If you're planning to sell your home, your first step would usually be to hire an agent. But a small percentage of owners decide to sell their properties without an agent's involvement. If you're tempted, you'll need to think through your decision carefully. There are some advantages to a sale by owner, but there are also downsides to this route. Here, we summarise the pros and cons.
Big Savings are Possible
Probably the single biggest motivation for owners choosing the sale-by-owner route is the amount of savings they can make by not having to pay an agent. On a property worth $600,000, with a commission rate of 2%, that would be a straight $12,000 saving. That's a really sizeable amount of money, so no wonder some owners decide they'd rather keep it to themselves than pay it over to an agent.
Of course, that's a gross figure, and you need to look at the net saving. If the $12,000 included marketing costs and photography, those are items that you'll have to pay for yourself, so you need to allow for those costs when assessing how much you'll save. Unless you are a good photographer and know you can turn out excellent photos, for instance, you're better off employing a professional–or at least using a service like BoxBrownie.com to edit your photos. (BoxBrownie has a blog with lots of great information on how to take better property photos–well worth reading if you're thinking about taking your own.) Photos can cost $400-800.
You'll also need to think about pricing your home. That's quite an involved process, as you need to assess the local market, and see where the property fits; if you have the right sort of "business brain" you'll be able to do that yourself, though there's a fair amount of work involved getting accurate comparisons (and we'd recommend you actually visit a number of properties that are on the market to get a proper feel for the condition and décor of comparable sales). You could also consider paying a few hundred dollars for a professional valuer to run the numbers; you'd still be saving a lot on that $12,000.
Making appointments is easier when you do it direct, and you only have to fit your own schedule, not an agent's as well. If you work from home, or if one partner's often at home during the day, nothing could be simpler than arranging appointments at any time of the day. No need to pay the agent for that! Or you could arrange a weekend open house event–again, no cost to you (other than a few hours tidying up in advance).
A huge advantage of sale by owner is that you can decide on your own marketing campaign. You can keep it discrete; one guy sold his city centre apartment by just mentioning on LinkedIn that he might be selling. Or you can keep it cheap; there's nothing cheaper than just sticking a board outside the house with "For Sale" and a phone number, or posting flyers around the neighbourhood. However, if you want a really good board that showcases your property well, you'll be paying between $250-400. Equally, if you're a dab hand with social media, you can market your property that way–though if its main appeal is to senior citizens, that might not be your best marketing channel!
If you choose to list on a website like Domain (domain.com.au), you'll pay $600-800 for a listing for two or three months. If you can sell quickly, you've done well, but if you don't sell in the listing period, you may end up paying more. You might be better off using For Sale By Owner (https://www.forsalebyowner.com.au) which charges $699 and lists your property till it's sold–including on Domain.
Add together the photos, listing, and board, and you've spent about $1,500-2,000, so you still get to keep a fair amount of that agent's commission.
There's a big advantage to going solo in that you remain completely in charge of your own strategy. If you want to stick out for the top price, you can. Agents can sometimes be driven by the need to achieve a given volume of sales, rather than getting the best price for each sale. You only have one sale to worry about.
One Cost you Really Must not Cut
By the way, some owners decide to do their own conveyancing, too. This is legal–but we would advise you not to be tempted. The legal compliance aspects of the process are many and varied, and regulations change all the time. Even putting your property on the market without including certain legal data could be illegal. You're running a big risk if you make a mistake, so pay a lawyer, and sleep easy.
An Agent's Hard Heart can be an Advantage
Whilst the advantage of a sale by owner is that you have full control, that's also one of the big disadvantages! You won't have a second opinion, or someone to discuss your options with. Sometimes, just having a third party that you can talk to makes a big difference if, for instance, you're wondering why you have plenty of visits but no offers, or why the house up the road sold for 20 percent more than you're asking.
There's another trade-off, too. You know the most about your property, having lived in it for years, but the agent knows more about how it compares to others and how buyers are likely to view it. For instance, your home might have immense appeal to investors wanting a rental property, but not so much appeal to families wanting to buy. Would you have known this? You probably love your home–including the purple paint and orange carpets. An agent can take a dispassionate look at how well it will sell.
It's difficult to put a price on those two advantages. But if it helps you get a better price for your home than you would have in a private sale–and if the difference is more than the agent's commission–then you're better off using an agent.
Feedback can be Difficult to Get–or to Handle
Buyers can be absolutely forthright with an agent. "That bathroom's just disgusting!" or "this guy has no taste!" are just two comments agents are used to hearing. Most agents are then used to toning down the criticism in order to present their clients with tactfully expressed ideas about how to make the property a little easier to market.
Unfortunately, if you're marketing your own property, you might not get to hear this feedback at all. Buyers who know that this is your home may simply not want to hurt your feelings, and you'll never find out why the offers aren't coming. And if you do get that kind of feedback, it can be difficult to stand back and not let it hurt you. That can be particularly difficult when it comes to negotiating on price and conditions. Start to get angry with a potential buyer, and you've lost the sale.
Agents Sell Homes All the Time
How often do you sell your home? Every five or six years, perhaps? An agent might sell a dozen every month, and as we all know, practice makes perfect! A good estate agent keeps up with the market, keeps up with all kinds of legal requirements and changes in buyer behaviour or finance availability, and has a huge contact list, too. Agents are used to the business of preparing property particulars, and they have a list of different professionals from photographers to home stagers that they can use; they have software for making floor plans, and they have long-term marketing deals with newspapers and internet portals. You won't have any of those.
For the estate agent, selling homes is a full time job. They train for it, they do it, and it's what pays the bills. You, on the other hand, probably have a separate full time job, and you'll have to carry on doing that while at the same time doing an estate agent's job on your own house. The learning curve could be steep, it's hard work, and your lifestyle will suffer. Bear that in mind, and then ask yourself whether that $12,000 is still worth it.
A Third Way!
There's another way to sell your home though, and that's to use Sellable. With us, you get less hassle, a quicker sale, and our sales structure incentivises us to get you as high a price as possible. In fact, we can make an online offer on your home in a matter of minutes. Find out more at our home page: www.sellable.com.au