INTRODUCTION
Selling, renting or buying a real property has so far been an exclusive job of a real estate agent. Not any more! Nowadays, accomplishing a real estate transaction is a simple process!
The role of a real estate agent is simply to act as an intermediary between you and the buyer/seller/tenant. Why should you surrender your profit to an estate agent when you can do the job on your own doing FSBO? By cutting out the middleman, both parties can save money and potentially even expedite the transaction’s process.
But before you get too excited, it’s important to understand the time and effort involved. Buying, selling or renting your own real property is a serious commitment taken. It involves an essential time commitment as well as lots of effort needed for research and planning. It might be a major responsibility to undertake, but at the end of the day you are saving money!
There are a number of reasons why you may choose to forego the use of a real estate agent when looking to selling, buying or renting a property. These are just a few of the advantages:
SELLERS
As a seller, there are many advantages to selling your property FSBO:
First and foremost, there is the obvious financial benefit. Taking into account the fact that you will save the 6% (on average) commission rates paid to a real estate agent, you are certainly given a strong motivation. For example, if you sell your property for €100,000, by using an agent €6,000 of that goes directly to pay the commission rates. For most people, that’s a lot of money to save!
Secondly, selling your own property you get the opportunity to make a quick sale if necessary. Assuming that you have found a new property or investment bargain and need to buy as soon as possible, then the pressure is now on to sell your own property and get the money. By selling the property yourself, you have the option of lowering the asking price easily up to 6% below the market value. This move will intelligibly attract potential buyers. The buyer will thus feel like he is getting a bargain deal, while you are actually losing nothing!
Another advantage is the fact of having better control and flexibility throughout the transaction. Selling on your own allows you to choose your bottom deal price and determine when and to whom you show your property.
Lastly, who knows your property better? You know everything about it from ‘corner to corner’. You are also familiar and aware with everything ranging from the neighbourhood to the district’s level. This sentimental connection makes you better equipped to handle the sale of your property and to answer any questions the buyer may come up with.
BUYERS
As a buyer, there are also advantages to purchasing on your own, including the following:
1. Once again, the most obvious advantage is to save money! By purchasing directly from the seller, you are potentially not paying the realtor’s fee. This gives you the chance to negotiate even more with the seller.
2. Similarly to selling, buying on your own offers you greater control and flexibility to view potential properties at your convenience and to directly negotiate the terms of the sale with the owner.
3. You know better than anyone what you are looking and what your budget is. By dealing directly with the seller, you can avoid the pushy sales tactics commonly associated with most real estate agents. Do not forget that it is in the agent’s best interest for you to purchase the most expensive property within fewer visits. When looking on your own, you are free to take as much time as you need to find exactly what you are really looking for. Buying a property can really stress you up sometimes!
PART ONE: ADVICE FOR SELLERS
Upon deciding in putting your real property on the market by your own, you should start looking for sources you can turn to for assistance. There is a wide spectrum of such sources, ranging from advertising agencies to newspapers, attorneys to loan officers, builders to engineers, private organisations to governmental departments etc. If you already know people who have sold their property FSBO, do not hesitate to ask for their guidance.
Fundamental Principles
In real estate industry, there is always an idea that the property market is continuously booming. In reality, many properties stay on the market for long time before they are sold or rented out! In order to ensure that your property will ‘fly-off’ sooner than expected, you will have to get things as right as possible. The beneath principles are the basics ones to consider:
Schedule correctly! Scheduling is about organising, planning and doing things so as to showcase your property in the best manner and involves from simply sprucing things up to renovating part of the property.
Depersonalise your property! Another thing to do when getting your property ready for sale or rent is to put aside things that bring memories to you and the people interested in. It is easier said that done but you should not evoke feelings of ‘it’s mine’ to potential buyers and tenants as they will not hold any meaning for them. Try not to have an abundance of family photos displayed around the property, nor trophies or collectible items and souvenirs.
Tide up the property! The next step is to make sure the property is free from clutter. This is often the hardest part for most people since some effort, time and money are needed. Buyers and tenants may view the clutter as reflective of a not properly maintained property or worse. The best way to begin is to seek the advice of a trusted friend or family member by asking them for their opinions on what would detract from the house if they were to buy or rent your property.
The following are some of the things you should arrange firstly:
Kitchen Clutter: The kitchen is the starting place to start removing clutter since it is one of the first rooms buyers/tenants will see. As the kitchen serves as the most important room of a property for most of us, make sure to clear the counter tops and empty out overstuffed drawers. The idea is to create open space to foster the feeling that there is plenty of room. Do not forget the appliances and in particular the refrigerator.
Closet Clutter: No matter how large the closet is, again the idea is to make it look spacious. If it appears packed full, a buyer/tenant may get the perception that there is no adequate space. On the contrary, the buyer/tenant will be impressed if the arrangement is correct!
