There are lots of stories online and in print touting the benefits of selling your home yourself, without using a real estate salesperson. Do-it-yourself property sales companies promise that you’ll save thousands of dollars in commissions.
What most home sellers on that path don’t know, however, can land them in major litigation and financial loss. DIY property sales companies will barely touch the subject or avoid it entirely.
DIY companies will tell you that by saving the agent’s commission, that money goes straight to your pocket. On a $388,000 home, a 4.5 per cent commission would land at just over $17,000. Wow, look at all those zeros you can put in the bank if you do it yourself!
What sellers don’t realize is that buyers are fully aware that sellers are not paying commission, so they don’t expect to either. Buyers will not pay inflated prices just so sellers can have lots of zeros in the bank.
On that same $388,000 home, you might pay a flat fee of $900 or so with DIY companies compared to the $17,000 slice that would cover real estate professionals’ costs. Comparing dollars to dollars, to sell DIY-style seems a straight-forward and obvious choice. The DIY companies sell consumers on the idea that real estate transactions are primarily about sales.
What home sellers don’t understand is that much of the real estate transaction is legal. And in the realm of legal loopholes, what you don’t know can land you in a world of financial pain.
Laura Riddle, in her book Sell Your Home Now, shares the story of a private seller who fell into such pain. The private seller met with a confident, smooth talking buyer.
“I know what I’m doing; let me help you with the paperwork,” the buyer had offered.
“So the seller signed a notarized quitclaim deed, which is the legal document that signs your house away forever, which normally escrow or the attorney holds until the last minute… The buyer had the quitclaim filed and got the house for a $10 filing fee. The case went to court. Be on your guard; getting a buyer is just one-tenth of the process,” says Riddle.
If getting a buyer is just one-tenth of the process, what are the other nine-tenths about then?
Shh… DIY sales companies don’t want you to think about that.
Homeowners don’t realize that DIY selling is a bit like choosing to represent oneself in court. It saves money but it’s incredibly risky. Most people wouldn’t dare, because they know they’re up against a skilled professional in a complicated arena and they could get really, really hurt. Somehow this common sense doesn’t translate to the realm of real estate, even though the legal implications are considerable.
In his article, The Shocking Hidden Costs of DIY Home Selling, Jeff Stern of Re/Max Performance Realty in Winnipeg points out an issue that can affect sellers in a big way, even after possession.
“Once possession date arrives … just before the bank releases funds, there is another inquiry into the buyer’s credit to confirm there have not been any negative changes.
The part you don’t know, but really should: anywhere from seven to 30 days after possession, the bank performs this final inquiry into the buyer’s credit. If there are any negative changes to their credit, the bank is not obligated to fund the sale. It is possible the bank would refuse to fund the purchase even after possession… It happens. Usually when it does, the real estate agent and the buyer will together scramble for another lender’s approval… It can lead to litigation, financial loss and a whole lot of pain.”
The bottom line is that DIY sellers proceed unprotected for most aspects of the transaction.
Let’s face it. There are great agents and not-so-great ones. Some can be intimidating to deal with. They may go to a homeowner’s door and pressure them into signing with them. They may even promise to bring a buyer, but only if the owner hires them. They’ll be convincing. They’ll turn on the charm. They’ll use guilt. A seller’s agent, however, is used to such tactics and can skilfully fend off bullies.
An agent also protects sellers from buyers. Sellers who must deal directly with buyers can be intimidated. Their non-sentimental criticism may bother the seller. They may be demanding about getting a discount. They also may just be looky-loos out for a Sunday afternoon. Agents offer a third-party, thick-skinned barrier from such time-consuming annoyances.
In real estate, as in law, what you don’t know can do more than just hurt you – it can land you in major litigation and financial loss.
In a 2012 article for MoneySense, David Hodges wrote: “Many people who choose the FSBO route find it a stressful, time-consuming grind. Take Tawnia Vihos, who tried selling her Ottawa home with a FSBO service, but gave up: ‘It totally pays to have a real estate agent. More exposure and fewer headaches.’”
Provided by REM Online, written by Kim Rempel
Until next time,
Many homeowners think there’s not much they can do about telephone, heating, water and other utility expenses. Sure, you may grumble about a high heating bill one month, but what can you do about it?
Turns out, you can do plenty. There are several ways to reduce monthly utility costs that can save you tens or even hundreds of dollars. For example:
Shop around for a better phone plan. Then contact your phone company. They might match the rates.
Turn down the thermostat on your water heater. You likely don’t need tap water to be that hot.
Clean the screen on your outside air conditioning unit regularly. (Gently with the water hose.) Dirt and leaves can build up on it, reducing the unit’s efficiency.
Leverage the sun. Open curtains in the winter to gain heat. Block direct sunlight in summer to keep the cool air inside.
Scrutinize your bill. There may be extras you’re paying for that you don’t need.
Play with the thermostat. Experiment with setting the temperature a couple of degrees lower. You might not notice any difference.
It’s worth paying attention to your utility costs. Just a few smart moves can save you some serious money.
One of the most important decisions you make when selling your home is setting the listing price. That can be tricky. After all, if you price your property too low, you leave money on the table — perhaps thousands of dollars. On the other hand, if you price your home too high, many buyers won’t even bother to see it, believing it is too expensive.
Even with that reality, there are some sellers who contemplate setting a high listing price in the hopes of a windfall. They want some unsuspecting buyer to fall in love with the home and buy it — even though it’s overpriced.
That rarely, if ever, happens.
Instead, the listing often languishes on the market because its listing price is conspicuously much higher than its market value.
Think about it. If two similar homes, side-by-side, are for sale, and one is priced $40,000 higher than the other, wouldn’t you wonder what was going on? That’s exactly what the market thinks. “Why is that home priced so high?”
Of course, many buyers, who might otherwise be interested in the property, won’t even consider seeing it, simply because it’s outside their price range.
It gets worse. When an overpriced home sits on the market with no offers for several weeks, the price will often need to be adjusted down. That helps the situation a little. However, you’ve lost the excitement created by a “new listing.” Yours is now an old listing struggling to get attention.
There’s a better way...
Setting your list price at or near the market value is much more likely to generate interest from qualified buyers and maximize how much you make on your home.
That market value may even be higher than you think! Interested in finding out how much? Call today.
Until next time,