For Sale by Owner in Wisconsin
Written by Wena Roeloffze I Price Strategy Advisor and Realtor I Realty Club 74 I Brokerage by Coldwell Banker Realty
Selling your home is a stressful event, with or without a realtor. It could also cost you money if not done right. This article gives you the detailed steps, process to follow and all the resources in our success package.
FSBO is not for everyone. Why? Because the preparation, research, marketing and selling will fall squarely on your shoulders. However, good preparation and knowing what to do and where to go, makes FSBO less daunting. Every successful business follows a detailed plan.
Using our Wisconsin FSBO Success Package in conjunction with the guide below, will guarantee your success. Here are the 10 steps. The details of the package is outlined after step 10.
1) Select Title Company and Compile Net Sheet
The general reason why most sellers want to be FSBO’s, is to save on commission fees. Step 1 is to make sure that is what you indeed will achieve. To start off, forget about listing prices and what the neighbors’ house sold for. Run your own numbers and create a net sheet to determine what your costs will be to pay off your mortgage/(s), any liens, title company, attorney, utility charges and prorated taxes. These calculations will show you how much you will KEEP after all deductions.
Easiest way to get the answer to this is to decide on a title company. They will be able to give you the necessary information, do a preliminary search and hold for the title on your property and can start with the process of getting your home saleable.
2) Market Analysis and Pricing Your Home
Armed with the amount of proceeds you want in your back pocket at closing, you are now ready for the next step, which is deciding on a listing price. This is an amount you use as a marketing tool to attract buyers and be competitive in your area.
This is most probably the most legwork you will have to complete. Zillow is a huge platform for real estate and they are known for their Zestimates. For the love of all things real estate, please do not use that for getting to a listing price of your own home. Read what Investopedia has to say about the inaccuracy of Zestimates.
Turn to Zillow to look at the photos of homes and study current listings to see how your home compares. Then look at sold home prices and make sure you study what the home listed for and what it sold for. Dive even deeper and see how many days the homes were on the market at the listed prices to determine your final price.
If your home comes up short due to the fact that you made no updates or have a few repairs to make, decide whether you will go ahead and sell your home as-is or if you are willing to make some changes. Try to see your home as objectively as possible or ask a family member or friend to give you honest feedback.
3) Disclose Past and Current Issues in Your Home
You know what your ideal proceed from the sale will be more or less, and you are armed with information about the market and have a listing price for you home. Next step is to prepare your home for prospective buyers. In other words, prepare and package the product you are selling.
As you go through your home in this step, have a copy of a Real Estate Condition Report handy to make notes and disclosures of your home’s condition. Most sellers overlook this crucial part and end up losing thousands of dollars, instead of improving their net sheets. Take the time to complete this step properly.
You are selling a used item. Buyers know they are purchasing a second-hand item. If you skip or refuse to let prospective buyers know what happened, what needs repairs and what is not working that great, you stand the risk of getting sued, getting offered a low-ball price and even risk not closing on your home. The more you disclose, the less can be negotiated.
I will illustrate with an example: we asked a seller to go through the home and open all windows, check doors and more. When we picked up the condition report, there were no disclosures made and we assumed that they followed our sound advice. A prospective buyer made an offer on the home and wanted a home inspection. And guess what the home inspector found? Two windows could not open because the frames had wood rot. And even worse, he found a small crack in the picture window in the living room. The sellers failed to disclose the small crack they were aware of because it didn’t bother them and they also failed to test all windows. What does this mean? In this particular transaction, the seller had to pay a closing cost of $13k to the buyer in order to close. That is a $13k loss on the net sheet!
Pay attention FSBO’s – disclosing issues in your home will not deter buyers, it will ATTRACT them. The more they know about the condition of your second-hand item, the more they will be keen to see it, the more relaxed they will feel making a higher offer to outbid other buyers and the higher the possibility of less contingencies in the offer to purchase.
4) Preparing Your Home for Photographs and Showings
You have gone meticulously through your home with an objective eye and declared with transparency what conditions may affect the price, the maintenance or the value of the home (both positive and negative points).
Next step is to make your home ready for pictures and showings. I have a detailed blog on 9 Tips to Prepare your Home For Sale. Read the article for great information. The most important is to declutter a space as much as possible.
What does declutter mean? Simply put, to declutter is to have a cleared space around the mechanicals in your basement, sufficient lighting in the home, no clothes on the floor, no stacks of boxes or stuff covering walls, entry ways or walkways in and around the home.
Think of decluttering in this way: if you have the choice between 2 plates of food, would you choose the neatly stacked hamburger with the patty and garnish on a clean plate or will you choose the messy plate with a patty hanging off the side and garnish hiding under the bun?
There are many examples on the internet of how to declutter and make your spaces look clean, inviting and modern. Move things around in your home, consider virtual staging for empty rooms or a vacant property and get creative to showcase the best features of your home. As the homeowner, you are in the perfect position to highlight your home best.
5) Photography and Staging
Your home is decluttered, clean and ready for photographs or a video to showcase your product. The pets are outside, your kids are gone and now you can take photos of your home. Our smartphones these days take amazing pictures and there are tons of apps out there to clear a background, sharpen the image, etc. No reason not to do it yourself.
Photographers, however, are not that expensive and deliver great photos because they know lighting, angles and visual placement – it’s their professional job. My grandmother always told me that there is no point in being penny wise but pound foolish. A professional photograph is the first hook for a buyer who is scouring the internet for a home. The visual connection cannot be understated. If you took the pictures, do yourself a favor and compare those with professional listings. If your photos are not that good, hire a photographer so you will have competitive pictures in the marketplace.
There is no need to pay extravagant fees towards staging. Virtual staging is a wonderful and cost-effective strategy to show the potential of a vacant home or what difference some TLC and finishing touches can accomplish.
