DIY: How to sell your own home
by Andrew Willink
25 June 2008
Thanks to rising petrol prices, grocery bills and mortgage costs, the housing market has suffered a downturn in recent months. So if you’re thinking of selling, you might be thinking of ways to save money. Selling privately can save you a bundle, but it also has some disadvantages that you should be aware of. Selling your home privately is not for everyone. If you are thinking of the best way to sell your home, consider the pros and cons of doing it yourself and going through a real estate agent.
DIY Pros:
Eliminate the middleman
By selling privately, you’re not dealing with the middleman i.e. real estate agent. When you sell, you pocket the full sale price. There’s no percentage of the sale price or flat fee owing to the real estate agent. You will be thousands of dollars better off. Estate agent commission fees start at around 3% and upwards. On a $400,000 home you could be saving $12,000 and this still doesn’t include the other fees you could pocket by doing your own marketing ($2000 to $3000).
The price is right
The majority of people choose to sell their property through an estate agent due to the simple fact of convenience and inexperience in the field. Making a conscious decision to leave it to the experts is a wise choice as they will sell your house for a record price; or are they? According to research conducted by Steven Levitt, professor of Economics, Chicago University, a real-estate agent will keep his own house for sale for ten days longer (waiting for better offers) than their clients’ houses. Not only will an estate agent sell their own home for a better price, but it is normally at an average of $10,000(USD) more than what would be fetched for you, the client.
In light of this point, it is important to remember that a slice of your property goes into your agent’s wages so they will also do what is in their best interests. Leaving your property on the market for longer requires more work from your agent. And in their eyes, it may not be worth the hassle. Using the example above, for every $10,000 extra you receive on your $400,000 property they may only receive an extra $300. That’s not much money for a whole lot of extra work. So, chances are you will be persuaded to accept the first offer you get as this works to your agents advantage, but not yours. Whilst $300 might not be worth an extra months work, selling your own home and having an extra $10,000 to bank could definitely be worth your time and effort.
You control property inspections
No more frantic cleanups, as the real estate agent walks in the front gate with prospective buyers in tow. One of the pluses in selling privately is that you make property inspection times that suit you. That way, your home can always be presented in its best light and you, as the owner, are the best person to talk about the home and its attributes to interested parties.
You run the show
Selling your own home means taking control of every aspect of the sale. Without a real estate agent calling the shots, you have more room to arrange and negotiate any fees and charges that are associated with advertising your property. Choose your own interior photographer, arrange a house valuation and auctioneer at a fraction of the price you would be charged by an estate agent. Not only are you able to organise and cut back on the expenses involved in the sale, but you can rest assured that you won’t be unexpectedly hit by marketing fees out of your budget.
No pressure
In a DIY home sell you would be both the vendor and customer meaning that you will be spared from any estate agent persuasion tactics. You will never have to feel that you are being ’encouraged’ to accept a certain price, even though it is ridiculously low. There are no commission fees to be deducted here so you will reap all the benefits of the sale once the hammer drops.
DIY Cons:
Advertising can be an expensive, drawn-out process
Placing ads in newspapers, magazines or online can cost many hundreds, if not thousands of dollars. If your house doesn’t sell immediately, you could be forking out a lot of cash just to keep it in the public eye. Be wary of advertising your house privately for too long if you are not receiving much interest. There may be things you need to change about the house in order to make it more attractive to potential buyers. Just by advertising for months on end doesn’t guarantee you a sale.
Leave it to the experts
Your house may be in perfect condition to showcase. But to an agent it could be the exact opposite. There could be several key things that could dramatically increase the value of your home if they were to be repaired. By using a real estate agent you are employing an expert who knows the market inside and out. They will know what buyers are looking for and the best features to emphasise. Whereas if you were to DIY, you could essentially be missing out on this wealth of information and minimising your chances of a higher sale.
Poor price negotiation could be costly
If you’re not the negotiating type, selling your home privately may not be for you. It is inevitable that potential buyers will want to negotiate on price. Negotiating the right price is not as easy as it might seem. You need to be flexible, but at the same time you should not go lower than what the home is worth. Market trends need to be considered, and you’ll need to do research on current values in your area so you can get an idea of the true value of your home. If your negotiating skills are not up to par, it may end up costing you more than a real estate agent’s fee in the long run.
Less exposure to potential buyers
When selling through a real estate agent, advertising avenues are generally more widespread and many of the costs are absorbed by the agent or factored into their costs. Most real estate agents have their own websites so doing a DIY home sell means that your home might not gain this additional exposure online. There is a plus side though. Websites such as DIYsell.com.au and dwelling.com.au have been established to help private sellers advertise their homes online.
Legal mumbo-jumbo
Valuations, property inspections, contracts, conveyancing, solicitors, financers, council rates - there are a multitude of hoops to jump through in order to seal the deal legally. This is where real estate agents come in handy, as they guide you painlessly through the process. If you haven’t got enough time on your hands as it is then it might be best to get an estate agent to sort the paperwork out for you.
Selling your home privately can be rewarding financially, but be sure you are aware of the pros and cons before you take the plunge. It’s not as easy as you might think, and could end up being a stressful exercise if things don’t go to plan. But if you have some time on your hands, have a knack for organising and are prepared to do some research then a DIY home sell could be the best savings you could ever make.
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