It's a question many homeowners often ask themselves: could I save myself thousands of dollars by bypassing the real estate agent and selling my home myself? After all, the Internet has made private home sales much more accessible with numerous For Sale By Owner websites that allow sellers to market their homes to a wide audience without the use of an agent. How hard can it be?
An interesting article in the Financial Post this week takes a look at the pros and cons of the private sale. A bit of math shows that a 5% commission paid to an agent on the average home price of $331,171 would save you a whopping $16,558. Or would it? As with most things, nothing is ever that black and white.
Whether or not a private home sale actually puts more cash in the vendor's pocket is a tough call. The seller might save by not having to pay a 5% commission, but others argue that an agent brings greater exposure, more competition and therefore a better chance you will be offered a higher price for your home. And then there's the time and effort put in on behalf of the seller, often eating up weekends and disrupting office hours. So deciding on whether a private sale is for you really comes down to how much time you have to research the market, talk to buyers and how confident you are in your ability to negotiate the sale.
The article makes a few interesting points:
- Private home sales are generally more successful in a hot real estate market
- Many private sellers often end up paying a commission to buyers' agents, usually about 2.5%
- Buyers usually expect a discount on private sales because they know the seller is saving on commission
- Private sellers do not have the same safety net that is in place through the official system if something is to go wrong with the sale
Source: Wallet Pop Canada
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