How To Guide: For Sale by Owner (a.k.a. Private Home Sales)
If you had no experience in cutting hair, you’d never just pick up a pair scissors and give yourself a new do, right? Well when it comes to employing a real estate agent to help sell your home, more and more people are opting for the self-serve approach.
The private sale of homes is becoming fairly common with advances in technology and an increase in For Sale By Owner (FSBO) companies. With a few clicks of a mouse, you can list your home on several websites that will give you exposure to thousands of homebuyers.
If you succeed in making the sale, you’ll save yourself real estate commissions of 3-5% of the purchase price of your home. For example, a $200,000 house sold at a 5% commission rate is a $10,000 fee! A big difference when compared to the cost of services like Propertyguys.com or Comfree.com at $250-$1,500.
How For Sale by Owner Works
Typically, private sellers will use one of the many For Sale By Owner network sites, such as Comfree.com, PropertySold.ca or PropertyGuys.com. These companies will offer different service packages to help you sell your home. Basic packages range from $150-$500, and include exposure through their website, lawn signs, and a personalized consultation with sales rep. The more premium packages go from $500-$1,500 for additional advertising support (i.e. in local newspapers, or real estate magazines), and they perform a competitive market analysis to help you price your property.
This system also weighs heavily on the interaction between the seller and their lawyer. A lawyer is best equipped to handle situations surrounding mitigation of fraud or any other legal concerns.
Thinking of Selling your Home Privately?
When it comes to deciding whether or not to try and sell your home without the services of a real estate expert, consider the following:
The Pros
- You could save thousands of dollars in commission fees
- Maintain control over all aspects of the sale
- Freedom to show the house at your own convenience and hold open houses when it best suits you
- Highlight all your home has to offer in your own words; don’t depend on someone who doesn’t know your house to convey the message to potential buyers
- More buyers are web savvy and aware of private sales websites, as well as online auction and free classified sites
- If you pass some of the savings onto the buyer you open up your reach to buyers at lower price points
The Cons
- Potential buyers may not be finding your home
- Real estate agents know the market and what price points will sell, as well as any upgrades that will draw buyers into your home
- Upfront advertising costs, with no guarantee of visibility
- Potential buyers must contact you; so you may need to make yourself more accessible
- Nobody to draw up contracts or advise you on negotiating
- You may not be the best person to show your home, because of your personal attachment to it, and you may be unwilling to talk about its shortcomings in fear of losing a sale
- You may need to negotiate a commission for the real estate agent of a potential buyer.
The Safety of an Agent
For many, a living, breathing real estate agent is the most comfortable option when making such a significant transaction. Agents offer exposure through their network of contacts and on websites like the popular MLS.ca and Remax.ca.
These trained professionals are also knowledgeable about your local housing market and can give advice on things like the best time to list your property and how much to sell it for. They can guide you through the process and negotiate the sale on your behalf.
Ultimately, only you can make the decision if the service of an agent is worth the fee.
