This topic is covered first for a very simple reason: If you are going to be selling your home the very first decision you must make is whether or not you are going to use the services of a licensed real estate agent.

There's nothing that says you have to but according to the National Association of Realtors, the average For-Sale-By-Owner (FSBO) home sold for $187,200 as compared to the average home sold with the assistance of a real estate agent sold for $247,000. That's a whopping $50,000 difference, and even with paying commissions to a real estate agent, it's a very significant portion of the bottom line.

The work required to sell a home does not vary whether you are selling it yourself or whether you hire a real estate agent, but you have to be willing to do that work. If you decide to go FSBO, PLEASE do yourself a favor and read this guide, particularly the section on FSBO Pitfalls, as it may contain critical tips to save you a lot of time and aggravation.

If you're going to be using the services of a real estate agent, here are some criteria you may want to use to be sure you get the best one for your needs:

• Prepare a list of requirements that you expect from an agent.
  
• Interview several (at least 3) agents from different real estate companies.
  
• Let each agent know up front over the phone that you will be interviewing several agents.
  
• Select an agent who is not only familiar, but geographically near, your home.
  
• Request referrals from past clients for whom the agent has produced a successful sale.
  
• Ask the agent to spell out the marketing plan he or she would employ to sell your home.
  
• Don't base your decision of which agent to use solely on the basis of price opinion.
  
• Don't base your decision of which agent to use solely on the basis of sales commission.

In the end, try to select the agent who will work the hardest for you and not forget about your home as soon as you sign off on the listing agreement. Make sure a timeline of activities is established up front so that both you and your agent will have measurable performance metrics. Communication is very important when listing your home, so be sure your agent is accessible and able to give you regular (at least weekly) updates and progress reports.

Your arrangement to list your home with a real esate agent is solidified by executing a written listing agreement between you and the broker for whom the real estate agent works. The agent manages the process from beginning to end, but the broker or real esate company is the actual entity with which that agreement is enforced.

The listing agreement specifies the initial listing price, start date of the listing, expiration date of the listing, showing instructions, seller-provided disclosures, broker compensation and any other terms which consitute the selling arrangement. It is a legally binding agreement and therefore should be strictly adhered to by all parties.

One of the most important things you must do is prepare your home for sale. This is done by making it the most appealing to as large an audience of buyers possible. The more buyers who find the house appealing, the faster the sale, and the higher the sales price, PURE & SIMPLE!

Making your house appealing means following a few basic guidelines:

• Every area of the house should be spic-n-span clean, with no exceptions
  
• Smaller rooms should be given the appearance of a large size by using smaller furniture.
  
• Larger rooms should be made more cozy by using decorative enhancements such as pictures and warm paint colors
  
• Flooring (especially carpet) at the end of its useful life (or cosmetically obsolete) should be replaced
  
• Bathrooms should be bright and well-lit, with air fresheners and adorned with fresh towels
  
• All bedrooms should have beds made and dresser surfaces free of clutter
  
• Bent or worn blinds are cheap and easy to replace, so don't skimp
  
• Paint should be neutral and professionally done.
  
• Curb appeal is important: paint your front door, change your rusty door knob, and fix that rotting wood trim!
  
• Buy some plants and flowers to spruce up your front lawn or front step
  
• Make sure no cooking smells are present for showings.
  
• Make sure pet smells are suppressed or removed for showings.
  
• Make sure everything in the house is mechanically working.
  
• Update outdated light fixtures, it's cheap and easy
  
• Keep all closets and hidden areas spotless and clean.
  

Once your home is ready to show (and only once it's ready to show!) should it be placed on the market. Don't sabotage your weeks of effort in home preparation by pricing your house for more than its worth!

It's easy to get wrapped up in the sentimental side of your home's attributes and trying to max out the value. Remember that buyer's determine the market, always have, and always will. No matter how much you think your house is worth, the market will always bring you back to reality.

There is no one correct way to price your home, but a number of techniques are reliable indicators of value:

• Sales price of recent sales
  
• Asking price and number of of current comparable homes in the area
  
• Cost per square foot
  
• Value added by special features (decks, wood floors, updated kitchens or baths, etc)
  

If you set the price correctly when you first list it, you will do better than trying to get a high price and then reducing it every week. That implies weakness and can lead to lower offers and higher carrying costs while you await the sale.

