Kauai

Pros and Cons of Selling Your Own Home

“Should I list my property with a Realtor, or should I just try to sell it myself? It can’t be that hard to sell my property and I can save that large chunk of the money that I would have to pay a Realtor.”

As a real estate agent, I am often asked this question by owners wanting to sell their home or property. Here are some pros and cons gathered from personal experience, those of friends, and other blogs attempting to answer this question.

Today’s news reported the sobering statistic that one in eight homes in America are vacant. Many more are for sale, so this is a very good question!

1920s circa Hawaiian Plantation home

Pros: (The obvious)

1. You get to keep all the money

There are no commissions to be paid if you can successfully find your own buyer. This can amount to a substantial savings—often around 6% of the selling price of your property.

2. You have total control over everything involved in this transaction:

  • You get to set the price
  • You know your home and neighborhood well, so you will be able to point out all the benefits of purchasing your property
  • You set appointments to show your home, so they are convenient for you
  • You get to negotiate the price and terms of purchase with the buyer

Cons: (The not so obvious)

1. The selling price and marketing

You may know what you want to sell your house for, but do you know what the market currently is? As a seller, you have a one time window of opportunity when you first offer your home up for sale. This is when you will see your most activity, so you want to get this right at the beginning.

Too low or too high:

If you have priced your home too low, you will be walking away from money that could be yours, or if you price it too high, you may lose the first flurry of inquiries from potential buyers (usually the most serious) that may not know that you might be willing to consider a price reduction at a later date.

Negotiating your price:

It is a fairly common practice for buyers negotiating directly with owners selling their own property, to immediately offer an amount of at least 6% less than you are asking. Why? Because they already know that this is generally the amount you would have paid if you had hired a real estate agent.

You may get the same amount either way, but in one case you are handling everything yourself and the other case a real estate agent is doing all the work, and taking the risk and responsibility of the transaction away from you.

2. Advertising your property:

How will you advertise your property for sale? Yard signs will only catch the interest of persons who drive by. If your property does not have great curb appeal, people may not make an inquiry.

With the internet, today’s printed advertising draws fewer contacts than it did in the past. Do you have a method to establish a web presence and are you prepared to develop a mailing list to reach your potential target audience? What other marketing techniques are you considering?

In some areas, you can pay a fee to have your property put up on the MLS service, but if you decide to do this, you will still be responsible for handling everything involved in SELLING your property and you will be required to pay a selling commission if it is sold by a licensed Realtor.

3. Handling inquiries:

Are you prepared to handle the in-person or phone inquiries? Have you developed a method to screen or pre-qualify people that want to see your home? In addition to serious potential buyers, there are many other reasons that people set appointments to look at homes such as:

  1. they have a similar property that they might be thinking of selling and they want to know how yours compares to theirs.
  2. they have always been curious about what the inside of your house or backyard looks like.
  3. they would love to buy a home like yours, but in reality, they would not be able to qualify for many reasons, so they are just looking and not serious buyers.
  4. they have a friend that likes this neighborhood, but they might not know the ability of that friend to actually purchase a property.
  5. the one we also need to consider, someone might be casing the property and using the information you inadvertently share to make them aware of the times that you won’t be home.

4. Handling an offer to purchase:

Purchase Contract:

Are you prepared to write a contract to purchase that covers all the purchase contract points that you can be held liable for in a real estate transaction?

Contingent Sales:

Many buyers either need to sell an existing property, or get a new loan before they can make a purchase. Are you prepared to handle the details of a contingent sale (waiting for something to happen before they complete the sale)?

Inspections:

Do you know what inspections are involved when selling your property? Are you prepared to coordinate all the inspections and disclosures with respect to the condition of the property at the time of sale?

Some of these might include:

  • the lead based paint regulations
  • the property boundaries
  • properly permitted construction certifications
  • termite inspections
  • legal title issues
  • the flood zone/airport noise
  • other potential legal questions that need to be disclosed to a buyer. A seller can be held liable for required disclosure information if it is not disclosed or covered in your contract.

5. Finalizing the purchase agreement:

A legal contract will always include:

  • what is to happen
  • how it is to happen
  • when it is to happen
  • what happens if it doesn’t happen

Are you prepared to take the necessary steps if the buyer does not perform on their purchase agreement in the time specified, or perhaps not at all?

While there may be a financial advantage to selling your own property, listing it with a Realtor will relieve you of the impact on your personal time as well as the marketing and transaction costs.

Additionally, a responsible Realtor:

  • will be working on your behalf to get you the best possible PRICE and TERMS.
  • has assumed all the marketing costs (photos, mailings, signage, advertising) targeted at finding you a buyer.
  • will screen potential buyers and show only buyers that have been pre-qualified on their ability to purchase your property.
  • will coordinate the purchase contract, the documentation, inspections, and see that compliance with all the terms of the contract are on track.
  • will seek to see that all contract requirements are met to protect you from future non-disclosure, and/or any potential buyer remorse legal actions that could occur.
  • will coordinate all closing documents with your title company or attorney.

There is a long list of behind-the-scenes work that is done by your Realtor. If your property doesn’t sell, your Realtor does not recover any of their time or costs.

And, in most cases, using a Realtor will usually get you a higher selling price than you can get yourself.

With all this all said, YOU may be that person who is prepared to handle your own transaction and, if so, you may indeed save what would have been paid in commissions!

This blog is not intended to cover every aspect involved in the sale of a property, but hopefully it has answered some of the basic pros and cons to this question.

If you have questions, or want assistance with buying or selling a property, please do not hesitate to call me at (808) 651-5676. I work hard to achieve the best possible outcome for my customers.

Lucy Adams, RS, Hawaii Life
email: lucyadams@hawailife.com

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Lucy Adams, RS

June 13, 2011

People wanting to get top dollar for their homes today and who don’t need to sell now, can wait until the market shifts upward. However, not everyone has the luxury of waiting to see what the market is going to do. Pricing your property right is the key to selling it in todays market. So if you need to sell, or simply want to use this opportunity to sell your house low so that you can buy something else that is equally priced low, then get aggressive with your pricing and your house will sell!

Lucy Adams, RS

June 13, 2011

People wanting to get top dollar for their homes today and who don’t need to sell now, can wait until the market shifts upward. However, not everyone has the luxury of waiting to see what the market is going to do. Pricing your property right is the key to selling it in todays market. So if you need to sell, or simply want to use this opportunity to sell your house low so that you can buy something else that is equally priced low, then get aggressive with your pricing and your house will sell!

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