Second homes are not necessarily a great investment. However, we did quite well financially and personally by owning a second home for nearly a decade.
PIMD welcomes Physician On Fire as our guest post. POF is a personal finance website created to inform and inspire both physicians and our patients with insightful writing from a physician who has attained financial independence and the ability to retire early.
It’s true. Selling a home by owner is not nearly as difficult or complicated as most people assume. I speak from experience, having done so 4 times in the last decade including twice in 2021.
Why would one go to the trouble of putting a home up for sale by owner when there are plenty of professionals who would gladly list the house for you?
Money. That’s why. Realtors’ fees add up, and the more frequently you move, the more painful they can be, substantially reducing your return on investment.
Truthfully, it’s best not to think of your primary home as an investment, but as a necessary expense that may pay for itself and then some if all goes well. Selling by owner can significantly improve your odds of coming out ahead.
Homes We’ve Sold By Owner
Before we dive in, I want to say that I’m not anti-realtor. There are situations where it makes perfect sense to employ the services of a real estate professional.
I sold my condo from residency, our dream home from my first “permanent” anesthesia job, and some lakefront property, all with the assistance of realtors, and also within the last decade.
In two of those situations, I was living out of state, and I wasn’t around to show the places. With the lakefront, we listed it with the same realtor that helped us buy the property, and we also were living a ways away.
These below are the homes that we sold ourselves.
Aberdeen, South Dakota
After the hospital in northern Michigan went bankrupt — that was where I had my first “permanent” job — we headed west for a great job at a new hospital, and we bought a 5 bedroom, 3 bathroom home with 3,800 square feet for $325,000 in 2012.
Two years later, it was clear that we were too far from home, and an opportunity came along to take a job close to my parents in a beautiful and familiar area in northern Minnesota.
We listed the house ourselves for $359,000 and it sold within weeks for $342,000 in 2014.
After accounting for some home improvements we had done, including adding radiant heat to the attached garage and a new epoxy floor for it, we got back what we had into it, plus a little bit more.
When you factor in property taxes, maintenance and repairs, and other costs of home ownership, it was a break-even deal at best. But avoiding about $20,000 in realtor fees was huge.
Brainerd, Minnesota
This was the location of my final “permanent” job as an anesthesiologist. We found a great mid-century home with 4 bedrooms, 2.5 baths, and about 3,600 finished square feet on the Mississippi River for sale by owner, and we bought it late in 2014 for $269,000.
Over the next five-plus years, we had some major projects completed on the property, including a new $25,000 retaining wall, replacing the deck and excavating out a spot for a large, enclosed patio beneath it. We also had the garage roof replaced.
In 2019, with plans to move back to northern Michigan, we listed our home for sale by owner at $339,000 and it sold for $328,000 rather quickly. This despite a realtor friend of mine suggesting a list price of $275,000 after touring the home and reviewing “comparables.”
We had put more than $50,000 into the property with the various projects, so much like the Aberdeen house, we may have “broken even” or not, depending on what expenses you include, but we certainly did not come out much ahead.
Cheboygan, Michigan
About six weeks before my position at the local hospital was eliminated, I attended an auction and came home with a little vacation property on Mullett Lake, 7 miles south of town. We would be able to boat to it from our house, bike to it along the bike path, or drive the 10 to 15 minutes whenever we wanted.
That dream came crashing down later that summer, but the cabin turned out to be a great place to spend time every summer. With much of my wife’s family in the area, it was nice to have a place of our own there, and this cabin is where we moved to when we left Minnesota in 2019.
We paid $15,400 at auction (not a typ0), and we put about $50,000 into a completely new floor-to-ceiling interior and an exterior paint job for a cost basis of about $65,000 total.
Ten years after the auction, we sold our place by owner in July of 2021 for $203,000 after listing it for $198,000. The buyers were working with a realtor, but we requested that the buyers pay the agent’s fees, which they did.
We did pay some of the closing costs, including the title insurance and transfer taxes, which were over $3,000 combined, but we saved over $12,000 in realtors’ fees, and the closing fees we did pay are commonly paid by the seller, anyway.
Alpena, Michigan
The cabin in Cheboygan was a great place to be, but it had no garage and at 800 square feet, it was 70% smaller than our home in Minnesota. We needed a place for our stuff, and while we had been looking for a proper lake home for a couple of years, we hadn’t had much luck.
