Your home is your biggest asset, so naturally you'll want to get a good price for it when it comes time to put it up for sale. But you might be thinking that a great way to do that is to forego paying the real estate agent fees. After all, you'll save money and make more profit this way, and hey, you're pretty good at negotiating too. In short, you may be thinking of selling the home yourself - known in realtor circles as FSBO (for sale by owner).
While this can work out for some people, for most it really doesn't. The main problem is that most people don't know how the selling process works, and how much expertise is actually involved. Even if they're prepared to put the time in, they don't necessarily have the expertise to do a private sale right.
Selling your home is not a process that you'll want to mess up because it can cost you more than that commission you would have saved. So if you're wondering if you need a real estate agent to sell your home, you can rest assured that it's better to have a knowledgeable expert on your team than not.
I'm now going go over the many dangers in selling your home privately. First, I want to introduce you to the concept so that you can spot it and understand it if it comes across your house hunting radar.
How Does Selling Your House Privately Work?
Selling your home privately in Ontario is not a simple undertaking. Regardless of how much a property is worth, it requires a huge time commitment. You'll be responsible for ensuring that you research other home listings and set yours at a fair price, not to mention negotiating with prospective buyers and buyer agents.
Whether you choose to use a realtor or sell your home privately, you'll need to find a real estate lawyer to finalize the sale. You'll need a legal professional to help with determining closing costs, ensuring the sale terms are legal, liaise with the buyer's lawyer, and prepare the deeds and other legal documents.
I'm now going to get into the risks that come with selling your home privately. There are six serious risks that come with selling your home this way.
1. You Might Overvalue or Undervalue Your Home
One of the big risks of selling your home without an agent is that you don't know how much homes in your neighbourhood are actually selling for. This is different from the asking price that anyone can find online. Only realtors have access to information on actual selling prices. A good realtor (who buys and sells dozens of homes every year) also knows when to adjust prices up or down for different neighbourhoods as the market changes. They also have the experience to weigh the comparable factors for your area. Your neighbour's house may have differences that make it worth more or less than yours.
What's the problem with inaccurate pricing? If you ask too high of a price for your house, it may not sell for months and months... or at all. Property listings have a 4-6 week shelf life. The longer a home stays on the market, the more likely prospective buyers are going to think something's wrong with it.
When you're selling your own home, it's also way too easy to ask too high a price. After all, you have an attachment to it from years of living there. A real estate agent will be able to take into consideration the attachment you have to your home while also getting you the best price possible for your home.
2. You Don't Get a Reality Check on How Your Home Looks
A second advantage to hiring a good realtor is that they'll give you an honest second opinion about what buyers want. Their goal is to make sure the home sells, and will work with you to meet that end goal before the house even goes on the market.
They'll also hire a professional stager to make sure your home looks its best to buyers. You may have spent some time decluttering and doing some research on staging, but it doesn't mean you can really produce an effectively staged home vs. selling your vacant home. Staging is different from how you would normally decorate to make a home feel 'homey'. Real staging uses placement, sight lines, and psychology to maximize the appearance of space and to help buyers picture themselves in your home.
Professional stagers might be providing you with some decor changes to make, but it's less painful than having weeks go by without a showing. You may also get a mountain of bad feedback from potential buyers who walk away.
Had you considered these risks when selling privately? Stay tuned as we take a deeper dive into the risks of selling privately!
So far, we've learned that selling your home privately can be very enticing. But, when selling your home by yourself you can easily misvalue your home due to sentimental attachment or lack of knowledge of the market. That same emotional attachment can make you think your home is in better condition than it is, when it might need some TLC to get the market value you hope to receive. I'm now going to introduce you to two new risks of selling your home privately.
3. You're Going to Have to Market Your Home All By Yourself
One of the risks of selling your house privately is that it takes a lot of work to market your home. For one thing, you'll need professional quality photos of your home for your listing that show off how much space you have.
It's essential to have your home listed in the Multiple Listing Service (MLS), so you're going to have to find a good broker with a great reputation who will list you for a flat fee, since those private home sellers can't list by themselves. Then you have to call up various online sites, newspapers and place classified ads for your listing.
If you're selling your home privately, you're also going to need to craft a good "For Sale" sign and send out promotional materials with your contact details on it on as many advertising platforms as you can. Whew! Sounds like a lot of work to do on your own, doesn't it?
Good Realtors Have Bigger Networks and More Marketing Channels
Realtors have a massive marketing network they can tap into. For instance, I have a buyer-in- waiting program where people who want to sign up to buy a house can do so. I can then match your home to these prospective buyers.
