For Sale By Owner – Do You Know All The Costs?

After much thought and deliberation, you and your family have decided to go against the grain and sell your property by yourself. How hard could it be? You have lawyer friends to help you with the documentation, you had all the legal forms downloaded from reputable websites, plus you know how to use the computer so you can handle creating the “for sale” brochures and flyers. Not only will you be able to advertise, market and sell it “your way”, you will also cut down on costs. But what exactly are you cutting down on? Are you really saving more money by doing everything on your own?

If you are only after cold hard cash, you can deduct mortgages owed (first and second, if any) from the total sale price. Since you don’t have to worry about handing over commissions, you only need to deduct all the incidental costs (advertising, professional services fees, taxes etc) and you will come up with the total net dollar value of your property. But if you really are finicky about everything, then you have to include the monetary value of your time and effort.

Generally, costs are incurred at every stage of home selling – even during the preparatory stage. At this point, you are trying to find out how much the property costs. You may have to get an independent surveyor or appraiser to give you a fair value for your property, and you will also need to secure disclosure forms and other legal real estate forms. Take note of the professional fees, and then try to calculate how much you have invested (in terms of man-hours).

The next and probably most expensive step is advertising and marketing. Costs incurred here would be fairly easy to calculate as ads in newspapers have a definite value; and the cost of raw materials (wood, paper, markers, paint, etc) can be quantified as well. You may have to however, put a price on the time and effort you will be putting in when you distribute the flyers, answer and screen inquiries; and the costs involved during open house events.

Once you have a serious buyer, your expenses will not be as much as you may only need to allocate an amount to pay for legal fees (which can be waived if you have friends who are willing to work on a pro-bono basis – just for you). Again, you will just need to put in a figure for the time you have invested.

If you don’t mind doing extra leg-work to save a few hundred dollars, then by all means, go ahead and put that “FSBO” sign on your lawn. But if you value your time, or cannot afford to run around town securing documents; or screen calls, then giving a realtor a percentage of your sale as payment for doing all the dirty work for you, may be your best alternative.