By Robert Irwin
When you're selling "by owner," your best hope is to get a knowledgeable buyer. You want someone who's bought and sold property before, who knows the ropes (at least as well as you do), and with whom you can sit down and hammer together a transaction. Unfortunately, that's not always the case.
Too often the person who comes by to purchase your home either is a first-time buyer, or is someone who has always relied on an agent - a "timid buyer." Yes, he or she wants to make the purchase. Yes, they're willing to work directly with you. But, no, they're afraid to move forward. They simply don't know how a deal is done and they're squeamish about making an offer. They don't know what to tell you or how to negotiate with a seller. They hem and haw until you want to yell at them (not a good negotiating tactic). And eventually, unless you take firm control, they'll wander away and you'll lose the deal.
How do you save the deal? How do you turn this wannabe buyer into a real purchaser?
One thing I've found useful is the mock agreement. You sit down with the wannabe buyer in front of a pad of yellow paper and you draw a line down the middle. Each of you has a pencil and before you begin, you set out the rules:
No one is going to sign anything, so this won't be a binding agreement. (In real estate, agreements for the sale of property must be in writing - Statue of Frauds.) Each person is simply going to write down what they want and what they have to offer. Then you're going to see if there's a match. If there is, you'll take it to your (or the buyer's) attorney to create an actual written contract. If there's no agreement, then you simply go your separate ways.
You list your price, your property's attributes, the reasons you think the value is there. The wannabe buyer lists what he thinks the property is worth, his reasons, and so forth. You talk about down payment, financing, terms and so on.
This is a non-threatening situation (or at least you should try to make it so). The idea is to informally get down on paper the rudiments of a deal. Since you're using pencils, it's easy to scratch things out and make changes.
The idea is that the wannabe buyer begins to see where you're coming from (and you, where he wants to go). A sort of camaraderie can form and you might end up not only parties to a sale, but good buddies as well... if everything goes according to plan.
However, some buyers are so timid that even this mild-mannered plan won't work. They simply can't bear to deal directly with a seller. If that's the case, then I suggest you tell them to get an agent. (Hopefully, you have one waiting in the wings who will work for a reduced commission.)
With their own agent, timid buyers suddenly become bold. You negotiate through their agent. They feel secure that everything is "above board." And a deal that might otherwise have been lost, can be saved.
Negotiate the commission, which you'll undoubtedly end up paying at least a portion of, in advance. Your cost, at most, should be no more than a buyer's agent's fee, typically half a full commission. It's money well spent when the alternative is to lose the deal.
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn. In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column forOwners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.