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Are you looking to sell your home but aren’t too keen on spending thousands on real estate commissions? Then you may have considered selling your house privately.
While this is a viable option, it’s not as easy as you might think. There’s a lot of work involved in selling your home on your own. And if you’re not careful, you might not be saving as much as you think.
Let’s go over a few important things before you decide whether to sell privately or with an agent.
Yes, you can sell your home without the assistance of a real estate agent. Some sellers take the DIY route to sell their homes to avoid paying commissions.
However, selling privately requires a lot of work and tasks that sellers generally do not have the skillset or experience for. This is an important consideration to make before you decide whether or not to sell on your own.
One of the key components of selling a home is marketing it to buyers. To do that, you’ll want to advertise your property on various websites to get as many eyes on your home as possible. Fortunately, there are multiple websites available to homeowners to help them sell their homes privately, which are commonly referred to as “For Sale By Owners” (FSBO) websites.
Alternatively, you can pay a small fee to a discount broker to access the Multiple Listing Service (MLS) website.
There are a few reasons you may want to try selling your home yourself:
Perhaps the biggest reason why FSBOs choose to sell their homes themselves is to save on the expensive commissions. Real estate agents are paid a fee to sell homes, which can add up to tens of thousands of dollars depending on the sale price of the home. By selling privately, you may be able to save on this fee.
Selling a home takes a lot more time and effort than most sellers realize. All the marketing, networking, and fielding calls are what sellers pay real estate agents to do, which is a full-time job. If you have the time to dedicate to this endeavour, you might want to take a crack at it on your own.
When offers start coming in, you’ll need to know how to wheel and deal so you make sure you don’t leave any money on the table and get the highest price for your home. You’ll also need to know what your home is worth according to current market conditions in order to price appropriately and negotiate fairly.
Maybe you prefer to have as much control over the entire process as possible. In this case, you can forgo having a real estate agent in the picture and take care of business on your own, including scheduling showings, staging your home, and setting the listing price.
There are several perks to selling privately versus hiring a real estate agent:
Savings. As mentioned, you can save on real estate commissions. For instance, let’s say you’re selling your home for $500,000 and local agents are charging an average commission rate of 4.5% to sell.
That would translate into $22,500 (+ HST) that you would pay your agent. If you sell on your own, you can keep that money and spend much less doing the work on your own.
Helpful resources. There’s an increasing number of resources available to homeowners who choose to sell their homes without the aid of a real estate agent. This makes the job of a private seller much easier.
Resources are available that help sellers with marketing, signs, appraisals, open houses, and standard real estate forms. Real estate lawyers are also available to answer questions and ensure sellers are covering all their bases to protect them from potential legal issues.
Control. If you’re the type who likes to have more control over things, then taking charge by selling your home on your own may be suitable for you.
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Along with the advantages of selling your home on your own come a few drawbacks that should be considered:
Time-consuming. Real estate agents do a lot more than just plant a for sale sign on front lawns and wait for buyers to flock to their listings. There’s a lot that goes on behind the scenes that you’ll have to handle if you choose to sell on your own.
If you take the lead, you’ll need to screen calls, book showings, market online, prep your home, take photos, and answer all questions yourself, which can take up a lot of your time.
Hidden costs. While you may be able to save on commissions, there are still costs associated with selling a home. If you sell without a real estate agent, your lawyer will be tasked with more paperwork to deal with to ensure everything is covered. That means your lawyer fees will be a lot higher to accommodate for the extra work that they need to do for you.
Buyer agent commissions. Both the listing and buyer agents must be paid a commission when a home is sold. Even though you may avoid paying a listing agent to sell your home, the buyer agent still needs to be paid, and it’s typically the seller who is required to cover this payment. Otherwise, you’ll have to negotiate some type of arrangement with the buyer agent.
Negotiations. Hammering out a deal with a buyer requires some skill and experience to get the best price for your home. If you’ve never been part of a negotiation, you could lose out.
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It’s no secret that real estate agent commissions can be hefty. But truthfully, it’s worth the price given the work they do. The following are just a few things real estate agents handle on your behalf:
Having your home professionally staged can help sell your home faster and for more money. Stagers understand what buyers look for in a home and stage listed properties accordingly. This will attract more buyers, and therefore boost the odds of an offer coming in sooner rather than later.
