Preamble
This post is written in first person tone, but DW/I worked on FSBO together and we are awesome team
This is not a FSBO primer, however, everything I wanted to say on the topic has been included
Please do not PM me with questions as I want no part in your FSBO project
This post is for information-purposes-only. Regional variations exist, and YMMV -- you made your bed … 
Acronyms
FSBO – for sale by owner
CAR – california ass of realtors
MLS – multiple listing service
NHD – natural hazards disclosure
COE – close of escrow
BAFO – best and final offer
comps - comparable sales of similar houses in your area
CC&R - Conditions, Covenants and Restrictions
HOA – home owners ass
Introduction
I bought the house without buyer’s agent, so selling it FSBO was crucial for me so I could experience the house buy/sell cycle. Saving ~3% seller’s agent commission was an added plus but not a primary motivator. However, is FSBO right for you?
Who does what in traditional house selling?
When you decide to sell your house, whether you realize or not, you do lion’s share of the work if your objective is to get top dollars.
As a seller, you need to tackle
Property inspection prior to listing the house so you can do the needed repairs beforehand. Prior inspection also speeds up COE by eliminating surprises while in contract.
Full disclosure on any repairs, modifications, and all known issues/liens/insurance claims on the house. California has moved away from “buyers beware” state a few decades ago to “sellers beware” state – meaning there is no statute of limitation on when the buyer can sue the seller if a material fact known when selling the house was not disclosed by the seller. So, as a seller you are better off with more disclosures not less, which is also the philosophy that I fully subscribe to.
Cleaning the house, and getting it ready for staging, moving out if necessary
Compliance paperwork related to carbon monoxide detectors, earthquake resistant water heater bracing, local tree ordinances etc
Filling out home details related to number of bed/bath, living/garage/lot sizes, appliances, amenities that will get populated into the MLS listing
Seller’s agent usually does the following
Order home appraisal to determine the list price. Seller side appraisal also helps eliminate loan contingency surprises even though buyer’s mortgage lender orders an independent appraisal. Appraisal is done by an independent appraiser that you arrange it yourself
Natural Hazards Disclosure – this is not big deal really – you can get it over the internet (say from JCP-LGS) and the report details the likelihood of potential hazards such as earthquake, floods, fires, landslides, radon and also as an addendum will report home insurance claims you might have filed
Pricing the house – tracking market on recently sold items Zillow/Trulia makes it easy to price it close to market temperature
Staging the house – if you cannot stage, you will be indirectly paying for your house to be staged 
Listing the house on MLS – you can do it thru flat-fee MLS brokers that have expertise in your state
Flyers, Photos, Marketing – skill level needed to get these done are trivial at best
Understanding you house selling situation – do you expect to rent your own house after COE etc
Signage for Home Sale, open house – this is free marketing/networking tool for seller’s agent to build clientele in your area and has nothing to do with “selling” your house. Unless your property is in Plantainville, Mississippi, nobody relies on local signage to pop-in and make an offer, so focus your efforts on MLS marketing -- which a flat-fee MLS service agent can do for an additional fee – announcing open house date/times, adding extra photos, etc.
Holding open houses – holding 2-4 hour duration open houses over the weekends and then showing houses as needed
Handling offers/terms, price negotiation, getting to contract – if you have people skills this is a no-brainer. If you are bookish in nature this is one area where seller’s agent can bring in huge value
Items that seller agents pretend to know (but have no clue on unless there is insider info)
Recent selling price of houses – any pricing knowledge of the agent is 2-3 months stale as the selling prices of the houses that are still in contract (but not COE) are not public info yet. So in a market where prices are moving up/down fast, the houses cannot be priced right even by the agent, and in hot areas like SF bay, this can mean losing quite a bit of money unless some social engineering skills are put to use which seller’s agent can bring to table due to “cartel effect” but there are ways for FSBO to achieve the same 
Getting you top dollars – it is buyer who has to likes the house and makes an offer, not seller’s agent, so as FSBO, you can spend your effort to make the house more desirable to buyer
Items handled by title/escrow for seller
Escrow process – this process is tightly regulated by the state of California, and it is a pretty mature/standard process. The seller side has minimal work to do, so once into contract it is mostly smooth sailing for seller.
