For sale by owner
Realtor fees run into the thousands. But not using a real estate agent could end up costing you even more, says Angela Self of the Smart Cookies
Angela Self – Globe and Mail
When it comes to selling their home, some Canadians are choosing to go it alone. A recent CTV consumer report found that one in four Canadians is selling property privately.
Comment: I find this number astonishingly high, but about an order of magnitude. That means that the 147,351 properties sold in the 2nd quarter of 2009 represents only 75% of the total sales in the country? CTV is claiming that there were almost 50,000 privates sales in the past 3 months? I am sorry, but that is ludicrous… Of course, there is no way to track non-MLS sales, so I cannot prove anything, but the sheer volume makes me very skeptical.
The main reason for ditching a real estate agent is to save on commission charges. Although fees can run into the thousands, not using a real estate agent could end up costing you even more. When it comes to buying and selling one of your largest investments, you should get professional assistance (Disclosure: I started my own business as a realtor).
A crucial part of selling your home is getting the listing price right. Someone who is not in the real estate profession or a savvy investor likely won’t have all the information they need to set the right price.
The stakes are high. If you overprice your home the only thing you’re doing is helping your neighbour – his place will seem like a steal compared to yours. But if you price it too low, you’re leaving money on the table.
The seller featured in CTV’s consumer report said he saved about $10,000 by using a website that lets you market your home yourself online. But since DIY home sellers can fail to take into account current market conditions or find comparable properties, the CTV seller may have actually lost out on more than $10,000.
A real estate agent can help you avoid these kinds of mistakes. Besides knowing the ins and outs of the market, including the details of recent comparable property sales, he or she will be able to help you understand your legal responsibilities as a seller. For instance, they could point out which facts you must disclose in order to avoid potential legal troubles down the road.
If you’re still set on selling your home yourself, know that it requires a great deal of time and expertise to hold open houses and give tours, assess potential buyers need to negotiate an offer. Selling a property can be an emotional process – it’s tough to negotiate the price of something you’re attached to. Not everyone will value your well-tended garden or the curtains your mother-in-law so lovingly crocheted.
Working with a real estate agent also means access to the Multiple Listing Service (MLS) – which will give it maximum exposure. If you were trying to sell you car, would you slap a homemade sign on the windshield and let it sit in your driveway? Or you could park it by the side of a busy road where thousands will drive by it daily and surround it with flashing lights? Listing your home on MLS is akin to the latter option. The more people who view your home, the more offers you’ll receive.
Back to commissions. Why do we have such a hard time wrapping our heads around paying a professional a fee for doing a job? The bottom line is there are many things you could do yourself to save money, but that doesn’t mean you should. Would you cut your own hair, extract a wisdom tooth or give your dog its annual vaccinations just to save a buck? Most likely you know it’s best to leave these things to the professionals. The same holds true for selling your home.
As for finding a good real estate agent, referrals work best. One idea is to canvas your neighbourhood, asking people with homes on the market now how happy they are with their agent. These people are easy to spot – just look for a “For Sale” sign on the lawn. Then, when you’re ready to sell, get your chosen real estate agent to put a sign on your lawn as well.
Angela Self will be writing for Globeinvestor.com weekly. She is one of the founders of the Smart Cookies, a group of five women who specialize in personal finance. They are hosts of a self-titled show on the W Network and the authors of The Smart Cookies’ Guide to Making More Dough. Find out more about them at Smartcookies.com.
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