For Sale By Owner: Costs vs. Savings

For Sale By Owner: Costs vs. Savings

Many homeowners believe that they can maximize their profit on a home sale by eliminating the real estate agent’s commission and selling the home themselves. Who wouldn’t like a few thousand dollars more in their pocket after closing?

But saving that commission may have some hidden costs that you haven’t considered.

The response to your initial advertising may be encouraging. The investor who offers “cash today” shows up with a stack of paperwork consisting of promissory notes and contracts and a few twenties (the aforementioned cash)as a down payment on an “owner financed” deal. The “young family looking for our first home” declares the place “PERFECT!” then confides that they are credit challenged and want to simply “take over” your mortgage payments. The classy professional turns out to be a real estate agent looking for a listing. Open house visitors will include nosy neighbors, more wannabe investors looking for giveaway prices, and maybe even a criminal or two looking for easy pickings.

What you probably won’t find in the mix is a qualified serious buyer. Why? Because when most qualified buyers are serious, they are working with a real estate agent.

Working with an agent assures buyers they’re getting a quality home at a reasonable price. They don’t have to worry about unforeseen legal hassles or problems at closing, because inspections, paperwork, and taxes are included in the package.

And you may be surprised to learn that the package deal that attracts buyers can have profitable surprises for sellers, too.

Is your home priced right? You can’t just invent a selling price. If it’s too high, you’ll never find a buyer. It it’s too low, you may be missing out on thousands of dollars in extra profit. A qualified, knowledgeable real estate agent can help determine the best asking price from the start. That’s especially important, since a house that’s on the market too long gains a bad reputation as buyers believe “there’s a reason no one else has wanted it.”

By pricing the home right and having qualified buyers waiting in the wings, an agent can save time in the selling process. In a falling market, a few months’ delay can have devastating financial consequences.

If selling your home yourself without an agent, there are several expenses you will have to pay up front. Many of these are either included in the selling package or settled at closing if you have an agent. These include advertising costs, document preparation, title search, courier services, inspections, and legal fees.

Finally, taking the bargain route of selling your home yourself can result in serious legal worries in the future. If the furnace quits working or the roof starts to leak, what will you do if the buyer threatens to sue you?

Selling your home yourself without an agent may appear to lead to significant savings in commissions. But what will those savings cost you in time, peace of mind, and even money? A good agent may be well worth the commission.

Duane Bell is a real estate lawyer who has seen many For Sale By Owner deals go bad quickly. He recommends Low Commission Realtor the leading 1% commission real estate service in the Greater Toronto Area.

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