HOA buyer package – if you live in common interest subdivision, HOA will prepare a package that includes: CC&R, details on any litigations against HOA, HOA board of directors meetings minutes for the past 12 months, HOA fire insurance limits, annual financial reports, HOA monthly dues, citations against the selling unit. This HOA package is then signed off by the buyer. Typically, HOA package request is handled by the escrow company, and in many cases it is best for escrow company to reach out to HOA, as in many cases, HOA does not want to hand out its dirty laundry “HOA Package” to FSBO seller
So in essence, what seller’s agent does seemed fairy rudimentary to me. Also, majority of the work involved is not related to “selling” at all – it is to get the house ready for sale and purging stuff. It is possible FSBO is not for you due to other constraints in your life. OTOH, in case you would to try FSBO, it would be beneficial to understand what FSBO really means.
FSBO is a very broad term and almost all books/websites make little effort to clarify the variations. IMO there are few variations
Pure FSBO: Seller stages the house, prices, and lists/markets the house on Zillow/Trulia (rarely on MLS), finds buyers, handles offers/negotiates directly with buyers, and seller/buyer enter into contract, and all paperwork uses custom forms crafted by an attorney, and transaction is closed thru escrow/title. Seller is saving of seller side of the commission (~3%), buyer will offer lower price for the property since there are no commissions. There are few negatives to the seller though
High potential for litigation in case something goes wrong since seller is dealing with the buyer directly
Using unproven/custom attorney prepared paperwork (unless both seller/buyer are Realtors themselves in which case they get a discount to use standard CAR paperwork)
Most importantly, reachability is only to a small pool of potential buyers who can buy houses without agents/MLS
Hybrid FSBO: Seller stages the house, prices, and lists/markets the house on MLS using flat-fee MLS brokers. Seller also agrees to pay buyer agent commission (~3%), so Realtors brings in buyers. Seller handles offers and negotiates with buyer agent, and seller/buyer enters into contract and all paperwork uses standard CAR forms, and transaction is closed thru escrow/title. Seller is saving of seller side of the commission (~3%), buyer gets property for little lower price since there is no seller’s agent commission. Biggest positive for the seller are
Standard CAR paperwork is used for transaction by both seller and buyer so there little need for the attorney to review the paperwork
Seller is dealing with the buyer’s agent (not buyer) and consequently there is minimal possibility of litigation except in case of fraud
A large pool of buyers can be reached via Realtor agents/MLS
Assisted FSBO: Seller stages the house, prices, and lists/markets the house on MLS using flat-fee MLS brokers. Seller agrees to pay buyer agent commission and also a flat-fee or some preset percentage (say 0.5%) to flat-fee MLS broker for CAR paperwork processing. So, Realtors brings in buyers and flat-fee broker will guide the seller thru the whole process and the flat-fee broker also handles offers and negotiates with buyer agent, and seller/buyer enter into contract all paperwork uses standard CAR forms, and transaction is closed thru escrow/title. It has all the advantages of Hybrid FSBO to seller.
I opted to go thru hybrid FSBO as I wanted to experience selling the house while not getting entangled in the loopholes of attorney prepared paperwork. IMO, CAR paperwork is bulletproof, and not having to deal with buyer directly means less chance of future litigation. I have no fear of litigations stemming from my actions since I came clean on the disclosures/claims/liens.
Notes from my FSBO selling experience:
House inspections and repairs, and cleaning the house to make it appear spotless are crucial and can earn you top dollars. Start early: 2-3 months before listing
Have disclosures/NHD ready before you even list the house – as I mentioned above the disclosure package would be a combination of NHD and seller disclosure on property history/issues/modifications/liens.
Sell in Q2 if possible as markets will usually be trending up
Track the comps selling prices via Zillow/Trulia – you still have 2-month old data but you can see the trend and make adjustments as necessary. If you live in a real-estate hotspot one way to get top dollars is to price the house a little lower so you can benefit from the bidding war. Implies that you have good negotiation/interpersonal skills.