Here comes the challenge: to keep your house show ready until you have an accepted offer. If you can pack up a few things in boxes and store them in your garage out-of-sight, that would be great.
6) Marketing
As a FSBO, you have a lot of challenges when it comes to marketing. A mere yard sign will not make people flock to your home in droves, and to start a marketing campaign can be costly.
Some of the big real estate platforms offer FSBO opportunities to list your home using their platform. Then there are also real estate agencies who offer flat fee MLS listings, which can mean very different things, but the higher probability is that they will ask a fee to list your home on MLS, but they will not be assisting you with the transaction, questions about paperwork, etc. If that option appeals to you, make sure you are aware of what is and isn’t included in the fixed fee you pay upfront.
Pictures are indeed a thousand words, but you still need to write something about your home to inform buyers why they should consider your home. Always stay factual. Stay away from making opinions about the neighborhood, the street you live in or noise levels. Promote that you have an appraisal, a floorplan or a home warranty and give buyers a factual representation of your home. Highlight the features of the home and refer to public records for room dimensions and acreage if you do not have that in writing from the builder or surveyor. Be aware of Fair Housing Laws when you describe your property.
7) Paperwork and Legal Requirements
Since Wisconsin is not an attorney state, you can conclude a real estate transaction without one. In fact, you can use the realtor who brings you a pre-approved buyer, to handle most of the work on your behalf, which can make for a smooth transaction. It’s a win-win: you only pay one side of the commission and the buyer’s realtor makes sure all gets done. That is of course, if you offer compensation in your marketing or negotiate with the realtor on suitable compensation.
As a home owner, you are obligated by law to complete a Real Estate Condition Report. This form is your best friend. Read step 3 again to refresh your memory. If a seller does not provide a buyer with a condition report within 10 days of acceptance, the buyer may rescind his/her offer. Very few exceptions exist where sellers do not have to complete the report.
Another legal requirement is to complete an Addendum S or a Lead Based Paint Disclosure form. This is a requirement for all homes built before 1978 and has to contain an EPA booklet for the prospective buyers.
Get your legal requirements done and paperwork filled in before you start showings or host open house events. Your preparation and due diligence will delight many buyers.
8) Showings and Open House Events
At this point, you will start wearing yet another hat, and that will be to act professionally when buyers make appointments to see your home. Be flexible to buyer requests and act responsive to calls, messages or emails. Make sure to include your preferred contact methods and times when advertising, and keep to it.
If I can mention one drawback of being a FSBO, it is that buyers might not give you any feedback at all or disappear after a showing. When a realtor shows a property, it is far easier to collect feedback without coming across as desperate. Don’t let harsh feedback get you down either and don’t take it personally. For every pot, there is a lid – for every home, there is buyer.
Don’t rule out an agent to bring you buyers. It could be the best experience ever! And don’t forget about emerging iBuyers who might purchase your home sight unseen with a cash offer. Be open and informed on your options and always consult with your attorney if you have any questions or concerns.
9) Professional Negotiations and Seller/Buyer Obligations
Well done! You received a great offer and accepted the offer. As an example, the buyer for your home wants to have a home inspection, will provide you with a loan commitment and the lender will be requesting an appraisal.
Every contingency in the offer has a deadline. Make sure you and the buyer keep to those deadlines. If neither you nor the buyer have an attorney or realtor, it might be wise to get an attorney at this point if you are unsure of the deadlines, what it means and what the consequences are around earnest money if anything goes haywire.
The contractual part is impossible to explain in detail and it is simply too complex to prepare you for all the different aspects that might arise. It is best to get legal counsel for all contractual aspects you are not sure about. Asking your neighbor who sold their house recently, is not a good idea.
Best practice is to let your chosen title company know that you have an accepted offer so that they can order title and start preparing for your closing. Share their contact details with the buyer so that the process can flow smoothly. A cash buyer will directly make contact with your closer, while a buyer who works with a mortgage lender will prefer to work with their preferred closer. Communicating this information is crucial for a successful closing.
Make sure you fulfill all of your contractual obligations, for example repairs, permits, invoices, lien waivers, etc. well in time and send copies to your closer. Pay your utility accounts and HOA fees in full.
10) Closing
You can pre-sign before closing, which means you don’t have to be at the closing day and time. Technology allows for you to receive a wire transfer of the proceeds into your bank account at closing. The only thing you have to pre-plan is to make sure the keys, remotes or codes of your home is given to the new owners.
Two to three days before closing, you will receive a closing statement which will reflect the proration of taxes, utilities and the deductions and net profits for the sale of your home. Review all the details and make corrections, if needed.
Make sure you vacate the property before closing day and leave the property clean and free of everything the buyer did not want. If closing is on May 1st at noon (for example), it means that you effectively have no more rights on the home from 12:01pm. Legally it is then the property of the new owner.
Congratulations, you just sold your home on your own!
Wisconsin FSBO SUCCESS PACKAGE:
Cost for full package: $750.00 (includes everything listed under a la carte services. Excludes repair estimates and appraisal services)
Costs for a la carte services:
Introduction to Title Company, compilation of net sheet, preliminary title search and order of title, in-person walk through of your home, comparable market analysis, list price and marketing strategy plus all legal forms: $200.00 (within 50 mile radius of Milwaukee);
Professional Photography (15 photos), Walk through Video and/or Drone, Virtual Staging (living spaces and 2 bedrooms) plus Floorplan: $550.00 (within 50 mile radius of Milwaukee);
Yard signs - 1 front of home sign and 2 directional signs: $75.00 (includes installation and removal within 50 mile radius of Milwaukee);
Repair Estimates and Appraisal Services: will vary from home to home.
Feel free to contact us today for how to be a successful For Sale by Owner in Wisconsin.