The Pitfalls of Selling A Home Privately
Thursday Feb 25th, 2016
When you first think about it, it seems like a great idea. Why don't I sell my home myself and save the commission? All I need is a sign on the lawn, maybe a classified ad or two and voila -- a pocketful of money saved! Or is it?
Before you risk what is probably your family's largest financial investment, it's worth investigating what it really means to put a "SOLD By Owner" sign on your lawn.
First, what is your selling experience? If it's limited to setting up the tables at your garage sale, that isn't going to provide you with the specialized knowledge you need to get your family through the maze of negotiations and paperwork that will need to be done, including items such as mortgage financing details, mortgage discharge penalties, taxes, lot survey and easements, if any.
Once you scratch the surface, you soon realize that getting the top price for your home in the time frame you've allowed does take skill and experience. Some homeowners have been lucky, but many have run into the scenario of taking too low an offer because they didn't appeal in the right way to the right potential buyer. Others have run out of both patience and time and again have ended up selling too low. It's certainly worthwhile to consider this point before making the decision to strike out alone.
How much is your time worth?
The money you may save on the commission could get eaten up by the time it takes to sell your home. In most cases, it takes longer to sell a house privately than it does if you utilize the services of a real estate company. One of the reasons for this is the general public's lack of access to the communications resources that are normally at a real estate agent's disposal.
For example, real estate agents can reach hundreds or even thousands of potential home buyers through the use of advertising and listing services now in place and accessible to them. This is what you are competing against.
Today, some major firms are on computer data bases for relocation and therefore have an instantaneous cross-country referral system at the touch of a key. There could be a buyer for your home transferring from another city, but you would never know it. At the same time, these companies also have or are associated with a relocation service. This gives them direct contact to another one of your target markets that you will again miss out on. As a private individual, you have neither the resources nor the contacts to take advantage of these in the same way.
The most important part - selling the buyer
Without a doubt, you will have some potential buyers respond to your ads or sign. This may not be as easy as you think. Having lived there, your family has developed some attachment to the home and may not look at it as objectively as an outsider will. One person's idea of cozy Victorian may look like so much clutter to another. This is the time when many homeowners wished they had a professional looking after the sale.
Through their training and past experience, real estate professionals can show your house to its best advantage. In conversations with the buyer, they've found out what it is they're really looking for and will emphasize those features in your home that match their needs. A professional is equipped to handle objections without getting emotional.
They are there to make sure you sell your home to the right buyer at the right price!
If proceeding on your own, be prepared to negotiate the price of your home. Today's consumer is more sophisticated and mobile. They carefully compare relative values before making any important decision, especially one concerning their home. A buyer considering a "SOLD By Owner", usually wants the same thing you do - to save the commission. You could end up doing all the work and possibly receive less money! This is another one of the reasons why utilizing a real estate professional as a third-party negotiator can be beneficial to you.
Once an interested buyer is ready to make an offer, can you effectively "qualify" that buyer? Is the contract you prepare going to be an enforceable one? As protection for your family, you should consult qualified legal counsel at any crucial stage of the process and always before signing any document. An Agreement of Purchase and Sale is essentially a legal and binding contract. The time factors for acceptance, possession and conditions imposed are all critical.
A situation that you may think is a windfall at first may turn into a nightmare. Two interested parties are both eager to make an offer on your home. Do you know how not to sell your home twice and yet protect your interests if one offer falls through? It has happened and the results can be as drastic as a lawsuit and a delay in the sale of your home, which after all, is the entire purpose.
It's going to take time to answer the hundreds of inquiries (often fruitless) that may come in during the morning evening and night. Showing your home will involve your week nights as well as weekends because most buyers work during the day. This also means an investment of your valuable time. And do you have the experience to weed out the "lookers" and concentrate on a genuinely interested buyer?
Your real estate agent is willing to spend the time. It's their job. And each and every house presents a different challenge, with a new family to meet and buyers to find. A professional works out of an office where full-time staff are able to answer calls and not miss any buyers. And by doing so, have access to the marketing power of a national organization.
Selling your own home could be a good idea. But first consider the time, money, resources, and professional selling skills that are required. Are you really equipped to take this on? Your time may be more wisely spent finding a real estate agent whom you'll be able to work with and let him or his do the job they were trained to do. This will save you time, stress and the need to spend money before you've even sold your home!