Frequently Asked Questions

 1. What is an MLS?
 2. Do I need the exposure of the MLS to sell my home?
 3. I can get my property on the MLS for $300; is that a good idea?
 4. How many property owners successfully sell their properties by marketing them on FSBO sites?
 5. How much is my home worth?
 6. Why do some homes sell quicker than others?
 7. What is the difference between using a real estate agent and selling on my own?
 8. Which home improvements will add significant value to my property and which won’t?
 9. Is there any harm in a seller overpricing their property and then dropping the price if it doesn’t sell?
10. When selling my home, how can I make it “bigger” and better looking without spending much?
11. How can two, 10-year-old homes with the same square footage, nearly identical floor plans and only a few blocks from each other vary in price by more than $10,000?
12. Should you appraise your home before putting it on the market?
13. What exactly is escrow and what does it mean to buyers and sellers?
14. What exactly are closing costs and who pays them, the buyer or the seller?

Q: What is an MLS?
A: An MLS is the abbreviation for Multiple Listing Service. Until about 60 years ago, each real estate office had its own listings. If buyers went to that office they would be shown only the listings that office had listed with its company. To see other homes, buyers had to go to other offices and talk with other real estate agents. The MLS evolved by offices putting their listings into a common ‘pool’, so buyers only had to visit one office to get a list of all available properties for sale. This also helped sellers maximize the exposure of their homes.

Q: Do I need the exposure of the MLS to sell my home?
A: There is no doubt that the majority of homes sold are listed on the local Multiple Listing Service (MLS). In fact, even the homes buyers evaluate online are almost all on websites showing only the properties listed in the MLS. But in order to have a home included in the MLS, it must be listed with an agent. However, it is possible to sell your home without being listed in the MLS. Just be prepared to spend at least the same amount of money real estate agents do when marketing their listings.

Q: I can get my property on the MLS for $300; is that a good idea?
A: The answer is a two-edged sword for the FSBO. On the up side, it vastly increases exposure of the home online. The downsides are:
a. If they do not offer a commission to the buyer agent, agents are likely to ignore it
b. If they just have the listing entered but are not truly represented by an agent on their behalf, it is like inviting Michael Jordan to your home for a basketball game. Michael Jordan (in this case a professional real estate agent) is legally obligated to secure the best possible outcome for his client, and that client is not you, it’s the Buyer. The agent has many more tools available for his negotiations than you do, and tens of thousands of dollars hang in the balance.

Q: How many property owners successfully sell their properties by marketing them on FSBO sites?
A: According to the latest Profile of Home Buyers and Sellers (National Association of Realtors 2008 Report), only 7% of homes are sold by FSBO homeowners who do not already know the buyer. That 7% includes both those who did and did not use FSBO websites.

Q: How much is my home worth?
A: This is one of the most challenging factors in selling a property and it has nothing to do with what you owe on the home. What is important is what the ‘market’ is willing to pay for your home. If you are priced too high, you probably won’t sell your home. If you price it too low, you lose money you could have collected.

To establish the correct price do one or more of the following:

a. Look at tax records (most are available online) for recent sales in your area.
b. Hire an appraiser.
c. Ask real estate agents for a CMA (Remember, almost all agents only get paid for properties they sell, so they will be hoping to list your property in exchange for providing this information. The best ones don’t take the time to do it when they will probably not get a listing).
d. Request my free Market Tracker and Property Investment Profile reports. They don’t take a lot of time for me to set up and you will find them extremely valuable in setting the correct price for your home.
e. Visit open houses of homes similar to yours (note: These homes may be overpriced; they haven’t sold yet)

Q: Why do some homes sell quicker than others?
A: If no one knows the home is for sale, it doesn’t matter how good the home or price is; it’s not going to sell. You must maximize the exposure of your home to the most potential buyers. That means you have to market it effectively. It must be priced competitively enough for buyers to consider it, and that price must be in line with its location. It must also be visually appealing to the buyer as happens with creating curb appeal and has a lot to do with the overall land attractiveness as well as the interior and exterior of the structure itself.

Q: What is the difference between using a real estate agent and selling on my own?
A: There’s actually a pretty big difference. For instance, the State of Oregon requires agents to take a lot of training and pass both a federal and state examination as well as to successfully complete a background check. In addition, the agent is required to complete an additional 30 hours of certified continuing education in various aspects of real estate law and practices every two years and ethics training every four years. Smart agents and real estate companies far exceed this. This is done to protect the consumer and to ensure listings, buyer broker contracts and transactions are handled properly. If a person is not licensed by the state for selling real estate, he or she is only allowed to sell personally owned property. However, all applicable laws and legal requirements for real estate transactions must still be met.