By law, real esate sales commissions are always negotiable. That doesn't mean the listing agent has to lower their rate, it just means that it cannot be fixed by law or company convention, regardless of what is advertised.

What you need to know about the commission is that it is comprised of two portions: the amount the listing agent receives and the amount the buyer agent (should their be one) receives. These two portions need not be equal but be aware that the portion that is offered to the buyer agent is advertised with your listing and therefore can have a marketability impact on the action your listing gets in terms of showings.

Some sellers would rather keep the buyer agent commission low so they can keep more of their equity, not realizing that agents may either not show their home or will show it last. Even a small change in the commission percentage can mean thousands of dollars less for the buyer's agent. Keep this in mind when you set the commission, as the first price reduction for a house that isn't being shown by agents will far exceed the portion of the commission that is being saved. Price your buyer agent commission in line with what other comparable homes are offering.

Getting your home in front of the largest number of qualified buyers is critical to a successful sale. The more people that are aware of your house, the faster it should sell, assuming it is priced right and in good condition.

Consider these methods of exposure:

• Multiple List Service (MLS) - the database that all real estate agents go to find new listings
  
• For Sale Sign
  
• Full Color Information Flyers
  
• Internet Photo & Virtual Tours
  
• Real Estate Magazines
  
• Newspaper publications
  
• Open Houses
  
• Brokers Open Houses

The internet is where the large majority of prospective home buyers start their search, so it is crucial to have a strong web presence for your home. Not having multiple photos of your home online is a good way to have your house sit on the market for many many months.

The sales contract is a legally binding agreement between the buyer and the seller to transact the sale of the home. It has very specific guidelines and deadlines which must be performed by both parties. A clause in every contract will specify a very important phrase: "Time is of the Essence". This means that all obligations of the contract must be performed by the specified deadline or the contract will be voidable and the defaulting party can be subject to legal action or loss of deposited monies.

In Maryland, it is critical that your contract has a Residential Property Disclosure & Dislaimer Statement, in which you as the seller reveal facts about the property to the buyer. This addendum must be received and signed by the buyer to have a legitimate, enforceable contract of sale.

Also, be aware of the contingencies within the contract that, if not satisfied, leave the sale of your house to whim and chance. Typical contingencies in the contract include:

• Buyer's Financing Terms
  
• Clearing of the Earnest Money Deposit
  
• Home Inspection Results
  
• Appraisal Value
  
• Homeowners Association or Condo Documents reviewed by Buyer

It is strongly advised that a licensed real estate agent be consulted to prepare contracts of sale.

From a seller's perspective, buyer's want it all. From a buyer's perspective, seller's don't want to give up anything. Both sides typically see it only from their own perspective, and more than one deal has dissolved because buyer and seller could not see eye to eye on the simplest of issues.

Therefore, negotiation is where the sale begins and sometimes ends, and is a critical phase of selling your home. Typical topics of negotiation are:

• Sale Price
  
• Closing Cost Assistance
  
• Settlement Date
  
• Financing Terms
  
• Home Inspection Repair Requirements
  
• Appraisal Contingencies
  
• Personal Property Conveyed with the home
  
• Leaseback Agreements
  
• Decorator Allowances
  

Having licensed real estate agents work as middle-men to facillitate negotiations is one of the easiest ways to eliminate the hard-feelings that all too often come with real estate negotiation. The stakes are high, so consider hiring representation to make sure you get the best deal possible.

The best way to avoid home inspection issues is to repair any items you know are broken or functionally deficient prior to the home inspection taking place. Buyers feel better when they have selected a house that their home inspector can barely find any problems with. This reinforces their desire to move forward, and conversely a house with a lot problems (even minor ones) can cause the buyer to have second thoughts. So unless you are selling your home as-is, which will generally mean you're selling it below market value, do as many repairs as you can prior to even listing your home.

If issues are found that are part of the home inspection contingency of the contract, be aware that you might have to fix them or run the risk of the buyer walking away from the contract with legitimate cause.

The appraisal is a critical piece of the puzzle. It involves a third-party, disinterested, trained professional (the Appraiser) coming to the home to determine its value in the context of the latest real estate transactions in that market. It is a scientific process of valuation, involving looking at recent sales, features of competitive properties, square footage comparisons, judgments of functionality, and local market trends to determine a specific dollar value of the home.