Storage Clutter: Storage room is said to be the major perpetrator, when it comes to clutter and decision making. Actually this is what they are meant to be, but when selling/renting a property, it is essential to leave these areas as empty as possible so the buyers/tenants can envision what they would do with the space.
Furniture Clutter: When you fit several pieces of furniture in one room, it tends to reduce the size of the room as visually looks smaller and cramped. The less furniture you keep, the more appealing the room will look. This is the time to throw out old pieces of furniture that you don’t intend on taking with you when you move out. However, don’t ever leave a room empty. People need to be able to visualize the space as usable.
Considering the Detail
Plumbing and Fixtures: Look in detail all sink fixtures throughout the house. They should all look shiny and new. There should not be any signs of mould. A good silver polish would make the difference. If this is not enough, then you should better spend some money and replace the worn ones. Do treat the leaky faucets and replace the tap washers. Water pressure is something most pay attention on. Buyers and tenants tend to have the water running from the kitchen’s tap or the bathroom’s shower to check water pressure.
Kitchen and Bathroom: Always have all of the surfaces tiled up sparkle. In the bathroom, use clean and colourful towels. Replace the shower’s curtain or the glazed sliding door if it looks old. Keep toothpastes, toothbrushes, hairpins etc hidden. In the kitchen clean any surface that looks oily starting from the oven, the cooking hobs, the extractor and the surrounding walls. Clean out all the appliances both inside and outside and try to keep them shiny clean. Always keep cupboard doors closed.
Carpet and Flooring: A deep carpet cleaning should be all you need unless it is torn or full of stains. Choose something inexpensive, trendy and in line with the interior of the property. Light colours are preferable as tend to enlarge spaces visually. If you have hardwood or parquet floors, think about refreshing them. A visit to the local DIY shop would be more than useful in how to do so.
Ceilings, Walls and Paint: Check all over the property’s ceilings and walls for water stains, cracks and leaks. If you have any, be sure to repair them and then paint them over. Actually, a fresh paint all over the property would be the best investment to give a brand-new look and maximise the attractiveness of the property. This is a really inexpensive way to enhance the appearance of your property. Light colours maximise the space and light available inside the property.
Openings: Ensure that all windows and doors open and close easily. If there are any squeaks in the hinges, then spay some lubricant. All door locks should have their key inserted in the keyhole and work perfectly. Avoid showing your property before replacing any cracked, broken or mat windowpanes or wooden moth-eaten doors. If you have fly-screens installed, a deep clean with pressurised air would take off any insects and dust.
Odours: An odour would be the ’decision maker’ for the buyer/tenant. If you are a smoker or a pet owner or cook spicy foods and a heavy smell lingers inside the property, then special care to eliminate it should be conducted. Avoid smoking inside the house and use air-freshening sprays with timers and aromatic candles. A last minute light spray throughout the property before the interested people arrive would be a good move. Pet owners can do the same. In addition, try not to have your cat or dogs wander around upon having the buyers/tenants viewing the property.
General: Use whatever you believe it would maximise the attractiveness of the property without overfilling the place. Tiny furniture and functional equipment like stands and stools are a preferable alternative to some expensive and massive sofas.
The Exterior of the Property
Always remember that the exterior of your property is the first thing potential buyers and tenants will come across when visiting the property. Saying so, it is made clear that the exterior is a ‘decision-factor’ as to whether it worth seeing more. As such, it is critical to ensure that the exterior of your property is well kept.
In order to get the best out of your property and assess whether the beauty and elegance of it is reflected indeed, you should stand across the road and consider the beneath:
Garden: If your garden is not landscaped, then ‘break in’ the first nursery you will come across and get some greenery. Get some advice from the gardeners in how to plant the bulbs, water the lawn and trim the bushes. Avoid planting very mature or big trees exactly in front of the building as they can be a big headache in the future. Try to keep the yard as green as possible and sweep away the brown leaves and grass cutting. Adding a couple of potteries would flavour the yard.
Openings, Flyscreens and Shades: Keeping the property’s openings, flyscreens and shades in a clean condition is a paramount trick. Do not hesitate to wash them and spray some lubricant. If that’s not enough, then rub them off and repaint them. You would certainly notice the difference yourself. Use pressurised air or water to make a deep clean of the flyscreens. At the end, pull back the curtains and open the windows leaving the sun shine in!
Main Entrance: The main entrance of the property must always be attractive! It is the first part that potential buyers or tenants will walk through. Spend some time and rub off and repaint or at least polish the entrance’s fixtures. Once more, avoid using furniture or signs that personalize the property. Ensure that the lock and key work smoothly and easily. Use a weed-killer to get rid of any undesirable weeds and don’t place any jumble in the walkway.