We considered renting storage space long-term, but we heard nightmares about things getting ruined over time from moisture and critters. We looked into buying or building a pole barn, but the same risks applied.
Eventually, we settled on a small, mid-century home with a 2-car garage that could be a second landing spot for when we weren’t traveling. We bought it for $90,000 in August of 2019, and believe it or not, it was move-in ready at that price.
When we finally found a property on a nearby lake that could house us and be our next “forever home,” in the spring of 2021, it was time to sell both the Mullett Lake cabin above and this house.
I had been contacted out of the blue by a woman who was very interested in buying our home if we ever were interested in selling just months earlier. We did choose to put the home up for sale by owner, but we gave her a sneak preview before beginning official showings, and she returned a couple of times with family.
We asked for $118,000, expecting that we’d get more, as everything was selling for over asking price. Not surprisingly we had several offers over our asking price, and it sold to the woman who had expressed an early interest. We sold it for $143,000 in May of 2021 and the buyer paid all closing costs.
The Savings from Selling By Owner
If you add up the sales price from these four properties, you’ll come up with just over a million dollars. $1,016,000 to be exact.
A traditional real estate transaction with a realtor or two realtors involved will typically cost the seller about 6% of the sales price, plus or minus one percent. 6% of a million dollars is $60,000.
Two of our four transactions were completely sans realtors.
In one of the others, the buyer was working with a buyer’s agent, and we ended up paying their 3% fee. In the last one, as mentioned above, the buyer paid the real estate agent’s fee. That’s atypical, but as you may be aware, 2021 will not be remembered as a typical year for real estate. It was a seller’s market, for sure.
Altogether, we saved about $50,000 by selling four homes ourselves. If we weren’t in such low cost-of-living areas, our sales prices and savings would be substantially higher.
How to Sell Your Home By Owner
How do you go about selling a place yourself?
This won’t be an exhaustive guide. There are books for that, none of which I’ve read. I’ll simply share my experiences and the tips I’ve picked up having sold a few houses myself.
Before You List Your Home
Find Comparables
Pay attention to home sales in your area. Try to find similar homes in your neighborhood or those like yours that have sold recently. Zillow lets you search sold homes by map. Spend some time browsing and take notes.
Decide on a Listing Price
Similar home sales should be a primary consideration, but also think about how quickly you want or need the home sold, how low you’d be willing to go, and what competitive advantage your home may have over other homes currently for sale or recently sold.
Also realize that not everyone will value the features that you do.
If you’re looking to get top dollar, take what you think would be fair, and add 5% to 10%. If you’re impatient and just want a quick sale, price it on the low side.
Stage Your Home
If the home sells, you’ve got to get all of your crap out anyway, so start before you even list it. Declutter, take down family photos, and box up anything that makes the home feel less spacious. This might mean taking out some furniture.
You want people to be able to envision making your home theirs, and that’s tougher to do when it looks crowded or has too many of your own personal touches.
Take Photos
If you don’t have access to a decent camera or don’t have an eye for photography, you may want to hire this step out to a professional. It may cost you a few hundred dollars, but that’s nothing to the tens of thousands you can save in realtor fees.
A wide angle lens is helpful, especially for bedrooms and bathrooms. Also, make sure the home is well lit, with windows open and lights on. Counterintuitively, you may get the best pictures on an overcast day when the sun doesn’t create harsh shadows and sharp contrast. A more narrow dynamic range is your friend.
Don’t forget to take exterior photos from a variety of angles. When you create your listing, don’t be afraid to use an interior photo as the cover photo if it’s more striking than the standard exterior shot.
I’ve had a realtor tell me not to include too many photos; it’s best to give a sneak preview but leave enough to the imagination that the buyer will want to see the home in person. I understand the psychology, but I like to give the potential buyer as many opportunities to say “ooh, I like that” as possible, so I take and display lots of photos for my listings.
Listing Your Home For Sale By Owner
Where do you list it? And how? This has evolved over the years, and what worked in 2021 and before may not work as well in the future, but here’s what I’ve done.
Zillow
I mentioned Zillow before because it’s been my go-to source as a buyer for years. It’s a very user-friendly website with great search functions and filters. They also own Trulia, so a listing at Zillow will also get your home listed on Trulia.com, a similar site.