Q: Which home improvements will add significant value to my property and which won’t?
A: This is my recommendation: “Don’t spend a nickel unless you are going to get a dime back!” On this website you will find more detailed ideas but here are some basic thoughts:

• If there is a serious structural defect, you are either going to sell at a deep discount or fix it.
• Give your home a fresh coat of paint, both inside and outside; it’s inexpensive and it does wonders for making a home look more appealing. And don’t forget the trim!
• If your carpet is trashed, you probably should replace it (and choose a neutral color). If it looks bad, it probably smells bad too.
• For major renovations, kitchens and bathrooms give the best return on your investment, but even then it may not increase the price of your home more than what it costs to pay for the labor and materials. See my article, “ Is Your Home Worth Remodeling or Just Repairing?”
• On the outside, a green, neat yard usually only takes basic lawn care such as watering, mowing and edging but it will make your property stand out from the others.

Q: Is there any harm in a seller overpricing their property and then dropping the price if it doesn’t sell?
A: Contrary to conventional wisdom, if you’re in an extreme seller’s market—where the prices are going up rapidly—and you’re modestly overpriced, that method could work. All the seller has to do is advertise longer and put up with more people coming through their property while the market price catches up with the seller’s price. We saw that in the 2004–2006 real estate frenzy. However, when the prices are going down (a ‘buyer’s market’) because there are so many houses on the market, it can be disastrous to overprice your home; you can, and probably will, chase the price down. By the time you get a buyer to make an offer, the price will have fallen below what you could have received had you priced it correctly to begin with.

Q: When selling my home, how can I make it “bigger” and better looking without spending much?
A: The first thing to do is unclutter. Start outside and look at the house from every possible angle. The more its hidden from view, the smaller it appears. If there are lots of decorative items close together in the yard, on the porch or around the home’s perimeter that also makes it appear smaller and cluttered looking. It’s better to have a few well placed quality items. Next, go inside the house and look at it as a new visitor might. If you can’t seem to take an objective look at your home, ask a friend to do it. Look at each room and hallway and then remove all unnecessary or personal items such as family photos. You want potential buyers to imagine themselves living in your home. If possible, rent a storage unit to store the extras. If that’s not possible, neatly stack the boxes in a garage to get them out of your home to open it up and make it look more spacious. Also, cabinets and closets should never be more than two-thirds full. Store those out-of-season clothes and, if you have excessive in-season clothes, store those too. Please note, if you have a garage with enough space to actually park a car inside, I guarantee prospective buyers will notice!

Q: How can two, 10-year-old homes with the same square footage, nearly identical floor plans and only a few blocks from each other vary in price by more than $10,000?
A: If the condition of the homes are the same, reason will have to do with location. If one is on a noisy street and the other on a quiet cul-de-sac, or if one has a nice view while the other has a home within 10 feet on either side, or the lot of one is much more usable than the other, there may be a lot more than a $10,000 difference in the price the seller is able to receive.

Q: Should you appraise your home before putting it on the market?
A: Even though it does cost money, it is one of the best ways for a For Sale By Owner to get a good estimate of what the property could sell for. However, if your buyer is getting a loan to purchase your home, the appraisal you got will probably not help. Lenders want their own appraisers to value the property so they can be assured that if the buyer defaults on his mortgage in the future, the lender can sell the property for enough to not lose money.

Q: What exactly is escrow and what does it mean to buyers and sellers?
A: Escrow is a neutral company that holds funds and documents to protect both the buyer and seller while the transaction is being completed. A buyer is more likely to write an earnest money check to a neutral third party than they are to write a check to the seller. They feel more comfortable having the escrow company hold their money in case something goes wrong with the sale (that was not the buyer’s fault) and they have to worry about getting their money back from the seller. It works the same for the seller; the seller doesn’t want to turn over the property deed to the buyer until he knows for sure that the money is available to pay him. The escrow company protects both the buyer and seller.

Q: What exactly are closing costs and who pays them, the buyer or the seller?
A: There are a lot of closing costs and both the buyer and seller normally pay some of them. For example, in Oregon the seller will typically pay for title insurance. This protects the buyer from someone showing up later and claiming they own the property. However, the buyer will pay for a different title insurance policy to protect his lender. In addition to title insurance, there are lender fees, document preparation fees, escrow fees, flood certification fees (even if your house sits on top of Mt. Hood) and lots of others. You, as the seller, will need to review the various closing costs to make sure you are paying only what you should. If a property is listed, a good real estate agent will review those costs prior to the seller signing the closing documents. For a simple calculation form that will show you how much you can expect to net after closing, see my article, “ The Closing Process: From Offer to Escrow.”