How to Sell a House in Delaware as an Owner?

Written By Emma Johnson

Okay. So you’ve decided to sell your home. Now how do you proceed? Do you list your home as is? Or should you renovate it before putting it on the market? Do you hire an agent? Or should you go the more stressful and less expensive route of putting it as FSBO (For Sale By Owner)?

There are n permutations and combinations that you can use to get a successful sale and earn handsome profit over the equity you have built over the years. However, here is a fact: 70% of owners do not know where to begin, primarily if they are selling a home for the first time.

If you are in the same dilemma and are on the fence about selling your home FSBO, here is something that can help you make a concrete decision. But before we move ahead, it is essential to understand why you are selling your home in the first place. It could be because of any of the listed reasons:

  • You are looking for a home upgrade
  • Your family is growing
  • You are relocating because of a job change
  • You are nearing retirement
  • You are tired of the upkeeps
  • You are going through financial distress.
  • Or A hundred other reasons we haven’t listed here. 🙂

Knowing exactly why you are selling your home can help determine how much time you have to put the house on the market and close a sale. For example, suppose you have found yourself in a financial bind and want to sell your home quickly, preferably in cash. In such cases, going FSBO might not be the best choice for you as it requires a lot of patience and time. However, if you have the time and the resources to wait, going the FSBO route can be a great money-saving option.

1. What Do You Need to Know Before Listing Your House as an Owner in Delaware?

1.1 The Best Time to Sell a House in Delaware

You can look at several factors if you wish to time the market and find the best time to sell your home during the year.

  • Be aware of the local legislation and if any concessions are coming up in the coming months. If you see some good fortune coming your way, hold on and take advantage of the changing rules to increase your profits. For example, if the budget is around the corner and you know there is a chance of a tax break, you should wait a few weeks to be eligible.
  • Fifty percent of home sales happen in the summer. That’s when home buyers are most active. This is when schools are about to start, and buyers are in a hurry to change locations quickly before the semester begins so that their child’s schooling does not get affected due to the shift. As a result, the average number of days a home stays on the market is the least during the year’s first quarter.
  • Another good time is during November when buyers plan to take advantage of end-of-the-year tax breaks. While strangely, this is when many sellers take their homes off the market, this time is the best if you do not want to deal with competition.
  • December is considered probably the worst time to sell your home because buyers are on vacation and more inclined to enjoy their annual leave.
  • President’s Day Weekend is another great to list your home in Delaware. Inventory is low during this time, making it a seller’s market and an excellent time to maximize your profit.
  • If you have enough time, July is an excellent time to sell your home. The median house price in July is around $500,000, 8% higher than the annual average.
  • If you want your home to sell faster and spend lesser time on the market, then March is one of the best months. For example, in Delaware, an average single-family home spends only 43 days on the market in March- 11 days less than the annual average.

Source: 1, 2

Infographic showing Delaware stats

What are some of the worst months to sell your house? 

January is one of the worst months to sell your home. A typical spend 78 days on the market in January. In terms of price, November is one of the worst months to sell a home in Delaware, as you will not get much profit if you sell your home in November.

1.2 What is the commission charged by agents?

The standard commission percentage in Delaware ranges from 5 to 6 percent on the selling price. The average commission charged by Delaware agents is around 5.44%, higher than the national average.

While going FSBO ensures you save money and have more control over the deal, you will still have to pay agent commission to the buyer’s agent.

88% of buyers purchase homes via agents, so it is almost inevitable to avoid this cost even if you are going FSBO. In Delaware, this commission is usually 50% of the total commission. So for a $500,000 home, you will have to pay the buyer’s agent somewhere between $12,500-$15,000.

Average Commission in DelawareAmount
Listing Commission2.8 to 3 %$9000 approx.
Buyer Agent’s Commission2.5 to 3 %$9000 approx.

If you wish to learn about this in detail, here is a breakup to help you. You can skip this section if you do not want to dwell deeper into the subject. So let’s understand this. Usually, in a typical real estate transaction, the buyer and the seller have agents to represent them. The final commission these agents earn is split 50-50 between the agents or in a percentage decided in the listing agreement.

Source: 3

1.2.1 What can you do to avoid or reduce the buyer’s agent commission?

Most people don’t realize that these commissions are negotiable. Depending on your situation, you can negotiate agent commission with the buyer and his agent. Also, if the buyer is under a time constraint, you can propose that the buyer pay his agent rather than you.

Let’s do a quick recap:

So if the average selling price of a property in Delaware is around $332,000 (median selling price in Delaware), the total commission payout would be $19,920, out of which $9,960 would go to the seller’s agent, and $9960 would go to the buyer’s agent.