Paint and Insulation: Keep the look of the property as bright and fresh as possible! Even a wash-clean with a power washer would make it glitter! Paint which peels or wood which chips away should be recovered. Use materials that are durable and well tested in the market. Do not hesitate to spend some extra money for buying such materials as they are cost-effective. Buyers always seek to acquire quality with less money!
Backyard: Being the outside part of the property with the most privacy needed, the backyard should be always kept tidy and neat. If a swimming pool, barbeque, shower or even a Jacuzzi is installed, the necessity of having it orderly arranged is maximised. Always keep the dog’s kennel in a safety distance. If its paved up, keep it always clear from children’s toys and any housing equipment. If you have flower beds and pots, regularly treat them so they don’t appear overgrown and abandoned. Keep trimming the hedge so as give the visual feeling of more space and do not overgrow it in height as it might be considered stifling from buyers or tenants.
Overview
The power is yours! Everybody can fly a plane when he is given the chance! Take the chance and do FSBO, It can really save you 000’s. Prospective investors are always around looking for properties to buy or rent. Do not underestimate your capabilities but also do not underestimate the first impression’s power.
Once you decide to sell or rent FSBO and start getting people coming and viewing your property, you will have to put your best foot forward for making your property long lasting and hard to erase in people minds. It is in human nature to make snap judgements and notice the minor repairs needed rather than the beautiful and well maintained floors and openings. Thus, begin with developing your ‘imperfections checklist’ and schedule out how to correct them.
In addition, any Warranties covering your property’s essential systems and appliances should be mentioned. It really protects the seller, tenant and buyer from costly unanticipated repairs upon having any breakdowns.
On the other extreme, some owners fall in the mistake of investing lots of money into their property prior to selling or renting in the hope of substantially increasing their property’s market value. Actually, installing a new 3.000 EUROS kitchen does not translate to a 3.000 EUROS increase in your property’s price.
Do not forget that the purpose is to maximize the attractiveness of your property, not completely renovate it. A thorough cosmetic overhaul is usually all that’s necessary to make your home more desirable.
PART TWO: ADVICE FOR BUYERS
Buying a home can be on one hand too exciting but too stressful on the other hand. You may be looking forward to a new beginning or a new locale or even all the new decorating possibilities within your new space. At the same time, you find yourself worrying if you can really afford to buy a property. Concerns about financing, how to negotiate with a seller, where to find movers, the schools and various other amenities in your new neighbourhood, can really stress you up. But there is not actually reason to worry about! With some research and effort you will feel confident throughout the buying process.
First and foremost, consider the things to avoid prior buying a property! Have a look at the following guidelines:
Control your expenses! Avoid making major purchases before buying a new property. Major purchasers include a new car, electronic equipment, expensive jewellery, vacations etc. You want to be able to funnel all of your financial resources towards the purchase of the new property. After all is said and done, when you have determined how much your new property will cost you, any surplus can be used you like.
Don’t move money around. When you apply for a mortgage, it is the lender’s responsibility to check as to whether you are able to pay back the loan. Bank statements from the past six months will possibly be requested as well as statements for all assets. If you move funds around, it can make it more difficult for the lender to approve your loan. The simpler you keep your finances in the months prior to buying a home, the better it is. Also, avoid in making any sudden changes in banks or other financial related services.
Don’t change jobs. If at all possible, try not to change employers while you are awaiting a loan approval. Lenders like to see continuity and stability when considering a mortgage approval. Job variables such as commissions, bonuses, and job security can come into play and decrease your credibility to the lender.
Becoming the Owner
As soon as you make the decision to buy a property, you really need to take a close look at your financial situation. Moving, is a costly venture in most of the countries and there is a needed increase in cash down payments and closing costs during that period. Furthermore, your monthly mortgage payments are often higher than what you may pay as a renter. In order to secure a mortgage, a lender will need to know that you are making adequate income to meet your monthly payment. In addition, they will also need to check your credit history.
Having ensured that you can afford to purchase a property, you will be happy to learn that there are a number of major advantages to buying. Here are a few of the factors to consider:
1) Long term Investment: Buying a property is a long-term investment on your part. Generally, your monthly mortgage payments will remain the same as your property value goes up through time. Properties typically appreciate an average of 5% annually. Of course, this number can vary significantly depending on various regions, such as the location, the type of amenities you meet around, what sort of other developments can be developed nearby, how far the property is from water elements, the view the property enjoys, what sort of people leave close to it etc. Still, every monthly payment brings you a little bit closer to owning your very own property in full. Keep in mind that the initial mortgage payments pay mostly for the interest on the loan, while subsequent payments pay a greater part of the principle.
