Selling Privately

Selling your home yourself? It’s a struggle.

Studies show that 90% of FSBOs (for sale by owners) end up listing with an agent, and of 10% who did sell themselves, 6% say they will use an agent the next time.

Why is the success rate so low? The bottom line is that the MLS system represents the marketplace, and the private seller is isolated from that market place.

Put yourself in the shoes of a buyer.

These days, one of the first things that you’d probably do, is use the Internet to search for homes. The information on the key real estate search engines which includes mls.ca originates from the real estate boards. It’s done automatically by computer. In fact a listing cannot be loaded without an MLS number.

If over 99% of the homes in the area are available through organized real estate, and the services are real estate agents are free to the buyer (the seller pays the commission) why would a buyer want to work with a private seller? Most times it’s in the hopes of paying less by saving commission. However, the vast majority of qualified buyers who are ready to purchase, shy away from dealing directly with the vendor as it feels uncomfortable and awkward, particularly if they do not have the help of their agent.

Another interesting stat. to consider: Of the small percentage of FSBOs who succeed in selling themselves, over 80% sell for less than what they would have netted if they had used organized real estate.

Why does this happen? I must admit it still surprises me at times to see a good, well-priced private sale just sitting there.

Why-it’s a lot to do with the age-old economic law of supply and demand i.e. the greater the demand for a commodity, the higher the value of that commodity, and vice-versa.

Since the private seller is out of the loop in terms of exposure and the main source of qualified buyers (the MLS system), and since the motivation of the buyers coming through is usually to save themselves money, this translates to very weak/limited demand.

Also, private sellers get discouraged. Their perception of the value of their home shifts as time goes by. When an offer finally comes in, they often end up accepting much less than what they should have.

Food for thought, isn’t it?! In closing, ask yourselves, if we were to try to sell privately;
a) What is the likelihood of beating the odds with our home/our situation?
b) If we do beat the odds and save some money, considering that the amount of money saved is likely to be far less than we (probably) would have assumed, is it worth the time, pressure and aggravation and possible risk of not having our own professional representation?

If you must give it a try....
- Employ the services of a real estate lawyer.
- Set yourselves a predetermined time frame.
- Price correctly. Hire an appraiser.
- Establish a fair trade agreement with a competent agent who you can trust to help you. The agent can’t bring the market to you, but can give you guidance through the process.

The benefit to the agent? If you don’t sell within your specified time frame, then the agent will be hired by you.