Selling a home by yourself means more money in your pocket, but it’s a lot of hard work and there are some things to think about.
Whenever I write about why you should use a real estate agent to sell your home, the mail pours in. I’m sure it will this week, too.
I am a real estate lawyer and write courses and teach industry players how to do their jobs more professionally and ethically. I also believe that in many cases you will be better protected and make more money selling your house if you use an agent. Not always, but in many cases.
Here’s why I think that:
You don’t have to pay upfront: Do-it-Yourself marketing companies are not real estate agents. You usually pay $1,000-to- $2,000 up front, for pictures, videos and to have your home listed on the MLS system. However, you get no money back if your home doesn’t sell. With a real estate agent, if your home doesn’t sell, you pay nothing, even though the agent may have spent a lot of time marketing and using all of their own and their company contacts to sell your home.
Abidding war is unlikely: Bidding wars are the norm in the GTA and other parts of Ontario. In virtually all cases, the home is sold by a real estate agent. The reason is that it takes experience to price the home properly. Second, the process is fair because no one knows what anyone else is bidding. With a private seller, there is no duty of confidentiality, so the seller can tell one buyer what another buyer is bidding. Buyers do not trust the process so there is no bidding war.
You negotiate on your own: When you do it yourself, it is difficult to know what a fair price is for your home. You might have to pay an appraiser to find out. When a buyer hears that you are saving commission, they will want to split the savings. So you don’t get all the commission savings and you also have to negotiate with a buyer who is likely represented by a real estate agent. This agent will use all their experience to figure out how low you will go, while giving nothing away about their own buyer.
Not knowing your obligations: Sellers cannot rely on the term “Buyer Beware.” You have to disclose problems with your home and you cannot hide or cover up anything. Otherwise, you can still be sued after closing. Who wants a court fight long after you move?
Lenders are more cautious when they see a private deal: I have seen deals collapse this way. In one case, the lender sent their own appraiser because they were concerned the buyer paid too much money. The appraiser agreed and the buyer’s loan commitment was cancelled. The deal died.
In another case, the seller was worried the buyers did not have proper financing. They wanted more proof about the buyer’s financial situation than the buyer was willing to give. Lawyers became involved when things could not be worked out amicably. When buyers are represented by agents, they are usually pre-qualified in advance so the seller can have comfort that they will have the money available to close the deal on time.
When you’re out for a walk this weekend have a look at the For Sale signs and see how many are represented by realtors. There’s a reason for that.
By all means, try and sell your house on your own, just beware that it’s not as easy as it looks.
Mark Weisleder is a Toronto real estate lawyer. Contact him at firstname.lastname@example.org