2) Tax Benefits: Real properties and in particular homes are entitled to a number of tax relaxations providing you with a significant reduction on your annual tax bill. Of course those vary from country to country, so it would be wise to seek for answers through the Internal Revenue Department, any Governmental Housing Schemes etc. If you afterwards decide to sell your property, you may even claim for a Capital Gains Tax exemption, which means you might not have to pay taxes on the sale.
3) Stable Monthly Property Costs: Buying a property also affords you the comfort of stable monthly property costs. While rents are often unpredictable, your mortgage is not. Particularly with a fixed rate mortgage, you are guaranteed one monthly amount for even up to forty years. When you consider how costly rents will probably by then, the choice seems obvious!
How Much Can I Afford to Spend?
Before you even begin looking at properties, it is essential to first establish the total amount you can afford for buying a property. By doing so, you will soon find out the property type you should focus on and not be disappointed if you really like a mansion you simply cannot afford.
Bear in mind that money lender will look at your total cash income and assets net value. The higher your net value is, the easiest and larger the loan you will qualify for will be. In addition, both your down payment and interest rates will be lower. Assuming you pay a downpayment of 30% for purchasing a property. An easy and simple way to estimate how much you can afford to spend in buying a property is to multiply your total annual gross income by four.
Paying the Downpayment
A typical downpayment amount could go usually up to 35% of the purchase price. In some cases, you can put down less but be aware that if you do so lenders will often make you take out private mortgage insurance (PMI) to protect them against any defaults in your payment. You can cancel the PMI when your equity reaches a certain percentage (e.g.: 20%) of the value of the property.
Offering a larger downpayment amount it would be a good idea. However, this is not the best in most instances. Yes, it is true that you will need to borrow less, lowering your interest payments in the process. However, it also reduces the amount of interest deducted from your taxes. Therefore, you are left with less expendable cash that you may need to improve and beautify the property, pay bills etc. Do not forget that you cannot take out a loan for your down payment; downpayment’s amount has to be already available!
If you are planning to use a gift from relatives to assist you, make sure to deposit it into your bank account at least six months prior to filling out a mortgage application as lenders will usually go through your bank statements for the last six months.
In addition to your downpayment, moving also requires money for various purposes such as insurances, taxes, escrowing, attorneys etc.
As mentioned above, lenders will extensively check your credit history. It is extremely important to prove you don’t owe any money! Request a copy of your credit report to ensure that it’s accurate and reports the necessary information before making use of it.
Pre-qualifying for a loan is simply estimating the size of mortgage you can afford. You do not need any official documentation. When looking at potential properties, you want to know that you have been preapproved for a mortgage. A pre-approval is an underwriter’s official guarantee of a specified loan amount which serves as a powerful negotiating tool once you have decided on a property you want to buy. The seller knows that you are serious in your intentions and that you can afford the property. An added bonus: it helps speed up the mortgage application process once you’ve made your offer.
Which Property Meets you Preferences?
Regardless the reason you want to acquire property, your goal is to find it in your budget range that best suits your preferences. Once you have decided exactly what you are looking for, you must narrow down your search to properties that really meet your criteria.
Drawing on those principles, you should start looking from close a number of things especially if you are attempting to buy and re-sell a property for a quick profit.
1) Location: Many people claim that there is no more important factor when it comes to buying a property. When considering resale in particular, location is critical. If you do not mind the noisy bus stop across the street or the adjacent supermarket does not mean somebody else will not. Make a checklist of everything around the property you are considering. What are the pros and cons of the neighbourhood? Consider any factor you can think of, from schools to safety issues and from microclimate to convenience.
2) Economic Stability: When choosing an area, look whether it is viable and thriving in terms of economic stability. Safeguard your ability to sell the property after 3, 5 or 15 years afterwards, mainly focusing on how desirable the place will be. A look around for reputable organisation and continuous planned developments are signs of local jobs as well as wealth to enhance the economic viability of the region.
3) Public Services: From the national down to the neighbourhood’s level, it is important to check the services provided. Are there post offices, libraries, parks, public transport means etc? What about recreation centres, youth programs, festivities and performances? The factors to consider are endless!
4) Schools & Hospitals: One of the most important factors for many parents is the educational system as well as the provided health care of the area you are moving to. People with children in particular are much worried for obvious reasons. Proceed with caution and always keep asking friends and people around to find out more about it. A check on the internet would give you some more details and useful information. Are they public or private? Do residents have to pay a really huge tax amount to keep those services operating?
5) Taxation: Never forget the taxman! Governments are always there, behind every transaction to safeguard that they will be paid when it takes place. Take some advice from people acting around, or newspapers or the internet on tax related issues and properties. Hoe often do they levy? What are the current amounts?
