When the time comes to sell your home, you may be tempted to sell it yourself. There is primarily only one reason for doing so, and that is saving on a real estate commission. Based on our personal and professional experience and observation, there are some general disadvantages of selling a home yourself, as opposed to using a carefully selected and experienced REALTOR.
The following remarks are not intended to dissuade you from attempting to sell your own home, but to place the process in realistic perspective. In the end, you will have to balance the benefits and disadvantages of course, and decide what is best for you.
Emotional Roller Coaster
Many people, especially with their own home, tend to get emotionally involved in the sale process because of the direct interaction with the prospective purchasers. For example, frustration can be experienced due to rejection of the house, negative comments or fault-finding, people whose personality you don’t like, or people who negotiate toughly on the price. These one-on-one direct dynamics or comments can sometimes be taken personally and therefore be a cause of stress.
You will have to show your property at times that may not necessarily be convenient to you. In addition, you are going to be spending time preparing the ad copy and staying at home to respond to telephone calls or people knocking on the door.
Costs include the entire daily or weekly newspapers classified and/or box ads, as well as a lawn sign. You would pay for these yourself. In addition, you may not know what specific types of advertising would be appropriate for your type of property; how to write ad copy that would grab the attention of a reader and prospective purchaser. Further, your personal advertising will never reach the number of buyers that we as agents can reach as we total more than 1200 members in the Real Estate Board of Ottawa.
The prospective purchaser may supply you with his own agreement of purchase and sale. This contract may have clauses and other terms in it that could be legally risky, unenforceable, unfair, or otherwise not beneficial to you. You may not recognize these potential problems or risks.
Lack of Familiarity
You may not have a clear or objective idea of exactly what a similar property in your market is selling for, or the state of the real estate market at that point in time. This can place you at a distinct disadvantage. You may eventually sell your property, but only after several price reductions and after a long period of time. Naturally, of course, this depends on the market and the nature of your property. Conversely, you could have a property with unique features or potential that could justify a higher sale price than you might realize.
You would not generally know the art of pre-screening prospects in terms of questions to ask them over the phone. The end result is that you could waste your time talking to people over the phone or showing them through the house, who are not and never will be serious prospects.
You may think the offer is the best offer from that prospective purchaser, or any purchaser, and therefore may accept it. That price may not be the best price at all. You may have started too low or too high for your initial asking price, based on emotion or needs, not reality; you may be inexperienced in applying real estate negotiating skills or you may be subjected to effective closing skills on the part of the prospective purchaser.
Lack of Skills
This problem was referred to in the previous point. You may lack any negotiating or sales skills and feel very uncomfortable or anxious in a negotiating context. As a consequence, the price and terms you eventually settle for may be as attractive as they may otherwise could be.
It is not uncommon for the prospective purchaser to determine what the fair market value is and then ask to have an additional discount equal to the real estate commission you are saving. The Primary reason why prospective purchasers are attracted to a “For Sale by Owner” is the prospect listed with a REALTOR, due to the commission otherwise built into the sale price.
The primary reason why you are selling the property yourself is to save the full amount of any commission otherwise payable. Hence the problem. A compromise may be possible whereby the price is further reduced by a percentage of the commission saved. Again, in practical terms, it is normally an illusion to think that you will save the full or even a substantial amount of the commission. Would you not have a lingering doubt that you could have netted more if it was listed with a REALTOR?
By Douglas A. Gray, LL.B.
Douglas is a Vancouver-based recently retired real estate lawyer and one of Canada’s foremost authorities on real estate education. Mr. Gray’s Syndicated column appears in the: Vancouver Sun, Calgary Herald, Edmonton Journal
Windsor Star, Hamilton Spectator