The appraisal is generally paid for by the buyer, but is really designed to protect the lender. The lender requires the appraisal to make sure they never lend to the borrower more than the property is actually worth. If they did lend more, and the buyer lost the property due to foreclosure, their losses would be limited, as they own an asset (the home) which is worth at least what the lent against it.

With the market constantly changing, appraisal issues have been cropping up a lot lately. The first step, therefore, is to make sure that your house is priced in line with prevailing market values.

You should locate all receipts for improvements that you've made to the home since you've been living there, as a way to bolster your value in the eyes of the appraiser. If you've installed a $40,000 kitchen that none of your neighbors have, you will want to prove that to the appraiser so that a fair value can be given towards your equity investment.

At settlement, you will be officially signing over the deed to your house over to the buyer. This will typically take place at a title company or settlement attorney's office. They will serve as the intermediary to be sure that the title to the home can be legally transferred and that the seller receives money for their equity, less any settlement expenses.

Settlement expenses to the seller typically include:

• Real Estate Commissions
  
• Transfer Taxes
  
• Closing Costs seller agreed to pay on behalf of buyer
  
• Pro-rated payment of any unpaid bills
  
• Mortgage Payoff(s)

Always check with your mortgage company in advance to find out your payoff amount. Note that it is often higher than what was on your last mortgage statement as it typically includes a 5-day buffer to account for the time it will take to receive the funds from the title company. The title company can often give you a document they obtained (with your permission) from the mortgage company showing a breakdown of your payoff.

If you have an FHA Mortgage, please note that your payoff will include interest for all days to the end of the month, regardless of when you settle during the month. It seems unethical, but that's their policy, so if you have an FHA mortgage, always settle or refinance as close to the end of the month as possible.

If you want to sell as a For Sale By Owner, you need to be aware of a few things that can save you a lot of time and frustration.

1. Commissions

First, just because you are selling as a FSBO doesn't mean that prospective buyers aren't already working with buyer's agents. In most cases, the buyer is working under a buyer agency agreement wherein they must pay the buyer's agent a commission if it is not paid by the seller. If that turns out to be the case, the buyer will simply subtract that amount from the offer they make on your place, effectively saving you nothing. In fact, it may cost you because agents will not show your house if they find you are unwilling to pay their commission. For these reasons, it might be in your best interests to offer a buyer agent commission in line with other comparable listings in the neighborhood. You are still saving the portion of the commission you would have paid the listing agent.

2. Feedback

Many-a-FSBO has had what they thought was a great showing of their house only to never hear back from a prospective buyer or their agent. Everything seemed great at the house, but then no contract was ever received. The reason is that the buyer and their agent usually don't want to tell you about the negative aspects of your house, even when those negative aspects will result in them not being interested. If you want objective feedback, you'll need to have a form that requests specific information about what the buyer liked and didn't like about the house.

3. Qualified Buyers

Any buyer that wants to see your house should be already pre-qualified by a lender, preferably a reputable one, or you may be wasting a lot of time showing your house to window-shoppers. Ask buyers to bring a copy of their pre-approval letter with them, so you can weed out the curious people and save yourself time and energy.

4. Gain Trust

Many buyers (especially 1st time homebuyers) don't know that you're selling FSBO to save money. They think that you might have something to hide about the house and they could be suckered into taking on your problems. This can lead to low-ball offers because they feel they are taking a higher risk with your house than one listed with a real estate firm. Overcome this skepticism by creating drop-dead gorgeous marketing flyers, providing a courtesy appraisal, and having abundant records of all of the service and maintenance done on the home. Organization, meticulous condition, and the wow-factor are the cures for that natural skepticism, so put in some extra work to protect your sale.

5. Contracts

Be aware that when receive a contract of sale from a buyer, especially in the case that they have an agent, it will surely be written in the buyer's sole favor. Simple protections that you might normally have could be removed, with respect to the buyer's ability to get out of the contract for less than reasonable circumstances. The buyer's agent will have no obligation to remind you of your contractual requirements, any of which could cause the contract to become voidable if they are neglected. In fact, the buyer's agent has an ethical obligation to the buyer NOT TO, in certain cases. It is therefore highly recommended that a licensed real estate agent or lawyer be hired to review any offers received.