Should you Sell your own Home?
When selling your home, you’re normally faced with two options: You can enlist the services of a real estate agent, or you can skip the realtor, put a sign on your lawn and try to do it yourself.
Mark Haak, a graphic designer based in Brantford, Ont., faced this decision three years ago. After having used a realtor for previous home purchases and sales, he considered his options and decided to try to sell his home privately.
“We were fairly well-educated on what’s involved in working with a realtor and we decided we would try to sell privately to see if we could save some money in commission,” he says.
While he sold his house within a few weeks of listing and was pleased with the process overall, Haak says there are disadvantages as well as advantages to selling privately. The process is not suitable for every seller or every property, he says.
The Potential Benefits Include:
- Cost savings. Selling your home privately means you are saving the commission you would ordinarily pay to a realtor. Commissions can vary and are negotiable. According to the Real Estate Council of Alberta, they can be either based on a percentage of the sale price, a flat fee, a fee for service, or a combination of these. A commission of 5% on a $200,000 house, for example, would result in a payment of $10,000 plus GST/HST, split between the buyer’s and seller’s agents. In contrast, several “for sale by owner” websites charge a flat fee.
- Availability of resources. When Haak decided to sell his house privately, he used a private-sale real estate network that provided him with a multiple listing service, signs, real estate-savvy staff to help with the sale and answer his questions about open houses and promoting his house, an appraisal and standard forms.Consulting with a real estate lawyer or clerk before listing can also be beneficial, says Sheilagh O’Sullivan, a legal assistant in Alliston, Ont., who has also bought and sold several homes privately. She says lawyers can also provide detailed information and checklists for the critically important steps involved in selling your own house.
Possible Pitfalls are:
- The time factor. With realtors involved, says Haak, a seller will often get a phone call asking whether a prospective buyer can come for a showing on a certain day, and then all the seller has to do is leave the house for a few hours. When selling your house privately, screening calls, booking and conducting showings and answering questions all become your responsibility.“If you really need to sell, doing it yourself is more than just throwing a line into the water to see if you’re going to catch something,” says O’Sullivan. “You need to understand that this is a job, in and of itself, so you need to have the time available and commit to doing the legwork.”
- Hidden expenses. When you sell a home yourself, says O’Sullivan, all marketing expenses come out of your pocket. On the legal side, she says, having a lawyer deal with a private sale versus one that is going through a realtor means that the lawyer has to put extra time in on the paperwork to make sure that everything is in order. This could mean higher legal fees for a private seller.Also, when both parties in a real estate transaction are represented by agents, the seller generally pays both agents’ commissions. Haak says he was surprised when he sold his home privately to learn that as the seller, he would still be expected to pay the buyer’s agent’s commission, or negotiate some kind of arrangement with that agent.“That kind of threw us for a loop, but you know, it made sense as well,” he says. “We had decided that obviously we wanted to sell the house and if the agent was bringing a buyer to us, we’d be willing to pay for her commission out of the proceeds from the sale.”
- Know your own property. Before listing a property yourself and inviting prospective buyers in, O’Sullivan says it is critical that you ensure you have full information on the property, including all relevant documentation. This may include having your water tested, your property surveyed or your title searched. A title search will make sure that everything that could block the title transfer – such as an outstanding mortgage or lien – has been discharged.
- Location. Selling privately may be more straightforward if your home is in a town rather than in the country, as long as all of the legal components are in place, says O’Sullivan. Such properties have usually already been surveyed and are on public utilities.
Ultimately, says Haak, the decision to sell privately comes down to your comfort level with negotiations and your understanding of the process itself. This is not something he would recommend to a first-time buyer, he says.
“It’s not a cut-and-dried thing where I would say, ‘Yeah, everybody should go private or nobody should go private,’” he says. “I think it really depends on the actual individual and the particular property.”
Whether you choose to sell your home yourself or use the services of a realtor, in the end you will be moving into a new home. Be sure to update your home insurance provider with the details of your new home, including the address, square footage, mortgage-holder and construction information. [Source: Sun Life Financial]