When you work with a real estate agent, home staging may be part of the deal. Your agent will enlist the services of a stager who will revamp your home in such a way as to make it more appealing to buyers looking in your area.
One of the most important components of selling real estate is establishing an appropriate listing price. Sellers might instinctively want to listen to their homes for as high a price as possible. And while that may be understandable, it can sabotage the deal if the listing price is too high.
Real estate agents pull reports on recent sales in the area to determine an accurate listing price. This will help ensure that your home sells within a relatively short period of time and fetches a fair price according to market conditions. Otherwise, listing too high can scare off buyers and drag out the process.
On the other hand, listing too low will leave money on the table. Any money you may have saved by avoiding commissions would be lost if you undersold your home.
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One of the great things about using a real estate agent to sell your home is the large network of other industry professionals that they have access to, including other agents who can spread the word about your listing. These professional relationships can bring a larger pool of prospective buyers to your home that you may not have access to if you sold your home on your own.
Not all people who show some interest in your home are necessarily qualified or serious buyers. Weeding through this pool of potential buyers can take a lot of time and effort. Your real estate agent will take the time to determine whether or not someone who wants to view your home truly is a qualified buyer or just someone who’s curious to see what your home looks like on the inside.
Having someone tackle this job for you will save you a lot of time and hassle. You won’t have to worry about having your daily schedule interrupted every time you receive a call. Instead, these hassles will be limited to the showings that will be more likely to lead to a sale if you let a real estate agent handle things.
If you do decide to take the DIY route, consider taking the following steps:
Before you list your home, you need to come up with a listing price. This is a critical step in the listing process, so you want to make sure you get the listing price just right.
In order to determine how much your home is worth based on today’s market conditions, consider hiring a professional appraiser. These industry experts will assess your home in great detail and compare it to other similar properties in the area that have recently sold.
It’s customary for buyers to have a property inspected by a home inspector before the sale is finalized. This gives buyers a chance to make sure there are no significant issues with the home before they commit to the sale.
Rather than wait for the buyer to arrange for the home to be inspected, consider having your home inspected before you list it. That way, you can find out if there are any issues beforehand so there are no surprises after an offer comes in. This will also give you a chance to either make any required repairs to bring your home up to par, or choose a listing price that accommodates any potential issues with your home.
You can supply the inspection report to any interested buyer who puts in an offer, even if they decide to hire their own home inspector.
Whether you do this yourself or hire a professional, staging your home before listing it will make it more attractive to prospective buyers and will make your online photos stand out.
It’s important to keep in mind that home staging is not interior decorating. Your goal is to prep your home so it’s appealing to the masses of buyers looking for a home in your area, not to you.
You might have your own tastes that don’t coincide with what buyers are looking for. So be sure to leave out your tastes and have a neutral outlook on how your home should be decorated when you list it for sale.
For this reason, it might be best to hire a professional home stager. These professionals have a keen eye on what buyers are looking for and will stage your home accordingly.
As mentioned, there are several online marketing platforms available to FSBOs that you can use to advertise your home. Be sure to maximize your home’s exposure and place your listing on as many of these sites as possible.
A real estate lawyer will be part of the transaction regardless of whether you sell privately or if you use an agent. But the job of your lawyer will be a little more involved if you leave an agent out of the picture. Get yourself a real estate lawyer early on in the process so you can have all the necessary paperwork lined up and all your bases covered.
Once your home is on the market, be prepared for a slew of phone calls from agents looking to book showings for their clients, or from buyers directly. It’s your job to schedule and manage showings and to make sure your home is always show-ready before buyers visit.
Once an offer comes in, be sure to analyze it in great detail and look at all pertinent terms besides just the offer price, such as the following:
Have your lawyer look over any offers that come in before you sign on the dotted line.
Selling privately can help you save on real estate commissions, but if you don’t handle the process properly, you might not save as much as you think, or anything at all. Before deciding whether or not to use a real estate agent, be sure to weigh the pros and cons, and consider all the work involved in selling a home on your own.
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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