Occasionally, one can see "For Sale By Owner" signs, and some owners think that selling their own home will not only save them money, but believe they have an advantage over the sellers that have their home listed by a reputable Real Estate sales professional. Before you decide to take on this very important and legally complicated process…remember not even most Real Estate Lawyer's recommend selling your own home yourself in today's market. Here are a few of the reasons why:
1. You are limiting your exposure to potential buyers (less than 10% of what a good real estate broker will generate) which theoretically means your home will take ten to fifteen times longer to sell on the market.
2. The longer a home is on the market the lower the selling price is. Why? Because most buyers think that if the home has not sold after this long... there must be something wrong with the home.
3. The selling/buying process begins AFTER the buyer leaves your home. Most sellers think that all it takes is for someone to see their home, fall in love with the great decor... and the offer automatically will follow. Remember that the buying process begins after they leave your home. If a real estate sales representative does not represent the buyer, and they are looking on their own…they usually leave the home and start to talk themselves out of the buying process. Real estate professionals are trained on how to overcome buyers remorse--a very common occurrence.
4. Because of the limited exposure you will very likely end up with a lower selling price. Remember, in order to generate the highest price possible for your home… selling means exposure. You need the maximum exposure possible, to generate the highest price possible.
5. Most buyers find it extremely awkward to negotiate or even to talk directly with sellers and therefore avoid FSBO properties.
6. Lack of negotiating experience and lack of pertinent information often will result in a lower selling price, or worse yet, a bungled contract and possible lawsuits.
7. The majority of qualified buyers are working with experienced real estate professionals.
8. Many serious buyers will pass by a FSBO (For Sale By Owner) home merely because they recognize that it is not in the real estate mainstream, this can some times make them wary.
9. As most local buyers now retain an experienced real estate sales person to represent them as their buyer-agency, you will probably be negotiating against an experienced professional.
10. Expected savings in broker's fees will also be greatly reduced if you offer a selling commission to entice real estate sales representatives to bring potential buyers.
11. If you are planning to use a Lawyer to help you negotiate the offer, then your lawyer's fees will be considerably higher.
12. Only real estate sales representatives have access to the up-to-date market information. News reports cannot approach the timeliness or specificity available to real estate sales people. Further, real estate sales representatives are involved in home sales much more frequently than the average homeowner is. This familiarity leads to a degree of expertise that provides an edge on negotiating and successful selling.
13. You only pay the commission to the real estate broker, if they successfully sell your home.
14. Accepting an offer is one thing, ensuring a safe and successful closing is quite another. Real estate transactions usually always have problems on closing. At times, expecting the Buyers and Sellers Lawyer's to fight it out or resolve the problems, can sometimes mean the deal is lost. This is the time that your experienced real estate professional, can be the most important. Your Real Estate professional can act as a great mediator. Lawyers MUST act only on their client's instructions and are not paid to negotiate.
Here is a list of the main expenses typically incurred by a seller of residential property.
1. Legal fees: Lawyers’ fees vary. It is an issue for each seller to raise at the time he/she hires the lawyer to close the deal.
2. Mortgage Discharge Fee: If you have a mortgage, the buyer will probably not be interested in assuming it. Therefore, you will need your mortgage company to accept an early discharge of the mortgage. Mortgage companies usually charge a discharge fee of three months interest on the outstanding principal. Depending upon the size of the mortgage, this can amount to thousands of dollars. If you are buying another home, the mortgage company may be prepared to waive the fee as long as you take a mortgage on your new property with the same company. This is an issue that you should discuss with your mortgage company before you sell.
3. Disbursements: As part of the closing process, your lawyer will incur some out-of-pocket expenses that you will have to pay. You should get an estimate of these expenses when you hire your lawyer.
4. Adjustments: The annual real estate taxes will be apportioned to the seller and the buyer as of the date of closing. If you have not yet paid the property taxes, you will be billed for your pro rata share. If you have pre-paid the taxes, the buyer will reimburse you for the amount you paid for the time after closing. If the home has oil heating, you will be reimbursed for the value of the oil in the storage tank.
5. Moving Costs: Moving costs vary depending upon the distance moved and the weight and volume of possessions moved. It is wise to get an estimate from more than one mover. It is also wise to book your mover well in advance of closing.
6. Insurance Policies: You should contact your property insurer to discuss your moving date, and to arrange property insurance for your new home.
7. Commission: The full commission that you have agreed to pay your Realtor is due and payable on closing. You must also pay HST on the commission.