Selling Without a Broker

Naturally, real-estate brokers vigorously fight the notion that you can sell your house yourself. They argue that only they know true local home values and real-estate laws and that they will "screen" potential buyers for you -- protecting both your time and your safety.

Some owners think otherwise. According to a 2002 National Association of Realtors study, about 13% of all home sellers go solo. The advantage is that selling on your own -- while potentially a hassle -- could save you roughly 6% in broker fees. This varies, of course. For hard-to-sell properties, the savings could be as high as 10%, but in highly competitive markets (where brokers are cutting their commissions), the savings could be 5% or lower. Of course, on a pricey home that could still be well worth the extra work.

Thinking about taking the plunge yourself? Here's what you need to know if you're going to act as your own broker.

Finding a Buyer
The most important step is pricing your house properly. Charge too little and you'll always wonder if you lost money on the deal. Ask for too much and you'll "go stale," as real-estate agents put it, making buyers suspicious that something's dreadfully wrong or that you're simply an unreasonable person.

How do you arrive at the right price? The easiest way is to hire an independent appraiser. Most charge $250 to $500 for the service. They'll have information on any nearby home sales at their fingertips -- they buy access to tax-record data bases and multiple-listing information -- and they'll personally inspect your house to take into account the new deck you've built or the recently finished basement. (For a list of appraisers in your area, visit the Appraisal Institute Web site.)

When you're ready to advertise your home, cast a wide net. Because your house won't be included in the multiple-listing service (or MLS, where members of the National Association of Realtors pool their real-estate listings to stimulate sales) you've got to generate traffic on your own. Buy classified ads in all your local papers, including shoppers and weekly alternative publications. Many areas have freebie real-estate newspapers that cater to people selling their own homes. You may also want to list your home online.

Your ad should list the basics such as location, price, number of bedrooms and any unique selling points such as a new kitchen or lake views, advises Larry Lessin, owner of Save 6, a real-estate marketing firm based near Washington, D.C. For $899, the company offers clients selling their own home a display ad in a monthly giveaway, listings on 12 Web sites, including the National For Sale By Owner Network and a wooden sign. "The ads that get the most response have an urgency about them," says Lessin. Key words that jump off the page are "seller motivated" or "priced below market." And buyers always seem to circle ads that offer owner financing (when the seller holds the mortgage) or help with closing costs, he says.

Splurge on a sign for the front of your house. The cheap metal jobs from Home Depot look, well, cheap. Visit a local sign company for a large wooden model (usually about $75). "At least half the calls on my house were from people driving by," says Bruce Buchanan, a CPA in Bowie, Md., who sold his five-bedroom Colonial by himself. Try putting the asking price on your sign to help cut down on the number of calls from buyers outside your price range.

And don't forget the original form of advertising: word of mouth. Talk up your home at work, in the gym and at the grocery. Nearly half the sellers we talked with made their deal with an acquaintance. George and Susan Wyper of Darien, Conn., for example, sold their three-bedroom, two-bath home to a friend of a friend who'd been looking in the neighborhood for some time. Meanwhile, another house nearby went unsold for weeks and was finally taken off the market. "The connection really helped because we found out pretty easily that he was a serious buyer," says George Wyper. "Before people rush into a listing agreement, they should definitely check with all their friends."

Independent sellers need to keep in mind that they must comply with many fair-housing laws, which are designed to protect buyers from being discriminated against on account of race, religion, sex or national origin. For more information on these laws call: HUD Housing Discrimination Hot Line at 800-669-9777 or visit HUD's Web site.

When Brokers Call
Be prepared for an onslaught of calls from local agents trying to convince you that you need to list your house with them. One of their favorite lines is that they've got a hot prospect who's just dying to see your property. Maybe they do.

But remember: If you allow an agent to show your house, you may be liable for his or her commission, even though you haven't signed a listing agreement.

One way to avoid confusion is to have your real-estate attorney draw up a one time only open-listing agreement. This document should clearly state that you don't have an exclusive agreement with the agent but that you're willing to pay a fee if the house is sold to a specific buyer that the agent is referring to you. This fee is negotiable and should be included in the agreement. In some of these situations, an agent will ask for half the usual commission paid in that area but will often settle for as little as 1% or 2% of the purchase price.

Closing the Deal
Now the paperwork begins. The first thing you'll need is a contract of sale -- the document that shows the price you and a buyer have agreed on and the closing date. That's the amount of time the buyer has to get a mortgage. Six to eight weeks is usually plenty of time. If someone asks for more time, that could be a signal that he or she will have trouble getting financing. Again, you'll probably want a good real-estate attorney to help you draw up these papers. Although many owners use copies of realtor agreements or forms found in published handbooks, laws and regulations vary so widely by county that these generic agreements often have to be rewritten at closing.

Meanwhile, the ability of a buyer to qualify can throw a last-minute wrench into the entire process. There isn't much you can do to make sure that potential buyers can get financing -- it's not even something that brokers, despite all their talk about the screening they do, can guarantee. But there are ways to help reduce the chance of a deal going sour. For example, in New York City's tough housing market, buyers are typically required to put 10% of the purchase price in escrow until closing. Try asking for such a sizable deposit and you'll quickly weed out the serious buyers from the wishful thinkers.

All these details can seem cumbersome. But the independent sellers we talked with agreed that with a little planning, the process isn't overwhelming. And saving thousands of dollars is rarely a bad deal.