Understand the difference between MLS/Zillow/Trulia
MLS has a virtual monopoly, and reaches more than 90% of the buyer pool. Realtors use MLS mainly and have access to commission amount, seller contact, and other “internal” fields that Zillow/Trulia/public do not
Zilow/Trulia/Realtor.com periodically harvest data off of MLS to show property status/history etc., but your buyer pool rarely come thru them (zero buyers in my case)
Professional staging is usually kitsch IMO, and you can do an awesome job of staging if you can spend few hours on aesthetics.
Find a flat-fee MLS agent that has expertise in your state/county. They are usually realtors that also offer listing-only service and FSBO paperwork assistance to generate additional income. Read reviews on these sites and call/talk to them to make sure MLS-listing fee includes furnishing you with the needed seller forms that you might require till COE. Also, if you are busy, try to buy paperwork service from them for additional 0.5% or so.
MLS Listing – it is atypical to offer less than 2.5% buyer’s agent commission. If you are not interested in FHA/VA loans then make sure you check only the “conventional loan” when you submit MLS paperwork. FHA/VA loans take additional time to close and usually have conservative appraisals.
Typical MLS listing allows 6 pictures, but you can buy service to add more pictures, announce open house dates/times. If you are still occupying the house make sure to mention that there is no lockbox and house showing is by appointment only. Do not expect more than an hour/two notice for the house showing.
Create a house marketing content: top 5 unique selling points about your house (corner lot, huge backyard, tons of windows etc.) and then enhance it with other great things about your house/community. Reuse this across MLS/Internet and house sale flyers.
House should be ready for showings a day before it gets listed on MLS, so you appear professional and mean business
Open house: typically 1-5pm on the weekends. Unless buyers/agents voluntarily leave their card it is best to leave them alone (my style at least)
Seller pays commission for the buyer’s agent, and this percentage is non-negotiable once it gets into MLS. Even though seller pays commission, buyer’s agent does NOT work for the seller, so do not expect any advice from buyer’s agent. However, treat them as your teammate since you/agent are working as a team to bring the sacrificial goat to mortgage lender
You can receive offers any time of the day including weekends/nights, and typically offers have 3 days expiration after which buyers will want to move on to other properties so they can end their house search. If you accept the offer you will be in a contract and the house goes to sale pending mode. It is best to have a BAFO in mind before you even price the house so you have an easy time processing as offers come in. When you look back after few years you should feel great about accepting an offer – if you do not feel that way then wait for a better offer.
It is critical that the buyer has inspection contingency in the offer even if it is all cash deal as it can save you trouble later (CYA clause) from buyer pretending to be coerced into buying the property with seller-friendly terms.
Read the offer/purchase-contract carefully and if you want to change something make it as part of counteroffer paperwork. Original contract will not be changed, but the counter offer that you send and subsequent buyer acceptance becomes a transaction history.
Buyer side will use standard CAR forms (hybrid FSBO case), and you can use CAR standard forms as well if you ensure flat-fee MLS will make it available to you – in that case there is no need to use an attorney to review these forms. If you have means try to get sample CAR forms. Internet has few draft forms which will be suffice from the familiarity standpoint. Some of the main CAR forms are CO, CR, ETA, FLD, NHD, RPA-CA (most important), SPQ, SSD, TDS. See reference section for link
Once you accept the offer, and if the buyer backs out without appropriate justification, they lose just the earnest money deposit (around 3-6% of purchase price) – however, seller cannot back out that easily. Do your homework before accepting an offer.
Buyer/agent/inspector would like to have “alone time” with the house so they feel comfortable with the house and its workings, so hand them the keys and leave the house for few hours.
It is a good idea to chat with the lender appointed appraiser, and give proof of comps to make sure the appraisal comes in at the asking price so that buyer’s loan goes thru
There are lots of parties in an real-estate transaction – buyer, seller, buyer’s agent, seller’s agent, buyer’s lender, seller’s lender, HOA, county property tax collector, title insurance – and keeping all these parties in sync will invariably lead to what is commonly known as full-mesh/n-squared (actually n*n/2) problem. And, a typical way to solve it is to introduce a mediation entity with a transactional capability – and that is exactly what escrow company does; escrow company has no vested interest in the transaction other than to charge you a fee for providing escrow service (and sell title insurance in some regions).