  • When both the seller and the buyer have agents, the total payout is $19,920.
  • When the seller lists with a discount agent and the buyer hires an agent to represent him, the seller saves on the listing commission and only has to pay the buyer’s agent.
  • If you are going FSBO, and the buyer doesn’t have an agent (if you know the buyer or are selling to a relative), you pay nothing to the agents.
  • If you go FSBO (without a discount agent) and sell to a represented buyer, you only have to cover the buyer’s agent’s share of the commission. Remember that while paying the buyer’s agent is a good practice, you can still negotiate the commission percentage to grab the best deal.

1.3 What are the advantages and disadvantages of selling your home via FSBO?

AdvantagesDisadvantages
You have direct and complete control over the deal by listing your home FSBO. You can decide the listing price, the renovations, and even the negotiation percentage. You also can decide where you list and how you market your property.Usually, sellers who have no idea about the market and local market trends end up selling their homes for way less.
Usually, buyers are more comfortable dealing with the owner directly. Communicating via agents can sometimes result in wrong expectation setting. You have a better-than-normal chance of successfully selling your home FSBO in a seller’s market. That’s because buyers in less competitive markets are willing to look at non-traditional listings when they cannot find the right home on the MLS.You will still end up paying some part of the agent commission.
If your house is on the market longer, agents may push you to close a deal. This can sometimes result in rushed discussion-making, which may lead to losses. Going, FSBO ensures that you close a deal at your own pace.Managing a listing can be tough! You have to be available to answer calls, schedule showings, and coordinate open houses.
Agents usually work on multiple listings at the same time. Their crunched bandwidth worsens during peak season when the inventory is high. Going FSBO ensures that your home gets the attention it
deserves.

You have a first-hand experience of what living in the neighborhood is like. You know all the great things about being a part of this community, and you can share your experience with clients who want to learn more about the neighborhood.

Being the owner, you can connect with clients emotionally by sharing your personal experiences of living in the house.

2. Getting a Home Warranty Service

Since you don’t have an agent who can make your home repairs or make the house presentable and ready for the client, you may spend a lot of money to do so on your own. One solution to this would be to take a Home Warranty Service.

2.1 What Is a Home Warranty?

A home warranty provides protection from high repair costs on plumbing systems and other major appliances and electrical equipment. It’s like home maintenance insurance which will assure the buyer that they don’t have to worry about any surprises once they buy the home. 

2.2 How Does a Home Warranty Work?

You have to pay a monthly fee for home warranties. In case something goes wrong during this period, the service company either repairs or replaces the appliance basis the situation.

Well, usually, you may be disappointed because the warranty doesn’t cover everything. It’s more of a way to allay buyers’ fears in case they are apprehensive since it can save the buyer money in the long run. On the other hand, knowing your home is in perfect condition could be a waste of money, but it may work as a good negotiating tool with the buyer. Home warranties only cover regular every, day repairs. 

Remember that the lower the monthly fee, the higher the service fee will be, and vice versa. So select the right warranty.

3. How to Get the Right Price for Your Home

One of the most significant drawbacks of selling your house FSBO is that you could be pricing it wrong. To avoid this, you need to make sure of the following:

3.1 Check out all the online sources for similar houses and their listed price. Compare the footage – ideally, compare homes that fall within 10 percent higher or lower of the square footage of your house to get a reasonable estimate.

3.2 Compare the amenities available in these listed houses and those available at yours. You might have a bedroom more or less than the others, or you could have an extra bathroom. Even that bit counts.

3.3 Your location also matters. How close is it to the supermarket or the local school? A good location will get you a better price. Compare the locations of houses up for sale and make an estimate if your house is better or worse.

3.4 If you are in a hurry to sell, keeping your sale price a little lower than average will get you a deal faster. But don’t price it too low, or buyers may think the deal is wrong.

3.5 Look at the market. Is it a buyers’ market or a sellers’ market? A buyers’ market will get you a lower price, but a sellers’ market will get a higher price.

3.6 Make sure buyers don’t miss out on your advertisement. If your house is worth $3,25,000, don’t list it for $3,50,000. A buyer with a $3,25,000 may overlook your house because it is priced beyond his or her budget. Be realistic.

3.7 If you have made home upgrades recently, you can mention these in the advert, which might get you a better price. But don’t bet on it. Again, be realistic since unless these upgrades are really premium, it is already a sunk cost to you. Don’t harp on it.

3.8 Keep your emotions in check. The house may mean a great deal to you, but for a buyer, it is a new home without any memories. For example, most sellers overvalue their property because of sentimental value. However, you need to be objective, look at the facts with the help of research, and base your price on this.

