Budgeting, saving and investing for a brighter financial future

Should you sell your own home?

By Helen Burnett-Nichols,

Comments (6)

Man and woman looking at paperwork for selling their home privatelyWhen selling your home, you’re normally faced with two options: You can enlist the services of a real estate agent, or you can skip the realtor, put a sign on your lawn and try to do it yourself.

Mark Haak, a graphic designer based in Brantford, Ont., faced this decision three years ago. After having used a realtor for previous home purchases and sales, he considered his options and decided to try to sell his home privately.

“We were fairly well-educated on what’s involved in working with a realtor and we decided we would try to sell privately to see if we could save some money in commission,” he says.

While he sold his house within a few weeks of listing and was pleased with the process overall, Haak says there are disadvantages as well as advantages to selling privately. The process is not suitable for every seller or every property, he says.

The potential benefits include:

  • Cost savings. Selling your home privately means you are saving the commission you would ordinarily pay to a realtor. Commissions can vary and are negotiable. According to the Real Estate Council of Alberta, they can be either based on a percentage of the sale price, a flat fee, a fee for service, or a combination of these. A commission of 5% on a $200,000 house, for example, would result in a payment of $10,000 plus GST/HST, split between the buyer’s and seller’s agents. In contrast, several “for sale by owner” websites charge a flat fee.
  • Availability of resources. When Haak decided to sell his house privately, he used a private-sale real estate network that provided him with a multiple listing service, signs, real estate-savvy staff to help with the sale and answer his questions about open houses and promoting his house, an appraisal and standard forms.Consulting with a real estate lawyer or clerk before listing can also be beneficial, says Sheilagh O’Sullivan, a legal assistant in Alliston, Ont., who has also bought and sold several homes privately. She says lawyers can also provide detailed information and checklists for the critically important steps involved in selling your own house.

But possible pitfalls are:

  • The time factor. With realtors involved, says Haak, a seller will often get a phone call asking whether a prospective buyer can come for a showing on a certain day, and then all the seller has to do is leave the house for a few hours. When selling your house privately, screening calls, booking and conducting showings and answering questions all become your responsibility.“If you really need to sell, doing it yourself is more than just throwing a line into the water to see if you’re going to catch something,” says O’Sullivan. “You need to understand that this is a job, in and of itself, so you need to have the time available and commit to doing the legwork.”
  • Hidden expenses. When you sell a home yourself, says O’Sullivan, all marketing expenses come out of your pocket. On the legal side, she says, having a lawyer deal with a private sale versus one that is going through a realtor means that the lawyer has to put extra time in on the paperwork to make sure that everything is in order. This could mean higher legal fees for a private seller.Also, when both parties in a real estate transaction are represented by agents, the seller generally pays both agents’ commissions. Haak says he was surprised when he sold his home privately to learn that as the seller, he would still be expected to pay the buyer’s agent’s commission, or negotiate some kind of arrangement with that agent.“That kind of threw us for a loop, but you know, it made sense as well,” he says. “We had decided that obviously we wanted to sell the house and if the agent was bringing a buyer to us, we’d be willing to pay for her commission out of the proceeds from the sale.”

Other considerations:

  • Know your own property. Before listing a property yourself and inviting prospective buyers in, O’Sullivan says it is critical that you ensure you have full information on the property, including all relevant documentation. This may include having your water tested, your property surveyed or your title searched. A title search will make sure that everything that could block the title transfer – such as an outstanding mortgage or lien – has been discharged.
  • Location. Selling privately may be more straightforward if your home is in a town rather than in the country, as long as all of the legal components are in place, says O’Sullivan. Such properties have usually already been surveyed and are on public utilities.

Ultimately, says Haak, the decision to sell privately comes down to your comfort level with negotiations and your understanding of the process itself. This is not something he would recommend to a first-time buyer, he says.

“It’s not a cut-and-dried thing where I would say, ‘Yeah, everybody should go private or nobody should go private,’” he says. “I think it really depends on the actual individual and the particular property.”

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Denise MacDonell on

This is a very balanced article, and I am a real estate agent! It presented the pitfalls very realistically, and came to a reasonable conclusion – that private selling works well for some, but not all. I especially liked Mr. Haak’s honesty in revealing that he was surprised he would likely have to pay a buyer’s agent commission. I have sold clients into private sales, on more than a few occasions. It has always gone well, I treat people fairly and ethically, and most often private sellers are agreeable to paying me a commission.

My one concern with some of the private sale websites is that they aren’t clear with folks, up front, how much it will cost in the end.

Regarding commissions, standard full-service commission now is 5%, and most of us will negotiate commission with a seller. Buyers do not pay to use a realtor.

The world of real estate has changed. Buyers and sellers have a lot of information at their fingertips, and some real estate sales people are uncomfortable with that because that’s not the way it used to be. That’s too bad, as informed clients are a delight to work with. People should interview potential agents and find the best fit – and if you decide to go it alone, please engage a lawyer early, and make your first conversation be about disclosure. Anything you say about your property, or don’t say, could come back to haunt you after the new owner takes possession.

cornelius bergen on

We just sold our house through a real estate sales outfit. It is costly to the buyer. If you study the market and come to a price that your house is on the current market by looking into houses like yours on the market and then advertise the price as without any commissions. And then be patient to sell…and be willing to wait after advertising all means possible… The first calls will be agents wanting to sell your house charging up to 7% commission … If you list, enquire of different agencies how much they charge, then choose one of many agencies doing a lot of selling. Beware of listing for more than two months…

Nicole on

As a growing number of people are choosing to sell their homes privately, I’ve found an increasing number of affordable marketing tools available. I’ve used HomeWebo twice in the past (I think it only cost me around $40 and maybe an hour to set up.) Then you get your own website to direct people to where they can see your home details, pictures, links to other social media, statistics, etc.

kirsten burnett on

All very valid points about the process and dealings of selling one’s house. But at a time with so much economic instability one must think to themselves is it even worth it to sell. The market is already overflowing with properties and you may not get what your house is worth. Whereas if you are a first time buyer you have such a vast quantity to pick from and you can set your prices as people have just been sitting with their houses on the market and will take just about anything. It is a crazy time to be in the real estate industry.

DaveDineen on

I like this article.
My wife and I have sold four houses privately, as well as bought three privately, so we’re quite sure that this is a good way to go … for some people, some of the time. We wouldn’t try to sell ourselves without really knowing the current state of the local real estate market, for instance.
Our average time to sell: seven days. For both buying and selling, we’ve even developed and executed tightly-targeted direct marketing campaigns. For instance, we thought it’d be tough to sell our home in a small village, as houses on our street had been for sale for up to a year. We sold in half a day!
You gotta know what you’re doing, because there’s no agent to tell you what to do.
Interestingly, the biggest amount of work — readying (or ‘staging’) your place so that it shows to best advantage, and keeping your house so tidy and clean that it’s never more than 30 minutes from being ready to show — is no different whether you’re selling yourself or dealing with the best real estate agent in town.

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