Determine the closing cost customs – some counties are seller paid and some are buyer paid, and some are split cost counties -- you can get details on who pays for what customarily by talking to escrow companies. The keyword here is “customary” – you can change the terms to 50-50 or whatever suits you as part of the counter-offer. It is a good idea to push for 50-50 for all expenses including title insurance. Title insurance is one time fee, and a necessary evil, so it makes sense for seller pitch in at least 50% so you have one less item that you can be held against for. In the same vein, ask the buyer’s agent to open an escrow account to just to show that you are letting buyer make all the decisions including closing so there is not a shred of evidence that buyer was coerced in any way.
Make sure recording happens on early part of the week or Thursday by the latest, so you see the wired funds before Friday in case wiring window is missed on Thursday. If recording happens of Friday there is a possibility that you will see funds on Monday, and you will have to hand the keys on Friday. Not a big deal but something you can take care of early in the process.
Scumbag Management
Advent of Zillow/Trulia/Realtor.com has given rise to lots of cold-callers who just want a piece of action soon as they know the property is FSBO. It comes from the underlying assumption that FSBO are clueless and need help. They come in few different colors
An offer to use their Realtor signs (House for sale, open house etc) for a fee since FSBO signs are generally frowned upon. You can avoid this trap by either ordering these signs from flat-fee MLS service, or better yet, use MLS for marketing and ditch the signs altogether which is what I did. In the age of GPS/360 degree views of the house, and open house announcements, there is no need for street signs
An offer to price the house just right and help with marketing – these calls test to see how desperate you are for new buyers, and if your house is getting enough attention. There is nothing these jokers can do that you cannot do yourself which I have already outlined above.
Requesting an appointment to see the house so they can validate if it meets the needs for their “large buyer pool” – so they can get on your calendar and make you inflated promises, etc.
How do you detect a cold caller? Very easy -- if it is a realtor with a buyer, usually the call is direct and to the point: “Hey this is John from Example.com Realty, I have a buyer who wants to see your property tomorrow at 1pm, is that doable?” OTOH, if it is a cold-caller, the conversation usually starts off as “Hello, may I speak to the owner of 420 Example drive please?” How to handle these idiots? Simple: create a contact on your phone named “Trash Can” or some such, and each time a cold-caller calls, just hang up and add them to the trash can. Soon you will have 20-30 entries in it and you never have to deal with them again. If you have time, you can have fun by challenging them. Since they usually talk non-stop and expect you to listen and answer their queries, the way to subdue them is for you to start talking non-stop while sensing the receive line and soon as you detect a silence (like CSMA/CD), you start your script all over again and run them as a check-pointed debugger process. There are lot of ways you can have fun with these jerk-offs and I sure did
Conclusion
IMO, FSBO is a fairly simple process. Real-estate is not a complex topic at all, and in fact it is quite easy/boring, and anyone can learn it with few hours to spare. I enjoyed the FSBO process immensely, and if you want to follow FSBO path, I wish you the very best!
References
None of the books can give you a complete picture, and more importantly, the local customs and variations – these are usually held as a tribal knowledge by realtor cartel. But they can be uncovered if you revel in unlocking the undocumented
http://www.amazon.com/California-George-Devine-Estate-Broker/dp/1413310958/ -- Really good book for FSBO in CA – quick read first, and then revisit as-needed
http://www.amazon.com/California-Estate-Principles-Dennis-McKenzie/dp/0538739657/ -- Really good book on real-estate fundamentals – quick read
http://www.amazon.com/Sale-Owner-Complete-Everything-Highest/dp/0071458255/ -- Good book with lots of opinions from the author. Few idiot reviewers give this book one star because of issues with forms download!
http://www.amazon.com/Home-Staging-That-Works-Money/dp/0814415229/ -- Good tips on home staging
http://www.amazon.com/Complete-Guide-Your-Estate-Closing/dp/0071400354/ -- Good book on COE
http://www.car.org/legal/standard-forms/standardformsinformationalchart/ -- CAR forms – in some cases, draft version is available on the internet
Statistics: Posted by mxlr650 — Mon Sep 28, 2015 1:06 am