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Practical For-Sale-By-Owner (FSBO) Tips, Part 2

Contributed by mm | October 26, 2005 5:20 AM PST

Now let us continue our FSBO tip series (first installment here). Your job as the self-agent does not finish after you do all the right things to prepare, price and market your property. Instead, more challenges are own the road:

Be Prepared For Multi-Tasking

If you are lucky, your potential buyers will start to give you rings. In my case, I listed my house just before the dinner, and before I finished the dinner, I already answered two inquiries. 12 more inquiries came in the morning of next day. Having a large team of potential buyers are great, but it also means you are up to the multi-tasking test.

The most meaningful thing you can do is to put on a structure. This means you keep a systematic way to track your potential buyers information, including caller's name, phone number, home tour appointment time, and any other information that will help you. My best practice is to use large size of post-it -- I set up an "index card" for everyone who visits me, and it helped me immersely throughout the process.

Even you have the right structure, you will still be challenged mentally an physically. Often times, I had to take a call from a new buyer when I was presenting the house. And in one extreme case, at one point of time, there were three groups of people with agents in my not-so-spacious house :-) Be mentally prepared for that: besides having a clear structure, you cannot do much about it, but you can think it in a positive manner -- it really is -- the more inquiries and more visits, the more chance you can land a great deal.

Know How To Present

I practiced how to present my home for a couple of times, almost in the same way I prepare myself for important executive reviews in my day job. If I can give a tip, it is really about warm welcome, and lead your visitors to envision how this is the ideal house for them. Some of the tactics:

- Show the floorplan, instead of furnitures.
- Point to the details; some great features like double-pane windows and spacious closets will not automatically cross the minds of your buyers.
- Casually probe the family status of your buyer(s); present differently for family with or without kinds.
- Be sensitive and ask questions about what buyers think; offer a solution to particular concerns if you can.
- Ask for contact information before they leave. This gives you a chance to follow-up if you want to solicit more bids at the end of the game.

Set the Stage for a Bidding War

Throughout the "private showings," you can pretty much figure out who are the people who will really make a bid. Take notes on your post-it about their family status, particular feedback during the tour, and any other information that you glean through the presentation.

You will need to announce some rules for submitting offers, which include when you expect to close the door, and the default clauses of the offer you will expect (like items to stay, closing date, possession date, etc.). You probably want to give a day or two for people to bring in an offer (depending on how many potential buyers you identified). To make it more exciting, it does not hurt that you carelessly mention that "one or two other families will likely give me an offer."

I was lucky. I got two buyers telling me that they intend to beat any bid (which cannot be true) an beg me to let them know any incoming offers (which I did). Even without that, you should automatically update each bidder about other bids -- it can really help to gauge the bottomline and see how you can get more money out of the deal.

Now, buyers will play some tactics on you too. The first offer I received -- it was a full price offer -- only gave me three hours to accept it. There are two ways out: the sneaky way is to accept the offer but put a clause that it is up to attorney's review in several business days, but if you really know more people are excited about the property, you should not accept the first offer too fast. Think about it: in toay's seller's market, will your first bidder reject your acceptance the second day if you make a nice call?

It Is More Than Money

Is it all about accepting the highest bid? In my case, since I have a definite date I need to move, I value the success probability of the offer as well. I gave some weight to whether the offer includes home inspection contingency (which, even for a 4-year-old almost-new house like ours, gave buyers leeway to back out from the deal), and financing contingency (if buyers cannot even come up with 5% downpayment, there will be a chance that he cannot get the financing needed to close the deal).

One related hint: even if you do FSBO, don't reject buyers with agent. Instead, you should let such buyers in, but convey the message that they will be competing with buyers without an agent and they need to be responsible for the agents' commission to be competitive. Personally, I even want to help such buyers with a grand of commissions -- an agent, even while working for the buyer, can really improve the chance of a success closing. You probably don't want to accept the highest-bidding offer from a first-time buyer who is not accompanied by an agent, and is not familiar with what will happen after the offer (which you can get the sense from the casual talks you should have during the visit).

Secure Your Deal

Finally you will have to make a decision of taking a leap of faith by accepting an offer or waiting longer. My advice will be: don't be too greedy. You might miss another $500, but each more day your house is on the market, it may cost you $50 or $100 (think about one more day of mortgage interest, property tax, insurance, etc.).

Once you pull the trigger, you should not look back. The only priority is to ensure the deal will come through. This means you will follow up with buyer or buyer's agent to know any outstanding issues you can help to resolve, and closely work with your closing officer to ensure a smooth closing.

(By the way, I am going to close my house today! I am almost all set to see $170,000 coming into my checking account through wire transfer and report some great profit in my October monthly summary!)

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