Selling Privately?

A big reason why people choose to sell their home privately is to save on real estate fees, commonly known as commission. If you’re reading this article, you might be contemplating this for yourself. After all, you’ve spent a number of years in your home, making improvements, perhaps spending vast amounts of money on it, and you believe it will sell quickly as there would be many people interested in your property. Perhaps have noticed in your neighbourhood the prices going up, up up, and you have a pretty good idea of what your home may be worth.

But, Those Commissions!

The idea of paying both the Listing Agent and the Selling Agent at Closing feels daunting. Spending that kind of money on Realtor fees seems wrong, and feels counterintuitive when you are trying to capitalize on the equity you’ve earned on your biggest investment – your home.

You Decide You are Going to Sell Privately

So, you go to Canadian Tire and pick up a For Sale by Owner sign. You have all the details of your home ready, and you get it from your municipality website or from the previous MLS sheet from when you bought. You have a plan. You will take some photos and then go on Facebook Marketplace, Kijiji or similar site and post that you are offering your home for sale. Members of the public will excitedly contact you – you have what they are looking for! Perfect! The reaction is even better than you had anticipated. This is going to be great! You will sell your house quickly, and you won’t have to pay Real Estate Commissions to anyone, in exchange for doing the work yourself.

Except, You Haven’t Considered the Pitfalls

While selling your own home appears easy (after all, you’ve seen your Realtor do it many times!), chances are, there are lots of things you may not have even considered. There’s a saying in real estate: you don’t know what you don’t know. You may feel confident about what you are doing, but the truth is, there’s a lot going on behind the scenes when selling a home. This article attempts to touch on just some of the things you may not have considered, and could actually jeopardize you.

1.) Your “buyers” may be unqualified. When you post an ad on Social media or on websites, you are exposing your home to potential buyers, but the key word here is potential. Do you know the difference between a pre-qualified buyer, and one that has actually been pre-approved? How do you know they have a job, or even have the money to buy your home? If you don’t know the answers to these questions, you are exposing your home and its contents to strangers (yes, strangers!) that may not be able to buy your home. Do you want people going through your home, when there is little to zero chance they have the ability to buy it?

2.) You can be sued. In organized real estate, Realtors act as fiduciaries, or legal representatives for their clients. This means we have a duty to protect the best interest of our clients, and also must fairly represent the property, by disclosing anything that might affect the buyer’s ability or willingness to buy.

Why disclose? Disclosing material latent (hidden) defects in a property actually protects you from a possible lawsuit later on. It also builds trust between you and the buyer, so while it might appear to place you at a disadvantage, it actually protects you from complex legal issues later on.

3) You do not have the training to draft a purchase contract. Are you familiar with the laws of residential real estate or the Alberta Real Estate Act? Do you know how to write a legal, enforceable contract? Do you know exactly what conditions, terms and phrases that need to be in there to protect you? A lot of people think that they will just get their lawyer to write one up, but what they don’t know is, they don’t actually do that for a living, and many will refuse to write a contract up. Most real estate lawyers will review a contract, but they don’t actually draft one. That is up to you. And obtaining a blank copy of a Real Estate Purchase Contract is actually a violation of the Rules, as that template was created for our members.

4) You may not have the information necessary to price your own home. With the advent of AI and information technology, there are many tools at your fingertips for figuring out the potential market value of your home. The problem with these tools, however, is they are primarily based on the information they have access to, what we call “open data”. Often, when you are determining a price estimate of your home online, you have no way of know HOW that price / value was derived. What recent solds did they use to determine that value? Often it does not tell you.

I recently had a situation where a client was going to sell his home privately based on the price that an AI tool told him his house was worth. When I did my Market Evaluation, I told him his house was worth much more than that and explained why. He was shocked at my number and was skeptical, but we actually received multiple offers and it ended up selling $60,000 above what he thought his house was worth! Needless to say, he was more than happy to pay the real estate commissions after that! And I also handled all the details from start to finish.

Another situation we come across is For Sale By Owners that offer their home at an inflated price. If you are proud of your home, have spent a lot of time in it, and have made improvements, it is easy to price your own home too high. When I sell my own home, I ask my colleagues for their opinion as naturally I am going to be biased about my own house. A lot of sellers believe ( incorrectly!) that the more they ask for their property, the more they will get for their home. Nothing could be further from the truth. This is your home, it is not a garage sale! It is important that you can justify your price with real information so that you can negotiate a deal that works for you. Keep in mind that most MLS sales have commissions already built into the price, so if a buyer has to do more work to buy your home (especially if they are unrepresented), then that will reflect the price offered. I often hear Sellers say their price is what the “want” for their house, but they have not done their homework as to what it is actually worth.

5) The MLS is a powerful way to expose yourself to the maximum number of Buyers. Even though I hold a residential real estate license, I still put my properties on the MLS, and pay the real estate fee to the Selling Agent. Why? Because the power of the MLS is the power of maximum exposure to pre-screened buyers. The more Buyers that know about my home through realtor.ca, our local MLS (Paragon) system, and other realtor’s websites through data sharing, the more likely I will get a great offer for my home, and if it’s priced right, possible multiple offers and a quick sale with the fewest number of contingencies possible. Isn’t that what most people want when selling their home?

These are just SOME of the things to consider if you are thinking of Selling your home on your own. You may think you are saving money, but the opposite may be true, and a great real estate agent with experience can help you navigate what could be the most important transaction of your life.

If you have any questions, feel free to contact me for a no-obligation Consultation. Contact me (HERE) to set up a time to sit down and discuss a plan that is tailor-made for YOU!