3.9 Read up on some marketing or sales books, which may help. One strategy would be if you evaluate your house worth $300,000, you could price it at $2,98,000, which doesn’t get you down much but looks very attractive to a buyer.

3.10 Always talk about other buyers interested in your house when you speak to a prospective buyer so that they know there is competition and they need to close the deal quickly.

3.11 For starters, you could probably test the market by talking to a few realtor agents. Never rely on a single realtor. Always talk to multiple realtors, as no two realtors price a property the same way.

3.12 If you think a fresh coat of paint will make your house more attractive, or if some minor expenses will add good value, don’t hesitate to spend. A few hundred bucks might mean you get thousands of dollars more on your price.

3.13 If you have absolutely no idea how to price your house, you could get in touch with an appraiser who will do the necessary research at a nominal fee, and you could base your decision on that – keeping in mind your own research, of course.

3.14 Most local assessor’s offices will have data on lists of sales. See if you can get hold of listing prices and sale prices of homes near you or similar homes as yours. Any data will be helpful.

3.15 Visit the Federal Housing Finance Agency’s website for information. Though this might not give you an exact price, it will give you a ballpark figure.

3.16 Here’s some data on the Delaware real estate market which will help:

The median value for homes$332,115
The median price at which homes are listed$414,900
Per sq. ft. listing price$196
Percentage of homes sole below listing price5.5%

*Based on data from Zillow (January 2022) ⁺Based on data from Realtor.com (January 2022)


4. Legal requirements for FSBO 

Since having a real estate attorney is required in Delaware, you will be a little at ease with the paperwork. But there are certain things it is good to know on your own. The Supreme Court passed a decision in 2000 making it illegal for anyone not an attorney to conduct a real estate settlement.

4.1 The real estate disclosure law in Delaware is laid out in The Buyer Property Protection Act, codified as Chapter 25, Title 6 of the Delaware Code. The law states that you need to put in writing all the material defects of the property at the time of the offer and any additional defects until the time of final settlement.

4.2 You must notify the buyer about any radon hazards – basically, any information you have on radon within the house based on tests or inspections.

4.3 Keep the buyer informed about any leaky gas tanks or a roof that is risky, etc. – you get the gist. Don’t let the buyer get surprised out of his wits later.

4.4 Delaware’s form for disclosure actually has 15 broad categories and nearly 150 questions, so ask your attorney to help. No need to panic.

4.5 The Federal law also requires you to disclose lead hazards in older homes and file a flood zone statement.

4.6 While making the contract, keep all the requirements in mind. It’s pretty easy if you read up about it on websites.


5. Taxes Applicable on Sale of Property

Since you are on your own, you need to be aware of the taxes while pricing your home. This will be a direct outgo after you sell your property. Check with your accountant about this. A few things to keep in mind:

5.1 The state transfer tax is 4% on the property sale/purchase price and is split 50-50 between the buyer and the seller. The city tax is also split equally between the two.

5.2. If your home is new construction, the buyer will pay the full 4%. 

5.3 Find out what the property tax is. If you don’t know, and depending on when you are selling your house, you can share this tax pro-rata for the year with the buyer.

5.4 Other taxes to check include State Recording Fees / Tax, city transfer tax, and any capital gains tax.

5.5 If you are from another state, then Delaware law states the gain from the sale is taxed at 6.75 %. You can deduct the expenses of selling the property. Don’t forget to check if any changes are applied on the actual date of sale.


 6. Paperwork Required for Sale of Home by Owner in Delaware

Do keep a good list of all the documents required and maintain a file for the same so that you don’t miss out on all the paperwork required. You can get all the information you require from property sale websites.

6.1 Both the seller and buyer’s basic ID documents, copy of the purchase agreement, Affidavit of the Title, Closing statement, a signed deed, home inspection results, home warranty information, survey results, loan payoffs, power of attorney if applicable, closing disclosure are just some of the papers you might need. 

6.2 Don’t get bogged down by the tremendous paperwork. Careful research will help. Here are some lists which will help you.

6.3 If you think you can’t handle it, consider working with a low-commission realtor just for the paperwork, so you don’t have to shell out the entire commission.

(Below, Tables (9.4 to 9.6) need to be changed completely and worded differently as it is taken from another website) 

Have already spoken about these documents, so can do away with the below table.

