and fixed shortly before closing.
Unfortunately, title problems often take time to resolve.
Examples include:
- Old mortgages that were never released
- Missing deeds
- Probate issues
- Judgment liens
- Boundary disputes
Identifying potential title issues early can help prevent delays once a buyer is under contract.
4. Ignoring Municipal Requirements
Many Chicagoland municipalities impose requirements that sellers do not anticipate.
Depending on the location, a seller may need:
- A transfer stamp
- Municipal inspection
- Compliance certificate
- Water certification
- Point-of-sale inspection
These requirements vary significantly from one municipality to another.
A seller who discovers these requirements at the last minute may find themselves scrambling to keep a closing on schedule.
5. Assuming the Buyer Pays All Closing Costs
One of the most common misconceptions in private sales is that the buyer is responsible for all transaction expenses.
In reality, sellers often pay a variety of closing costs, including:
- Title charges
- Municipal transfer taxes
- State transfer taxes
- Survey expenses
- Tax credits
- Attorney fees
Understanding these costs before negotiations begin helps sellers avoid unpleasant surprises.
Most FSBO Problems Start Before the First Showing
Selling a home without a realtor is not necessarily difficult because of marketing or showings.
The bigger challenge is making sure the transaction is structured correctly from the beginning.
Many of the issues that delay or derail private sales are entirely preventable when identified early.
A little preparation before listing can make the path from contract to closing significantly smoother.
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