7 Things To Consider Before Selling Your Own Home
When the time comes to sell your home, the thought of planting a 'For Sale by Owner' sign on the front lawn and doing the job yourself has a certain appeal. Foremost among the attractions is the savings you'll pocket – potentially tens of thousands of dollars or more – if you cut out the real estate broker. However, there's a lot more to the job than just putting a sign on the lawn. For some, the headache and work involved may not be worth the savings. Find out how to determine whether you'll be able to successfully sell your home, and what to expect if you choose this route.
Your first consideration should be whether you can get the word out. Sure, you can put that sign on the lawn and make a number of relevant internet postings, but be aware that you'll be missing out on the following:
- An established real estate brokerage will have a network reaching far beyond your city or town. In most cases, it can source qualified buyers both regionally and internationally, and may even be retained by large corporations hunting for executive accommodations. These networks are well financed and managed, and have a professional staff dedicated to ensuring that they generate sales for their clients.
- Most brokerages will pay for print advertisements in local as well as some national media outlets. They may also target and distribute circulars throughout your city. Consider the costs of doing this yourself.
- Real estate firms have in-house marketing strategists who know what buyers want to see, and can package your home appropriately, producing color photos, feature sheets, and other materials for both brokers and potential buyers.
Not getting enough exposure may result in your property sitting on the market for a long time. If it sits long enough, you'll likely be forced to sell at a lower price. A home that sits too long without selling can also become stigmatized, leaving you without any traffic. People think "There must be something wrong with it if it hasn't sold already."
The real estate market is dynamic; always in flux; with prices moving constantly – sometimes quickly, sometimes less so. If you can't correctly gauge the market's direction and speed, you may also fail to assess your home's correct value. This effectively renders you 'out of market' and results in selling unnecessarily cheaply or, until you correctly assess your home's worth, overpricing and then waiting to sell your home.
Contrast this with the instant access a real estate agent has to information on home sales. Most real estate offices are equipped with software that can generate instant comparative market analysis and pricing – a system that takes the subjectivity out of the process and provides an immediate selling range given any particular market's dynamic parameters. In active markets, this is an invaluable resource. (Before you list your home, see Five Things Every Real Estate Investor Should Know.)
This may be the most oft-overlooked part of the sales process for do-it-yourselfers, and one that should not be considered lightly. Do you possess the skill set needed to successfully negotiate the sale of one of your most valuable possessions? Can you effectively manage the process through to a close against a seasoned broker or real estate lawyer?
Remember that you may be up against professionals who are keen negotiators, and who know the sale process very well. As such, they may suggest all sorts of terms and conditions that sound reasonable, but aren't in your best interest. Even an unseasoned real estate agent is likely to be aware of the implications of various terms and conditions. Will you?
If you have never been involved in serious negotiations with savvy professionals, you are at a serious disadvantage. Your lack of experience could negate any of the benefits of having done it yourself.
Should you choose to have your real estate lawyer negotiate the sale, the fees may be even higher than those of a broker; the tradeoff is that you may get a higher level of expertise.
Perhaps the most dangerous aspect of the home-selling process involves contracts and closings, for which you will require the services of an expert who understands contracts and can steer the process to a legally sound conclusion. Many closings have been marred by legal niceties that led to unexpected outcomes or, worse, lawsuits, and ultimately a failure to sell at the price and time of your choosing. Unless you are a lawyer yourself, this is one aspect of the process that should not be undertaken without professional assistance.
Large real estate firms now offer numerous value-added services, such as pre-qualifying buyers for financing, and, in some cases, providing the financing itself. If you are not using such a firm, realize that your deal may wait until financing can be secured, and that time delays often produce buyer's remorse: a condition that sees potential buyers talking themselves out of a deal the minute they leave you. It's better always to lock the deal shut as soon as possible. That means having the resources at hand to do so.
The Eccentricity Factor
Are you reducing the number of potential buyers because you haven't listed with an agent? Some house shoppers will be apprehensive about engaging with a 'for sale by owner' property simply because it's not the norm. There will be anxieties and apprehensions that steer people away from even seeing your home. For a lot of buyers, an established brand name and a sales professional with polish are more palatable. Ask yourself whether your decision takes you outside the real estate mainstream.
There is little doubt that you can fill an agent's shoes and sell your own home, although it will take preparation to do it successfully. How much time do you have? What's your time worth? In the end, you need to determine whether your investment of time and energy will be repaid by the commission you save.
The Bottom Line
You can sell your own home. If you make the commitment, do it right; the reward of a job well done and a few extra dollars in your pocket might make you glad you did. Just don't go into it blind, and consider that you might just end up with more money in the bank, as well as fewer headaches, by leaving the job to a pro.