6.4 Required for all Delaware real estate sales 

2 Forms of IDIn most cases, a valid passport, driver’s license, or another form of Delaware-issued ID.
Copy of Purchase Agreement and Any AddendumsCopy of the original, signed sales agreement as well as any agreed-upon changes.
Closing StatementA detailed list of all the costs associated with the sale and who pays them. This is often prepared by your escrow agent or title company.
Signed DeedTo legally transfer your property, you’ll need the deed that proves you’re the rightful owner. At closing, you’ll sign the deed over to the buyer.
Bill of SaleThis is basically a receipt that includes both your information and the buyers. It will also list the home’s final price and what was included in the sale.
Affidavit of TitleA notarized document that states you own the home, that there are no liens on the property, that you are not simultaneously selling the home to someone else, etc.

6.5 Possible additional documents

Loan Payoff InformationIf you have a mortgage on your home, you’ll need documentation of exactly how much you still owe and any payoff fees. If you’ve already paid your mortgage in full, you’ll need documentation proving that.
HOA Forms and GuidelinesIf your home is part of an HOA, you’ll need to give the buyer documentation on the HOA’s Covenants, Codes, Restrictions, financial history, required fees, approval process, etc.
Survey Results or Survey AffidavitsA survey (or an affidavit verifying a previous survey) proves precisely where the property lines are.
Home Inspection ResultsIf you had a pre-sale inspection, you’d want the results to compare to the buyer’s inspection. If having a buyer inspection was part of the sales agreement, you should receive a copy of the results before closing.
Proof of Repairs or RenovationsDocumentation proving any significant repairs or changes to the house help verify its value. These receipts also provide the buyer with information about who to contact if they discover issues with the repairs in the future.
Home Warranty InformationThe home warranty service agreement will explain what is covered, for how long, and any costs associated with the policy.
Copies of Relevant Wills, Trusts, or Power of Attorney LettersIf you are selling an inherited property, you’ll need copies of all legal documents that passed ownership to you.
Relevant Affidavits (Name Affidavits, Non-Foreign Affidavits Under IRC 1445, etc.)You may need additional affidavits like a name affidavit (which lists all of your or the buyer’s previous names) or an affidavit proving you are not a foreign citizen and, therefore, exempt from certain property sales taxes.
Closing DisclosureIf your buyer is taking out a mortgage and you agreed to a specific seller’s concessions, you may need a copy of their closing disclosure to verify the lender approved your concessions.
Correction Statement and AgreementIf forms are lost or errors are discovered in the future, a correction statement and agreement require you, the buyer, or their lender, to replace or fix those documents if need be.

6.6 Delaware disclosure forms

Seller’s Disclosure of Real Property Condition ReportThe seller disclosure statement details any known issues with your home and its major appliances and systems.
Flood Zone StatementWith some mortgages (like federally backed ones), your buyer’s lender might require information on the property’s flood risk.
Lead-Based Paint DisclosureFederal law requires that if your home was built before 1978, you disclose information about the dangers of lead-based paint to your buyer.
  • Many closing documents are legally binding agreements. Any errors can derail your sale and cost you thousands of fees or costs to re-list your house.
  • To avoid an expensive mistake, consider working with a low-commission realtor instead.

7. How to List and Promote Your Delaware Home for Sale by Owner

If you want to know where you can list your home for sale, simply look where buyers will be looking for property. Several brokers freely give this information on the net or youtube. Make no mistake, you must work extra hard to promote your property in the right places. 

7.1 Firstly, get some good photographs of your home. Better still, hire the services of a professional photographer for a few hundred dollars since an expert will make the images look beautiful. This is vital to attracting buyers on websites and listing sites, so don’t take it lightly.

7.2 Your description of your home should be so attractive that buyers should not be able to resist. If you know of a good copywriter in your circle, take their help. This will help get more prospective customers. Blow your trumpet on the best features of your home – a great view, hardwood floors, a lovely balcony, etc. Talk about all the amenities nearby, such as proximity to schools, markets, hospitals, parks, distance from major nearby landmarks, etc. Look at buyer priorities and list those out first. Mention all recent repairs and significant work so that the buyer is happy that they don’t have to spend extra for repairs, etc.

7.3 There are many websites where you can list your property for free or a small fee. Look at Zillow.com, Trulia.com, Craiglist.com, FSBO.com, etc.

7.5 Use your social media to advertise for free. Ask your friends to share and post it on their social media handles. Word of mouth will help too.

7.6 Use a low-commission agent to list your property on the local MLS. You can pay a flat listing fee, say a few hundred dollars, or go for a discount broker who will charge less than 1%, depending on your negotiation skills.

7.7 Putting up a ‘For Sale’ sign in your yard may be an old strategy, but do it anyway. You never know if someone in your neighborhood has been eyeing your property. 