My website also gets thousands of visitors each month, and most of those visitors are looking for homes. In a nutshell, I can get your home in front of more people than most realtors, let alone a rookie.
The other thing to keep in mind is all the marketing costs come out of the realtor's commission - they're not extra fees.
4. Dropping the Organizational Ball
For the sake of argument, say all goes well and potential buyers want to see your home. You're going to need to communicate with buyers and organize showings. Your evenings and weekends are tied up, and some of your days as well, if people want to see the home 9-5. Most people with jobs and families simply cannot handle the workload.
This doesn't even take into account proving that someone who does want to buy your home has the financial ability to do so. You'll have to know if a prospective buyer has a pre-approved mortgage to buy a home, and for what amount.
That means asking for a letter from a bank or lender that says how much they're approved for. Then you'll want to have a credit check done. If you don't do these things, you'll be spending a lot of time doing showings for people who aren't even seriously ready to buy.
Negotiations and Sale
Some entrepreneurial-minded people think that real estate deals are like any other negotiations, and there are some similarities. But do you know how to negotiate a sale without scaring off your buyer? There are lots of houses, and it's easy to lose the sale entirely.
If the home sells, there are financial tasks you need to handle, like making sure that at least 3 to 5 percent of the home's sale price is deposited with a neutral third party to ensure that the buyer just doesn't walk away from the deal. There's also the home inspection, and organizing paperwork with lawyers and mortgage agents.
If you go with a realtor, you shift all the personal vetting of buyers over to them, plus all of the time spent organizing appointments.
We just learned that if you're going to sell a home all by yourself, marketing isn't as easy (or cheap!) as it can look. Many people often think that real estate commission is pure profit to a realtor, when in actuality, it covers a lot of the costs that it takes to get your home in front of qualified buyers. We also learned that juggling a full time job and handling showings can be especially tricky. Your availability might not align with potential homebuyers, making you susceptible to losing out on the sale of your home. Now we go through the last, but certainly not the least important risks of selling your home privately.
5. Turning Off Buyer's Agents
One of the questions you'll have to ask yourself when selling your home is, "Am I ready to work with a buyer who has an agent, even if I don't?" If you do, you'll have to factor in paying the buyer's agent a commission on the home's sale - usually two and a half to three percent of the entire deal. If you don't want to pay commission to a buyer's agent, then these agents will have no financial incentive to show your home to anyone. That will drastically reduce the number of people who see your property.
When you use an agent for selling your home, yes, you're paying a commission. However, your agent and the buyer's agent will divide up that commission.
6. Not Ready For Multiple Offer Situtations
Even with the recent slowdown, Canada's housing market is moving and a good pace and selling houses privately means you have to be up to speed on the different tactics some real estate agents will use.
Some buyers will try to make an offer before your specified offer presentation date (known as a "bully offer"). There are plenty more bully offers being made nowadays due to the lack of inventory - buyers are snapping up anything and everything they can get their hands on. Sellers who want to put a stop to bully offers on their property can sign a Form 244 (Seller's Direction re: Property / Offers) - if you have an agent fielding your offers, that is.
When multiple offers are expected, you as the seller may choose to sign Form 244. This allows you to review all the offers at the same time; if you don't sign Form 244, real estate agents are legally obligated to present any offer they receive to you within a strict time frame.
In the case of multiple offers, buyers may try to win you over by putting in offers way above the asking price, forgoing any conditions on the sale, or offering more flexible closing dates. Multiple offer situations can quickly get out of hand for sellers. You'll have agents, or the buyers themselves, bombarding you with offers, telling you why you should accept theirs. Without experience, you could be persuaded by a buyer's agent into leaving money on the table. With a real estate agent representing your interests, you could potentially get tens of thousands more for your house!
Price negotiations are extremely difficult, so skip the regret and the stressors of a private home sale by hiring a real estate agent with experience in multiple offer situations.
A Good Real Estate Agent is Worth it
As you can see, there are serious downsides to trying to sell your home yourself. Instead, why not talk to me? It's free to chat, and there's no obligation.
Working with me has a real advantage because of my 35 years of experience in the real estate business. I take care of things like marketing, qualifying buyers, and paperwork. I can offer a home appraisal service, so if doing research all by yourself to see what the market's doing is just not for you, I can come in and take care of it. I also have a guaranteed sale program where I guarantee the sale of your home (call me for details). If your goal is to sell your home quickly at the best possible price, I will make it happen.
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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