A negative to Zillow is a relatively new feature that may hide your listing from people who don’t click on “Other Listings” when browsing the site.
Nevertheless, it costs nothing to list your home on Zillow, and they’ve quite a few resources to help you understand the process of selling your home.
Creating the listing is straightforward. Come up with an accurate text description that entices people to want your home or at least to want to see it. Upload your photos, state your price, and submit.
Note that Zillow can take up to 72 hours to approve the listing, which can be maddening if you weren’t aware of this and you planned on it going live on a certain date. Ask me how I know.
Craigslist
The website hasn’t changed much in 20 years, and I’m guessing it’s not the first place many people go to find a home, but we actually saw our Minnesota home on Craigslist before noticing the sign as we drove by in person.
A listing on Craigslist is free; you don’t even have to have an account. You’ve already got the pictures and description from your Zillow / Trulia listing, and when you submit your listing to Craigslist, it will be live almost instantly.
Facebook Marketplace
One of the reasons Craigslist is used less often is that Facebook Marketplace has taken off in recent years. I hadn’t even considered listing our home here, but my wife mentioned it, and I figured “why not?”.
She was on to something. When I listed our Alpena home, the listing got tons of comments, people tagging friends who might be interested, and we booked numerous showings based on the post in a handful of local groups.
Once again, the listing is free, and you can use the same description and photos that you’ve used elsewhere. Just be prepared for a deluge of questions from non-serious buyers like the Facebook default “Is this still available?” to “will you rent to own (contract for deed)?” and other questions that wouldn’t have to be asked if the asker had read your full listing.
The Newspaper
If Craigslist is fading away, the classified ads section of your local newspaper is a true relic. But it’s a relic that an older crowd who may have the means to buy your home is still browsing while sipping their morning coffee at the corner cafe.
I have not taken out a classified ad for any of our properties, but I wouldn’t rule out doing so, especially in a buyer’s market.
For Sale By Owner Websites
This is another avenue I haven’t taken, but there are at least a couple of websites that specialize in For Sale By Owner (FSBO) listings. These are not free, but won’t set you back much more than a classified ad, either.
I think you’re better off with a free Zillow listing, but it may not hurt to check out FSBO.com or forsalebyowner.com, especially if your listing has been active without much luck elsewhere.
A Yard Sign
At a minimum, you should go to your local home improvement store and pick up a big For Sale By Owner sign to display in the yard.
You might also create a flyer with the description and photos you’ve taken and print a bunch off to be kept in a waterproof info box alongside the sign. I did this for our home in Aberdeen.
Scheduling Showings
Your listing should have your contact info so that people can reach you by phone, text, or email. I would also encourage you to give them a way to schedule a showing without having to contact you.
For our two most recent home sales, I set up a free account with Calendly, an online scheduling service that I’ve used numerous times as a podcast guest to find a time slot that works for the host. It works the same with home showings; your guest is the potential buyer and you’re the host of the show.
It’s great because there’s no back and forth (and back and forth and back…) communication and interested parties can only book times that you have available. You decide what time slots to make available, how long they should be, and you can block off any period of time that you have a scheduling conflict.
If you do things right, you’ll never be double-booked as long you require people to use Calendly or a similar calendar application, and the calendar will fill up automatically as interested parties book slots.
Showing Your Home
No one knows the home better than you. If you’re working and are worried that you won’t be able to accommodate most people’s schedules, remember that many potential buyers also work and will prefer nights and weekends.
Ideally, you’ll get a number of showings scheduled over a short period of time. If you have kids and pets, it might be best for them to find another place to be when you’re showing the home.
With our 2021 showings, we made the appointments 45 minutes long and left a 15-minute window between them. If you have a larger home, you may need more time.
I think it’s wise to point out both your favorite things about the home and its imperfections. The home inspection will unearth most of the home’s issues anyway, so be honest and transparent. When a buyer and seller work directly with one another, trust is important, and pointing out what’s wrong with the house can help you establish that trust quickly. Don’t dwell on the downsides, but don’t try to cover them up, either.
Just as you did when taking photos, make sure the home is clean, bright, and comfortable. Open the shades, turn on the lights, tidy up, and show your home in a positive light.