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September 23, 2016 in Buying Toronto Real Estate, Canadian Real Estate Market, For Sale By Owner, Location, location, location, New in New Homes, Pay what you want listings, Real Estate Investments, Save on Comission Fees, Selling Toronto Real Estate, Sold Watch, Toronto MLS Listings, Toronto MLS Sales, Toronto Neighbourhoods, Toronto Real Estate Trends, Toronto Real Estate Update, What's next (in real estate) | Permalink
Going FSBO (For Sale By Owner)
Many sellers entertain the idea of selling their home without an agent. They always have. Particularly today, with so much information online, many believe that the Internet weakened the role of the agent; that the agent’s value is not what it used to be.
However, when it comes time to sell a home, it’s common for many people to wonder if they can go at it alone and save the 5 percent commission. Going the FSBO (For Sale By Owner) route seems easy enough. By researching online, you can check out comparable sales, learn your local market, and determine a good price for your home. Take some photos with your smartphone camera, write compelling marketing copy, and make a few cosmetic enhancements if needed. When you’re ready, list your home online for buyers to find and explore. In some cases, it truly can be easy, but not for everyone. There are a few considerations and some reasons why many sellers end up going down the traditional path of being represented by a licensed real estate agent.
When the stakes are high, doubt creeps in
Selling your home isn’t like selling a used car or a flat-screen TV online. It’s just not that cut-and-dried. It’s likely a place where you’ve made memories and have some serious emotional attachments. The sale of a home generally comes at a time of life change; a new job, new baby, retirement, death or divorce. Emotionally detaching means that you may not be as objective as possible. And as a result, there could be negative financial ramifications. Putting a a third party in between you and the sale can be comforting. There are practical considerations as well. Prices can vary by block and there are a variety of elements for a homeowner to consider: the local market, pricing, disclosures and property access, among other things. When it comes time to go FSBO, a little bit of doubt may creep in. Is my timing right? Is my pricing right? Is there something I’m missing? Am I ready to sell? Sellers don’t know what they don’t know. When it comes time to go live, and expose themselves to the market, they sometimes get cold feet.
You’ll probably still pay an agent’s commission
If you go it alone, you aren’t necessarily saving 5 percent of the home’s sales price by not hiring an agent. Most likely, you’re only saving 2.5 percent. When a home is sold, the seller ordinarily pays the 5 percent commission. The seller’s agent then splits the commission with the buyer’s agent. If you want to get traffic to your listing, you need to offer that commission to the buyer’s agent to incentivize them to show your home. Additionally, few buyers feel comfortable negotiating directly with an unrepresented seller. Buyers want guidance from their agent and appreciate their feedback. If you don’t offer that buyer’s side commission you risk losing eyeballs and therefore market share. If you lose a large chunk of the market, you risk not getting top dollar.
It becomes a part-time job
Selling a home takes an immense amount of preparation time, not to mention the time and energy to show the home once it’s listed for sale. You’ll have to field calls, emails and questions from buyers and agents. Plus you’ll need to be prepared to show it at a moment’s notice. It could easily begin to feel as if you’ve taken on a part-time job. And, not everyone is cut out for the additional workload and stress. In many cases, you’ll be doing all this while also focusing on where you’re moving. Are you selling in order to move to another city or town, or because of a change in your career or life? Any of those situations can be stressful enough on their own. When you add selling your own home to your plate, it can quickly be overwhelming.
There are certain people that can absolutely do it. It’s been done successfully over and over through the years. If you’re convinced that you can overcome the doubts and fears associated with being unrepresented, have the time and energy to make it happen, then give it a shot. Start by doing your homework, going to open houses and learning as much as you can about how your market works. Be prepared to set aside a good chunk of time for the months before and during the sale. Search and research as much as possible, not only local listings but how to best present your home to the market. Because you don’t sell homes for a living, you could be caught off-guard or overlook something important.
Once you go “live,” the days on market (DOM) starts to tick. That number of days is the buyer’s way of knowing how your home fares in the market. If the DOM approaches 90 and you are still active, buyers will see it and know it. If you are unsuccessful and end up listing it the traditional way, that buyer will know about the previous attempt to sell FSBO. They may use it against you when making their offer. So put your best foot forward. If you’re not there yet, don’t go FSBO. Take the time you need to and reevaluate your plans. The last thing you want to do is rush into the market when you’re not ready.