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Now it's easier than ever to sell your home yourself, or pay far less than the standard "6 percent" commission to a real estate agent.
Why? The Internet.

Information is power. For years, real estate agents and their lobbying groups have done their best to block public access to the Multiple Listing Service (MLS). The MLS is a collection of information about virtually all the "listed" homes for sale in a given area, (usually to the exclusion of FSBO's). Home buyers have had to work with real estate agents in order to gain access to information on the MLS. To this day, real estate agents attempt to maintain strict control of the MLS.

The Internet. The Internet now provides an enormous amount of real estate market information to consumers—information which wasn't previously available. Today, you might just as easily sell your home and find your next home via the Internet instead of the MLS.

Is a real estate sales commission always 6 percent?

Most real estate sales agents charge a 6 percent commission. Six percent of what—the sales price? If you owned your home free and clear of debt, the commission would be 6 percent of your equity. What if you had a mortgage on your home? Would you be paying a 6 percent commission? No! If your loan balance were 70 percent of the sales price, you would have 30 percent equity. In this case, the 6 percent sales commission, would be 20 percent of your equity! A FSBO sale would save all or most of the equity you'd otherwise pay to a real estate agent.

Open Listing. The MLS is the most powerful marketing tool in existence for the FSBO.

Companies exist which help you list in exactly the same MLS as if you had paid a traditional real estate agent to list your property. If you sell your property yourself, "By Owner", without a real estate agent involved, you'll pay no commission to anyone. If a real estate agent is representing the buyers of your property, you'll pay that agent 2 to 3 percent of the selling price. You will only sign an "Open Listing Agreement" (a non-exclusive listing agreement which is an authorization to place your property in the MLS), which may be canceled at any time. This is one way you can put the power of the MLS to work for you.

Professional Property Inspections

A professional inspector can accurately assess the condition of your property, and know when to call upon the expertise of others if required. An inspector should evaluate the condition of the exterior: roof, vent pipes, gutters, chimney, siding, masonry, foundation, exterior grounds, (structures, stairs, walkways, driveways, outbuildings, drainage, etc.) Interior inspections should be performed systematically from top to bottom: from the attic to the basement or crawl space. Functionality of doors, windows and storm sashes should be checked. Bio-hazards (lead-based paint, asbestos, etc.) should be noted. The home's infrastructure should be inspected and/or tested: electrical, plumbing, ventilation systems, heating and cooling, water pressure, etc. In the event a structural engineer's opinion may be required, a professional home inspector should recognize and alert you to that need. An engineer's advice might be sought when there are questions about physical conditions, which may potentially threaten the structure and the safety of occupants.

Ask your escrow agent, title officer, real estate or mortgage agent for referrals. Ask the inspector for their professional credentials, experience, and names of a few satisfied customers. Are there complaints registered with the Better Business Bureau? Are they a member of a professional organization such as:

Frequently Asked Questions

When one is pre-qualified, a mortgage professional has rendered an opinion regarding the home price the potential buyer can afford. Their opinion considered the potential buyer's down payment, debts, income, credit rating, and a lender's underwriting guidelines. Being pre-qualified is only an opinion from a person who will not actually lend the money to purchase your home. If one is pre-approved, however, a lender has verified all the above and more. The lender's opinion is more valuable since it is the lender who will lend the money. When a potential buyer is pre-approved, the seller can be more confident the buyer can close the deal. A seller should always ask potential buyers to provide a pre-approval letter.

Closing costs are various charges paid to different entities associated with facilitating real estate transactions. Some of the closing costs a buyer might encounter include: application fee, appraisal fee, credit report, transfer tax, discount points, notary fee, documentation fee, title and escrow fees, loan fees, mortgage insurance, origination fee, title insurance premium and others. Closing costs are negotiable between the parties.

One point is equal to 1 percent of the loan amount. Depending on the context, it can have different interpretations. A discount point provides the borrower with a reduced, "discounted" note rate. An origination point is a fee for services rendered in connection for originating the loan. An FHA or VA offer may ask the seller to pay points.

When a buyer makes an offer to purchase your property, they will need to provide an earnest money deposit as a sign of good faith. The earnest money deposit becomes a part of the purchase price and is held, or deposited into a trust or escrow account until there is full acceptance of the offer and the transaction closes. Typically, the earnest money deposit is 3 to 5 percent of the offer amount. In a FSBO transaction, the buyer should make their earnest money check payable to the escrow company.

Title insurance protects the buyer and seller. It is and insurance policy issued by a title insurance company and specifies, among other things, what liens are recorded against the subject property. Public records can be incomplete and contain errors regarding the history of ownership of a property (chain of title). It's critical that an owner receive undisputed, marketable title to the property. Title insurance was developed to attest to the reliability of the chain of title, and compensate people in the event problems arise and someone contests the sale transaction. There are different levels of protection offered by different types of title insurance.

FHA and VA loans provide purchasers the opportunity to buy homes with minimal cash investment and at lower interest rates. These loans require the lender or seller to pay for certain closing costs and loan fees that a buyer would normally pay with a conventional loan. VA and FHA also have stricter appraisal and home inspection requirements. All repair work must be done prior to closing the sale. Offering your home and allowing VA/FHA financing increases the number of buyers that may make an offer on your home. You always have the right to compare these offers to other offers with conventional financing.

Selling your home yourself by listing it For Sale By Owner (FSBO) is a way that both you and the buyer can save money on a new home. You save money by listing and selling it yourself, usually 6% of the selling price and they prospective borrower saves by usually getting a property a little below market value. You, the seller are able to sell it for less because you don't have to pay that big commission. And I mean big, 6% is alot to pay just to get your home sold. On a $200,000 home you will save about $12,000.

In a tight market it makes all the more sense because alot of homeowners don't have enough equity in their home to sell it through a real estate agent and still have some cash left in their pocket.

You want to start by calling a real estate agent or two to get a market analysis. The real estate agent will provide this for free. This will give you a good idea of what homes similar to yours are selling for. You will also be able to find out average marketing time. With this figure in mind, lower it by 1%-2% to set your asking price because you are selling it yourself. Let's face it, most prospective buyers are turning to FSBO so that they can save some money too. You can also check out the value online at a website such that checks home values but sometimes they are not always as accurate so your best bet is to at least start with the real estate agent.

Once you have a selling price in mind you will need to do a little research on the internet to find a good for sale by owner website where you can list your property. Some will charge you a fee although alot are free or at low cost. Some mortgage website also provides a free listing. You want to get as much exposure for your for sale by owner listing as you can.

There are even some websites that will let you list it with the MLS listing service for a fee of about $149-$499.

It is also a good idea at this time to find a mortgage broker in your area that you can work with to make sure that the prospective buyer is qualified to get a new mortgage. Refer any prospective buyers that are not already preapproved to the mortgage broker that you've chosen. You don't want your deal to fall through at the last minute because they weren't approved upfront.

You can also put an ad in the local newspaper although these are pretty expensive too and add up very quickly.

Be sure and let everyone you come into contact with know that you are trying to sell your home especially your neighbors because sometimes they may know someone that likes your neighborhood.

Put up a for sale by owner sign in your yard if you are able to as some homeowner associations do not allow them. Try to get a nice one so that it doesn't look cheap.

You will also want to find out about a title company. Usually your mortgage broker can suggest one that he/she has already worked with. This will also put the prospective buyer at ease at their deposit will be held in escrow. This will also assure that the title is clear and can be transferred without problems.

Selling your home For Sale by Owner can be rewarding both financially and after a time or two you will fell like a pro!