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Saturday, June 10, 2006

Tips for Selling Your Own Home

We have recently helped a number of our clients purchase homes from sellers using Comfree to market their properties for sale. This has turned out to be a great deal for our clients as they have bought these properties well under market value. It seems many home owners think they will save money by selling their home themselves instead of using a real estate agent.

But that's not the point of this article... There will always be people who sell their home themselves, and our recent dealings with homes for sale by owner (FSBOs) have certainly not gone as smoothly as those where both sides are represented by agents. There have been numerous complications leading to late closings and unexpected expenses, that could have been avoided if the seller was better prepared. So, I have some suggestions for those FSBOs out there trying it on their own:

1. Hire a very good real estate lawyer. A couple of months ago one of our clients bought a home marketed on Comfree. They got it for a great price. Anyway, it is supposed to close in just over a week, and the discount lawyer that the seller hired has yet to forward all the necessary documents to our client's lawyer, and even lost a deposit cheque! This means it is going to close late, and it is going to cost the seller a lot of money. A reputable real estate lawyer would have made sure everything was taken care of well in advance to ensure a timely closing.

2. Do not have a friend who almost has a real estate license, or used to have a license help you out. We recently had a client offer significantly over list price to a FSBO but the "friend" helping out didn't even deliver the offer to the seller. How is that helping a friend out? Three weeks in real estate school does not make anyone an expert. I have years of experience in this industry and am still learning because it is always changing. You are trusting your biggest asset with someone who barely knows anything more than you do about real estate. Plus, your friend will get in a boatload of trouble if they are reported - but they should already know that since they are almost a real estate agent.

3. Get a current real property report - not one that is 1 or 2 or god forbid 10 years old, a current one. The real estate purchase contract used by real estate agents in Alberta states that the seller must supply a current real property report. It takes time to get the report, and you've got problems if it doesn't comply. The buyer's mortgage company requires a current report in compliance, that shows the current state of the property. If it is more than six months old it is likely that the mortgage company will require a new one in order to provide funding to the buyer, especially since it's a FSBO deal (the mortgage companies are much more finicky when it comes to FSBOs). That funding is what is going to pay you for your property, so it is in your best interest to get a current report ASAP.

4. Work with agents representing buyers. Over 90% of buyers in Edmonton work with real estate agents. If an agent has called you and would like to show your home, that means their buyer is under contract with them, and the only way that buyer could buy your home is through their agent. Should that buyer decide to make an offer on your home, you will be presented with a Customer Disclosure Form which basically states that the agent is representing the buyer, not you - you are unrepresented. The good news for you is, at least the agent will know what is going on and help move the process along as smoothly as possible.

5. Answer your phone and be available to show the property. There are a ton of people relocating to Edmonton these days. Out of town buyers almost always have an agent and almost always look at properties during the week, during business hours. If you can't take appointments and show your home at these times you are missing out on the most motivated category of buyers out there, and motivated means they are willing to pay!

6. Consider listing with an agent. The last three homes we've helped clients buy that were listed on Comfree sold for $30,000-$50,000 below market value, including the fact that our fee was added into the purchase price. On a $200,000 property our company's listing fee is typically $5000, which means if those sellers had listed with us they would currently have $25,000-$45,000 more in their pockets, let alone the fact that we routinely sell our listings well above market value (see for examples).

I am the first to admit not every real estate agent is created equal, and I have seen cases where home owners have hired real estate agents and in the end would have been better off selling on their own. So perhaps really what I'm trying to say is, listing with the right agent will net you more money than selling on your own. Finding the right agent is the key. Interview more than one agent and ask them to show you examples of recent sales and what they sold for compared to the market, ask to see examples of how they market their listings. Remember, just because one agent says they can sell your home for way more than another doesn't mean they can - ask for proof. And lastly, you set the asking price for your home, not the agent, and most importantly, you decide how much and what offer you will accept for your home.

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