7.8  Do some research on why people are moving to Delaware. It will give you some tips on how to structure your deal and put the right words in your advertisements on social media. Do your research on your city or locality. For example, one broker claims that people are moving to Southern Delaware because of the easy availability of water, low taxes, and great amenities. Use this information in your promotions.

7.9 Did you know? This is how most local buyers found homes that they finally purchased.

Can use the table or the chart as appropriate.

Through the Internet51%
Through Real Estate Agents28%
By putting up a sign in their yard4%
Through people in their community6%
Others11%

So, don’t worry; you are in good company while using the internet to list your home for sale.

Here’s a pie chart example of the same data (I have show it differently above as the below chart. It is taken from a website)


    8. Major Challenges faced by FSBO sellers

The National Association of Realtors Profile of Home Buyers and Sellers states that 7% of homes are sold by FSBO, which is roughly 389,900 homes, which is a considerable number. The significant challenges faced by these owners in order of difficulty include getting the right price (17%), difficulty in paperwork (12%), difficulty selling quickly (5%), fixing and preparing the home for sale (8%), and lack of time to showcase the home to buyers (3%). 


     9. The Art of Negotiation

Since this could be one of the most important decisions in your life, it would be a good idea to read all the books you can read on the art of negotiation. Here are a few pointers all the same. 

9.1 List all the points for discussion so that you don’t have to go back to the drawing board – contract contingencies, how closing costs are divided, the timeline, payment mode, payment schedule, commission to be paid to the buyer’s agent, etc. Be transparent as far as possible.

9.2  Even small seller concessions you offer the buyer might sweeten the deal and lead to a higher price. E.g., An easier payment schedule that is convenient to the buyer.

9.3  Understand your buyer and his or her priorities so that you can best structure the deal to your advantage.

9.4  If you get a lower offer than your price, try countering it with the original price (if you cannot reduce it) but add a few other concessions to sweeten the deal. Maybe you can cover moving costs, give the place new paint, maybe move out earlier than you planned, or throw in some furniture you don’t require anyway. Hey, you can probably make a list of all the things you don’t require anymore and then offer them the final offer to close the deal.

9.5  If all the offers you receive are low, maybe you need to relook at the price you have quoted.

9.6   If you receive multiple offers, you can probably push up the best offer to match your sale price, saying you have other offers on hand and you are going to close within a day or two.

9.7  Offer to pay the buyer’s attorney fees or other smaller fees if the deal is closed within a stipulated time. Little sweeteners like this will encourage the buyer to close the deal quickly. 


  10. Closing Costs for the Seller

Selling your house via FSBO will certainly save you some money; however, be aware of other closing costs that you will have to bear, irrespective of whether you have an agent or not. Let’s see what these costs could be:

Transfer taxesThese are taxes levied by the city, county, or state and amount to approx. 3% of value.
Mortgage PaymentIf you are closing your mortgage, find out what you owe till the date of paying off the loan. 
Reconveyance feesIf you are closing your mortgage, you must obtain a reconveyance deed. Fees would be around $100.
Recording feesAfter obtaining a reconveyance deed, you need to record it at a nominal fee – unless it is already included in transfer fees.
Escrow fees Property tax payments are made in advance to the lender in escrow. Shared equally between buyer and seller. 
Attorney’s feesDelaware requires you to have an attorney to close the deal, and these fees will have to be paid by the seller.
Seller concessions A buyer may negotiate a financing concession so that he owes less in cash at closing. Make sure to check with buyers as this could be substantial – up to 3% of the sales price.
Any maintenance or holding costsUntil you sell the home, all payments, such as maintenance,  taxes, insurance, and mortgage payments, will have to be borne by the seller.

Keep an open mind on these costs, and make sure you know what you are in for before you decide to sell your house by the FSBO route. Remember that closing costs can increase to 1-3% of the final purchase price.


Conclusion

It isn’t easy selling your home yourself. So be very clear whether you want to go ahead and commit your time and effort to the same. If your time is valuable and you can earn more by focusing on something else, don’t think twice before you hire a realty agent. Although the FSBO method saves you loads of money, you need to be meticulous in the paperwork and while dealing with the buyer. If you have plenty of time and can’t afford to lose out on the commission, go ahead and do all the research required before you make your decision. 

Once you are done with the whole deal, selling your home will make you an expert on the topic, and you can probably even offer your services to other home sellers since you now know all there is to know about selling a house. Happy selling!

Written By:

  • Emma is a residential and commercial agent in Delaware, known for her sharp negotiating skills & deep market knowledge. Off duty you will find her buried in novels and playing handball with her kids.

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