Grande Prairie, For Sale By Owner:

For Sale By Owner

In Canada we are very fortunate to have an orderly, structured real estate market.  Without an orderly market F.S.B.O. would be too risky for most people.

Our Multiple Listing Service (MLS) realtors give us this orderly market.  When they sell a house that information is made available to appraisers who then use it to provide information, to other people, on the current market value of similar properties.  

While not necessary, an estimate of value from a certified appraiser will greatly speed up your sale, help ensure you get a fair price, the buyer a reasonable deal, and that a mortgage can be obtained for the property.  (It happens--a buyer agrees to pay over market value, then both parties are frustrated when the banks won't provide a mortgage!)

The appraiser does not set the value of the property--the appraiser only reports what the market says it is worth, based on the sale of comparable properties.  This value is adjusted based on the condition of your neighborhood, paint, roof, maintenance, rugs, purpose of the appraisal, market conditions, etc.  The "Appraised Value" comes in at a specific dollar amount, but really it is only a reasonable value--from within a range of values.

One Strategy for Selling by F.S.B.O.

1. Obtain an appraisal (one firm is helping sponsor this web site, you can check them out by clicking the advertisement at the top of the page).  A residential appraisal will usually cost about $175 to $200.  
    
    
2. Set your price--remember if you set it too high and an unwise buyer agrees, the deal may fall apart when the bank requires an appraisal and the buyer finds out the price was too high.  
   
   (Of course the seller may have an existing mortgage that the buyer can take over--but there are some legalities that might come back to haunt the seller.  Its rare, but it can happen.)
   
   Brace yourself--in all likelihood you will end up getting about 3.5% below appraised value.  Remember the buyer is not being driven around, not receiving knowledgeable advice, and is trying to follow the market while not getting too confused over which houses have already been seen.  
   
   Why is the buyer going through all this trouble--it's not because the Realtors don't have enough properties to show!   Its because the Buyer is hoping to pocket the Realtor's commission!
   
   But if you are going to give away the full 7% commission, why go F.S.B.O?  Call a Realtor, it's much easier for you and you won't mess up the real estate market.
   
    
3. Think ahead before advertising your home.  The really serious F.S.B.O. buyers follow the advertisements closely, so you can expect a flurry of meaningful inquiries during the first week's) that you advertise.  If your price is too high, those buyers will probably not call back! 
   
   So, if you are a motivated seller with a deadline, don't set your price too high!  Consider using the appraised value and be prepared to dicker down about 3 1/2 percent.
   
   If you are not overly concerned or have a lot of time, you might try over appraised value.  After all it is only an estimate, and you are not in a hurry.
   
   If you don't ask for over appraised value, show the appraisal to potential buyers.
   
    
4. Advertise in the "For Sale By Owner" section of the classifieds, and of course list with this WEB site--it's free!  Tell all your friends and co-workers that your home is for sale!  Don't be shy.
   
    
5. When you get an offer, remember price is not everything.  Sure it may be a few thousand lower than you expected; but if the buyer offers a date that means you won't have to move early, put your stuff into storage, rent a home, lose that rental damage deposit, and finally move a second time into your new place.  Well, that is worth something!
   
   Those appliances and drapes were not included in the appraised value.  Buyers often want them, and you may not want to move them.  But, don't give 'em away!
   
   Incidentally when you get one offer it is appropriate to complete negotiations on it (successfully or not) before taking other offers.  Having said that, everyone has the fantasy of a bidding war over their property.  Just be careful you don't put out two counter offers out at the same time!  There are legalities involved!
   
    
6. When you accept an offer:

1. write up a temporary contract immediately--so both parties know what has been agreed to (be sure to show the price, appliances etc. included,  and a date the sale will be completed.)   (An informal contract can be found on this web site.)
    
2. Take an initial deposit immediately.  $1,000 to $5,000 is often used, but warn your buyer that lawyers will likely want more when the contract is prepared.
    
3. Don't cash the deposit--the lawyer will hold it.
     
4. Agree on a lawyer you can both see within a week to write up a formal binding contract.  One option is to share the lawyer to save on disbursements (legal expenses).  The down side is if the deal goes bad--you will both probably end up looking for your own lawyers.  Don't even think of doing a real estate deal without a lawyer!  The buyer usually pays more since there is a mortgage to be registered; the lawyer will set out the fees for both parties.