If you’re thinking about selling your home - you might have considered selling your home privately, bypassing a realtor and a buyer’s agent.
Why spend any extra money if I can do it by myself, right? The reality is that it’s rarely that simple.
While on the surface it might seem like you're saving money, there are some significant cons when it comes to selling privately as an owner.
Today we’re going to go over some of the major pros and cons of selling your home privately and help you figure out what makes sense.
Related: My Seller won’t close - now what?
Pros for selling your home privately
Here are a few benefits that come with selling privately:
Making more money
Selling a house privately means the seller can keep more money from the sale by avoiding commissions paid to a Real Estate Agent. When you hire an agent, they receive a commission based on the property's value, which could amount to thousands or even tens of thousands of dollars. However, selling on your own means you have to handle everything related to the sale without assistance. While it may sound attractive, there could be hidden costs that might not be apparent without representation.
Buyers seeking you out
If you happen to live in a high-traffic or desirable area, you might have buyers seeking you out. If the market is known as a "seller's market" (where supply outstrips demand), it might seem appealing to sell privately. (This assumes that the buyer delivers on what they promise).
Cons for selling your home privately
Here are a few potential problems and roadblocks associated with selling privately:
Taking on lots of paperwork, inspections, and repairs
Getting your house up to code and making sure it passes inspection can be a stressful process, especially if you’re not aware of what needs to be done.
Each province will have different requirements for disclosure and it will be your responsibility to make sure all information is accurately presented to the buyer, or otherwise, you can be held liable for misrepresentation.
When you use a Real Estate agent and a Real Estate lawyer in your transaction, they both carry professional liability insurance and are licensed/governed by regulatory bodies. This means that if anything were to go sideways in your transaction either during the sale or afterwards and your buyer chooses to go to court and win a claim against you for misrepresenting the property, you likely will have to pay out-of-pocket.
Has the legal due diligence been done?
It’s one thing for paperwork to be overwhelming, it’s far more serious opening yourself up to liability. If you haven’t taken the proper steps to disclose and review all relevant information, you could be sued by the buyer.
Whether you are using a Real Estate agent, or decide to sell privately, engaging a Real Estate lawyer is essential in ensuring your agreements are valid and your interests are property represented.
Bad negotiating means a lower selling price
When assessing the total amount of money you might save by not hiring representation, also consider that you might not get a higher asking price on your own. Unless you have years of experience in the housing market you’ll be better off having legal representation to protect your interests.
It’s also worth noting that with professional representation comes a network and reputation that can be leveraged in helping find the right buyer.
Amateur marketing means more time on the market
Selling privately means only being able to market and sell on pages listed for private selling. This will reduce access to more qualified buyers and can greatly reduce your exposure to the market.
Not only will you be managing all the communication, but not getting your property in front of qualified buyers means it could take significantly longer for the sale to close.
The longer your property sits on the market, the less appealing it can become to potential buyers. They could start speculating that there's something wrong with the property or attract the wrong buyers who are looking for a potential big discount on a property.
Attracting the wrong kind of buyers
Some buyers see a lack of representation as an opportunity for a bargain. Getting subpar offers means waiting even longer for the right buyer to make an offer, or compromising and selling the property below market value.
In either case, you’re likely not coming out ahead.
Qualifying the buyer
Let’s say you do manage to find a buyer while selling privately - what do you know about them? Have they qualified for a mortgage? Are they paying cash? There's also the possibility of encountering some bad actors out there, which may open yourself up to fraud, liability, and a longer closing period if you haven’t properly qualified for their background.
There’s a huge cost to dealing with poorly qualified buyers. A Real Estate agent and your Real Estate lawyer will help you preemptively avoid those problems.
Staging an open house
On a side note, consider the safety of staging an open house:
- Where did you advertise your open house?
- Are you going to be alone at your property when strangers come by?
- Are you keeping track of who came by and at what time?
- Have you accounted for your valuables?
While these may seem insignificant, these factors are all important in shielding you from liability with having guests in your home.
Ultimately, what makes sense for you?
While there may be some cases where selling privately can work, for the vast majority of homeowners, having representation for selling your property is recommended. If you choose not to go with a Real Estate agent, at the very least, make sure you hire a strong Real Estate lawyer to help facilitate the agreement.
The fact of the matter is your home is likely your largest asset, and one of the most important transactions to do properly. Making a mistake in the selling process is something that should be avoided.
This way you won’t open yourself up to liability, fraud, and unnecessarily long closes. Unless you have the expertise to oversee a private sale - hire a real estate lawyer and close your sale professionally.