For Sale by Owner or Agent?
You have decided to sell your home and are debating whether you should try to save the real estate commission by selling your home yourself. Before you put that "For Sale By Owner" sign on your lawn though, consider what you are getting into.
You will want to sell your home for the right price at the right time. But how much do know about marketing a property? Do you know what your house is worth and what other houses similar to yours have sold for? Do you have the skills to negotiate and close a deal? Selling a house requires specific knowledge in property and laws, mortgage financing and taxes, as well as good judgment.
Most home sellers are not experts in selling real estate, and selling your home is too important a decision and too large a financial transaction to just casually try to do yourself without finding out want's involved first
Referrals and Resources
If you decide to sell privately, you will probably put up a "For Sale" sign and run some ads in your local paper. But how many prospective buyers do you think you will reach? Most real estate agents have access to the Multiple Listing Service (MLS) information system, which is operated by their member boards of the Canadian Real Estate Association (CREA) in Canada or the National Association of Realtors (NAR) in the U.S. The MLS system provides a list of homes for sale by MLS subscribers in each community and MLS members use this system to match buyers will sellers.
Furthermore, larger national firms can utilize their cross-country referral, listing and computer services to reach hundreds or thousands of potential buyers from even thousands of miles away.
If you are selling your home privately, your weekly classified ad in the local paper will likely reach most of your potential buyers within a couple of weeks. Without the professional affiliations and communication resources, you will have to spend hundreds or thousands of dollars in advertising to attract a sufficient number of potential buyers.
Most homes listed with a real estate representative sell faster than homes sold privately because most people do not have the resources. If you are selling your home yourself, set a time limit. If your house is not sold in, say, five or six weeks, you probably need a larger pool of buyers from more distant areas that a professional real estate company can bring you.
Time and Expertise
Time and the expertise to deal with the negotiations and paperwork associated with selling a home are some other factors which most home sellers don't have when trying to negotiate the sale of their property.
Homeowners who run an ad in the paper are often unprepared to answer questions from potential buyers concerning taxes, lot survey, heating costs and square footage, or don't have the phone technique to at least get the caller out to see the property. Weeding out the curious callers from the serious ones requires a special skill too. Moreover, most people don't have the time to spend evenings showing the house and arrange for open houses on the weekends.
Let's say you do manage to attract a few potential buyers to your door. Now what? Unless you have the training and professional skills to "sell" the prospective buyers on the house and ask well-phrased questions to appeal to them the right way, you may lose the prospect's interest based on your communication skills alone. Don't underestimate the difficulty in showing a property gracefully, either.
Negotiating the sale face-to-face is one of the most difficult and crucial stages of the selling process. If you want to sell privately, do you know how to answer a prospective buyer's objections sufficiently and accurately in order to assist them in making a buying decision? Will you be able to avoid overtalking or overselling?
If you sell your home yourself, there is a good chance you will end up taking too low an offer because you've either run out of patience or didn't know how to negotiate effectively with the buyer.
On the flip side, you may over-estimate the value of your home. You want $150,000 and not a penny less, and the home doesn't sell. A real estate representative knows the property's true worth and could have saved you the effort. Or, maybe the home is really worth $170,000 and you thought you got a great deal at $150,000. You may have saved a few thousand dollars in commission but you also lost $20,000.
And what about other costs? Small costs, such as those for signage add up. When you hire a real estate representative, all the costs, including those for his or her experience and time, are covered in the real estate commission.
Advantages of Listing With an Agent
Most homes are sold using the services of the real estate representative because he or she understands the aspects of the real estate business and will act as your negotiator. A real estate representative makes his or her living out of selling homes and knows your neighborhood well.
The most important service a real estate representative can provide you with is market analysis -- what properties are selling for and how quickly they are selling. In fact, listing a property at a reasonable asking price is probably a greater task than selling your home.
If you decide to sell privately, you will have to watch the real estate pages of your local newspaper to monitor your competition, reported sales and temper of the market.
On the other hand, a real estate representative will go through all the stages of selling your home - listing, presentation, negotiation and closing - with you. A real estate representative may also be able to advise on real estate mortgages and different kinds of creative transactions you may need to make.
If you decide to sell your home without an agent, you will need to do some research such as finding out how much annual income a buyer must have to qualify for getting a mortgage on your house so that you will be prepared to talk about money with a serious buyer.
Selling your home can also be emotionally draining. You'll have to try to act impartial and distance yourself from all the memories of your home. There is also a possibility of misrepresentation when trying to sell your own home. All of the information on your listing sheet (containing the essential information about your house) which you will have to prepare for prospective buyers must be accurate or it may result in a lawsuit for you.
Overall before you consider launching a "For Sale by Owner" campaign, find out exactly how much work and knowledge is required and whether or not you have what it takes. Selling a house is an enormous undertaking and takes time, money, resources, marketing skills and experience. For what is likely the largest personal business venture of your life, you want to have peace of mind knowing you got the maximum dollar for your home.