What Are The Risks of Selling a Home Yourself?
We’ve all seen the videos, read the stories, and gasped at the images of people who thought they could conquer a project that would have been better left to the professionals. There are entire Pinterest boards reserved for those who have failed, and compilation videos on YouTube.
Even in the best of times, selling a home can be complicated. Market conditions can change on a dime, impacted by everything from local to national and international economies, to changes in population and even the weather. And these days, you can add the global pandemic and social distancing into the mix. Especially in times of market uncertainly, a little professional help can go a long way.
With technology always on hand and information literally at their fingertips, the hyper-connected Millennial generation has taken a do-it-yourself approach to consumables; everything from products and services, to purchases of every kind – including real estate. Generation Y might as well be called Generation DIY. The appeal of the FSBO (For Sale By Owner) transaction lies in the flexibility, customization and let’s face it, the cost-effectiveness.
As a consumer, job one is educating yourself, weighing your options and making an informed decision. When it comes to real estate, an FSBO could be the right choice for those who want to save the commission fee and take the reins in all aspects of their transaction. But buyer and seller beware – an FSBO has various drawbacks as well.
Professional real estate agents have the experience and expertise to navigate through any market conditions. They’ve likely already been through some market ups and downs, and can guide a seller in deciding if now is the right time to sell, who your target buyers are and how to appeal to them. Aside from their market expertise, an agent will also have access to the tools and technology necessary to complete your real estate transaction safely and virtually, no in-person contact required.
While we are always ones for instilling confidence in others, we also want to make sure that all options are considered before attempting any DIY project. Especially when this project comes to your home, which is likely your largest investment. The decision to sell your home yourself does sound appealing, but many people who choose this option do not take into consideration all of the risks involved before making their final decision. Below are five questions you need to ask before you decide to sell your home yourself:
Is there enough time in the day? If you already have a full time job, family, or time consuming engagements, finding the time to not only prepare your home for sale, but actually sell it is a large commitment you need to be ready for. Now, we’re not saying you can’t sell your home yourself, because you can. There are plenty of resources out there to help you DIY. We’re just saying that a professional, experienced real estate agent can do a better job of it, and get you more money too. While saving on the agent’s commission might be tempting, consider what you get as part of the price you pay, including (but not limited to!):
Setting the right asking price
Preparing your home for sale
Showing the home
Reviewing and negotiating offers
All the paperwork!
All this takes know-how and time. And you likely already have a full-time job, right? And remember that for avid home hunters, listings get stale fast. If you home’s been on the market for an extended period, due to delays related to home staging, marketing and showing, prospective buyers will lose interest fast. Remember: you only have one chance to make a first impression.
How well do you know the market? The real estate market is constantly moving, adjusting and changing. There are trends you need to stay on top of, and information you need to know in order to successfully sell your home yourself.
Can you get the exposure you need? If the only thing letting people know your home is for sale is the sign on your front lawn, your pool of prospective buyers is extremely limited. As a seller, how do you get the phone to ring? Generating interest from potential buyers is the key objective of listing agents, especially in a seller's market. If you’re not a real estate agent, or a marketing or advertising professional, you likely don’t know where to start – and who could blame you? Marketing through yard signs, brochures, and online and print advertising can help spread the word. How does a virtual tour sound? Do you plan to host an open house for buyers? What about an open house for agents and brokers? Beyond marketing, an FSBO means you get to juggle third parties such as a home stager, photographer, appraiser, the buyer’s agent (or if they’re DYI-ing it as well, the buyers), then throw in a pile of paperwork, just for fun – NOT.
Have you practiced your negotiation skills? One of the many benefits of using a licensed Real Estate Agent is their experience when it comes to negotiating an offer. Just because you have an offer does not mean your job is done. Knowing the things to negotiate to ensure a successful sale will make a big different in the final outcome.
Do you understand your legal responsibilities? There is more to selling a home than simply putting a sold sign on your listing. Once you have a buyer who is interested in purchasing your home, consider the legal side of things. The buyer will submit an offer, and when you’re confident that you have a good deal on the table (you are confident that it’s a good offer, right?), a contract will need to be signed by yourself and your buyer. Remember, if it’s not written in the contract and signed, then it doesn’t count. An Agreement of Purchase and Sale will include details about the buyer, the seller and the property. It will outline the purchase price, the deposit, fixtures and chattels, title searches, closing arrangements, conditions and clauses. A real estate lawyer can help with this step of the process. The benefit of working with an agent is that oftentimes, they already have a lawyer they regularly work with, to ensure all legal matters are handled correctly and in a timely manner.
Your home is likely your biggest asset. When you’re ready to sell the place, ensure you’re well-represented – whether you represent yourself, or are backed by a professional real estate agent. A “minor” mistake can mean the difference between a lucrative sale, or tens of thousands of dollars left on the table. As the consumer, do your due diligence and make an informed decision before you start the selling process.
If you answered no to any of these questions, or are unsure of the answers, it is wise to consider speaking to one of our agents to discuss how they can assist you in selling your home, and further showcase the benefits of using an agent.
Some hard stats:
While Canadian statistics on FSBOs are limited, the US-based National Association of Realtors has done some research on the subject:
FSBOs represented 7% of home sales in 2017.
The typical FSBO home sold for $200,000, versus to $265,500 for agent-assisted transactions.
FSBO methods used to market a listing:
Yard sign: 22%
Friends, relatives, or neighbours: 18%
Online classified advertisements: 6%
Open house: 10%
FSBO websites: 5%
Social media: 12%
Multiple Listing Service (MLS) website: 4%
Print newspaper advertisement: 2%
Direct mail (flyers, postcards, etc.): 2%
No advertising: 49%
Most difficult tasks reported by FSBO sellers:
Getting the right price: 17%
Understanding and performing paperwork: 12%
Selling within the planned length of time: 5%
Preparing/fixing up the home for sale: 8%
Having enough time to devote to all aspects of the sale: 3%
Have more questions about the home-buying process, or ready to move forward with your purchase? Contact us today, or download the RE/MAX Home Buyer’s Guide for everything you need to know about the purchasing process.