Our Recent Experiences Selling Our House 'For Sale By Owner'
As part of my early retirement plan, my wife and I decided to sell our house to free up the funds tied up in for investment purposes and to eliminate the costs of holding the house. In this post, I discuss how we sold the house for sale by owner.
The 3/2, 1,200 sq. ft. house was built for us, and we closed on it at the end of 2014. We paid $225,000 for it, and it began appreciating in value as soon as we purchased it. For the first several years, the rate of appreciation was 8-10% per year, which we were very pleased with. But the value increased by about 15% in both 2020 and 2021. By the spring of 2022, the value of the home was over double what we paid for it.
Prior to this home, we had owned two others and sold the second on our own. The process had been quite simple, and we had a local title company do the paperwork for us. Combined with the real estate market still being decidedly in sellers' favor, we decided to sell our current house on our own again.
Getting exposure to buyers is key in any market, so we hired a real estate agency to get our house listed on the MLS, which is used by most residential real estate buyers. The cost was about $400. We also hired a friend who takes photos of real estate for sellers professionally to do so for our house at a cost of $200. These were the only costs we incurred in getting the house listed.
However, selling a home for sale by owner means that you avoid the fees for hiring a seller's agent, generally 2.5%-3% of the sale price of the property. But if you want buyers' agents to show the property, you must pay for their fees. In the MLS listing, we stated that we would pay 2.5% of the purchase price to the buyers' agent.
We had been paying close attention to the local real estate market for years and were confident that the house should sell for at least $460,000, so we listed it for $465,000 to give ourselves a little wiggle room.
The house went live on the MLS on a Tuesday. We had a showing on Wednesday, and the buyers made an offer on Thursday, but the offer was extremely low at only $395,000. The buyers' agent accompanied the offer with a very condescending email saying that the house was dramatically overpriced. We were tempted to ignore the offer completely but decided to counter with $450,000. The buyers then countered our offer with $450,000 but wanted an appraisal even though they were cash buyers. We suspected that they were hoping that they included the appraisal contingency to potentially lower their price and were not comfortable with that at all. Also, appraisal contingencies had not been common in the neighborhood for several years.
It was now Friday morning, and the house had not been shown to anyone else yet. We were starting to get discouraged but trusted that God would work things out. In a short while, we were contacted by three buyers' agents, who all wanted showings that day. One of these was a virtual showing where the agent simply walked around the property with her phone on a video call with her client. Two of the three buyers made offers on the house, one for $457,500 with an appraisal contingency and one for $465,000 with no appraisal contingency. We told the agent for the buyer with the lower offer about the other, higher offer, and the buyer then added an escalation addendum whereby he would beat competing offers up to a cap of $480,000. When we informed the other buyer that we had a better offer but didn't disclose any details on it, she included the same escalation addendum with the same cap of $480,000.
It was now Saturday, and we were now blessed with two offers on the house for $15,000 over our asking price. We decided to take the second offer of $480,000 since the buyer was about 90% cash, while the other offer was contingent on financing.
An inspection was done on the home the next week, and the inspector recommended that gutters be added to the house to help with drainage, and the buyer requested a $2,000 concession so she could pay for gutters to be added later. We had never had drainage issues but didn't want to jeopardize the sale over such a small amount, so we agreed to the concession.
Just two weeks later, we closed on the property. After paying the fees for the buyers' agent, Washington state's real estate excise tax of 1.6%, title insurance, and the title company's fees, we cleared about $455,000. Overall, the process was relatively easy, and we certainly didn't believe that hiring a seller's agent would have been benefited us much, if any. Selling the house ourselves saved us about $12,000.