Why Trying to Sell Your Home on Your Own is a Bad Idea
Last year I had a client who was thinking about selling in the Spring on their own. My immediate concern was that they were going to bite off more then they could chew, and really didn’t have a grasp as to what they would be taking on. The decision to sell your home on your own could be one with a lot of consequences. While the idea of saving on agent commissions may seem enticing, there are so many other reasons why trying to sell your home on your own is a bad idea.
1. Pricing Challenges
Let’s face it, a lot of the home owners I talk to feel strongly about their home’s value. I can not emphasize enough how the price a seller chooses is instrumental in their success in selling. Picking the right price for your home is a more complex task than most would realize. Actually I should correct that last statement. Picking the right pricing strategy is a more complex task than most would realize. As a Real estate agent, I have the years of experience, and market knowledge to be able to come up with a strong comparative market analysis (CMA) to set a competitive yet realistic price for your property.
Now let’s break this down a bit further.
What would you do with an extra 79K? These days it’s completely understandable that homeowners try to profit as much money as possible when selling their home. While the idea of saving on commission costs by going the "for sale by owner" route seems enticing, in most situations they’re likely to leave a lot more cash on the table that cancels out those "savings".
Competitive Yet Realistic Pricing: A good real estate agent knows how to do a true CMA and give you the pricing strategy for your home. There’s a number of things to consider, including the local market conditions, recent comparable sales, and the unique features of your home just to name a few. Pricing the property correctly ensures that your property stands out to potential buyers as a compelling option without being overpriced.
The Pitfalls of Overvaluation: Overvaluing your home can be a common mistake owners make when trying to sell their home without a real estate agent. An inflated price can lead to your property stuttering out the gate, and end up stale on the market for an extended period. Buyers are very easily deterred by a property that is seen as overpriced. The longer a home stays on the market, the longer the chance the owner has of achieving it’s true market value.
Avoiding Undervaluation: On the flip side, under-pricing your home (without the right plan) can result in leaving a lot of money on the table. Without an understanding of the local market dynamics and trends, you may unintentionally price your property lower than it’s worth. Negotiating on their own at an already low price point, home owners are more likely to sell their home at a “discount” compared to what the other comparable houses have sold for.
2. Limited Exposure and Marketing
Why limit your exposure right off the bat? When you choose to go the “For Sale by Owner” (FSBO) route, you miss out on the massive network and resources that great real estate agents have at their disposal. Being listed on Realtor.ca is only possible through a real estate brokerage. That website is one of many that uses the multiple listing services (MLS), a powerful data feed that ensures your property is seen by a broad audience of potential buyers across a number of different websites. When you go FSBO, you’re limited to your own personal marketing efforts, which may not reach as many interested parties as an agent’s strategies would.
In a previous post, I looked at how our team, The Crew Real Estate, has not only used realtor.ca as a marketing tool, but also tripled the exposure of our listings using our system of leveraging our “always on” online. Marketing your home with the combination of traditional advertising methods and doubling down on effective online marketing puts our listings miles ahead of the competition.
Listing your House for Sale with Matt Allman
Experience, trust, and a vast market knowledge of southwestern Ontario’s real estate market.
That’s the Coles’ Notes of what I bring to my seller clients with every listing I take on.
…more
The FSBO approach often falls short in comparison to the reach and impact of my team’s listings. Your property might remain hidden from the eyes of many potential buyers who rely on real estate agents and MLS to find their dream homes. Limited exposure is a significant disadvantage when trying to sell your home on your own. Combining their marketing expertise with the help of other professionals like staging companies, and contractors just to name a few, real estate agents can ensure that your property gets the attention it deserves. The more eyeballs on your home should mean more foot traffic through the door, getting you closer to that offer you are looking for.
3. Negotiation Expertise
When it comes to negotiation, the metaphor “Bringing a knife to a gun fight” fits perfectly when you try to sell your home on your own. There can be exhausting and complicated negotiation involved, from receiving the initial offer, going back and forth on dates, times, clauses and conditions, not to mention agreeing on a final sale price. A great real estate agent should have great negotiations skills, be able to advocate for your best interests, and work to get you the most favourable deal for your situation. When selling on your own, your lack of experience in negotiating offers could mean being on the losing end of that deal.
The conditions, clauses, terms, dates and times can start to get overwhelming. By pulling from the experience of past transactions, a real estate agent will have a plethora of options available to try and get the deal to work out in your favour. Sure you can go on all kinds of FSBO Facebook Groups and websites to get information and trade tips, but for every one or two great tips, I’ve probably seen 15x as many comments/replies/posts that are giving the kind of advice that would have the seller in court. Which brings me to the next topic…
4. Legal Complexities
Selling your home on your own can introduce you to a mix of legal complexities that may go unnoticed without the experience and expertise of a good real estate agent. These transactions involve a number of legal documents, contracts, and disclosures, all of which must be handled with care. There are a lot of legal intricacies are designed to protect both the buyer and the seller, but if you aren’t working with an agent on your end of things, the deal can get lopsided real quick. One of my main goals when I negotiate on behalf of my clients is to make sure that the that the transaction is compliant with the law, and you are covered from start to finish.
There are so many legal cases you can look up that highlight some of the problems and oversights that can happen without proper guidance. One small mistake could have you paying more in legal fees than you saved in commissions! That would suck to go through all that effort to try and save money, and end up paying thousands more if any legal complications come up.
5. Time and Effort
Despite what the comments section on the internet will tell you, selling your home is an undertaking that demands a significant amount of time and effort. When you opt to sell your home on your own, you’re essentially taking on the role of a listing agent and showing agent, which can be a time-consuming and demands an “always on” approach.
Showings and open houses can also be draining. Coordinating schedules with potential buyers, conducting tours, and answering their questions can be time-consuming. If you’re not experienced in this, it’s going be challenging to showcase your home’s features effectively.
6. Thinking You Will Save a lot of Money
No agents means no commission, so that should mean a lot of money saved right? Well… maybe not. Anytime I’ve done a study on the sale prices of FSBO properties, and the comparable sales on the MLS, it never bodes well for our FSBO friends. The properties listed on the MLS routinely out perform their FSBO counterparts in list price to sale price ratio, and they spend less days on market as well.
Now there’s an arguement that a good agent should be able to make up the difference of the commission they are charging by producing a higher sales price for the seller along with the rest of the benefits that I’ve covered above. When a seller goes at it alone and ends up in a situation they weren’t prepared for, those commission savings can get eaten up very quickly.
That being said, commission is always negotiable. Talk to your agent about their expectations as well as your own. It doesn’t have to be a scary conversation, in fact you can test their negotiation skills right off the hop by having this discussion with them. After talking about what services you expect from the agent, you should both arrive at a commission number you are comfortable to move forward at.
If You Want to Sell Your Home On Your Own, Give Me a Call First.
Seriously, we need to talk.
Even in a very hot sellers market where it seems like all it will take is a sign in the lawn to get the job done, there is much more at stake. While the idea of selling your home on your own may seem appealing, it’s important to consider the disadvantages that come with this approach. Limited exposure, pricing challenges, negotiation expertise, legal complexities, and the substantial time and effort required are all intangible values that can eat into any potential savings from not paying out a seller’s commission.
