In this DIY Friday, we will talk about one of the most lucrative DIY activities you can ever do in your life. Some DIY tasks will help you save a few pennies while selling your home by yourself and shortcutting the Real Estate agent will save you thousands of dollars. In most cases, you can save over $10,000. I personally saved $16,245. Here’s my story:
First House, First Agent, First Mistake
I bought my first house at the age of 24. It was definitely too small for our growing family (we already had my son, William and my wife got pregnant not so long after we moved). This is why we decided to sell our house only 6 months after buying it. This was, in and of itself, a big mistake. My wife and I were pretty young at that time and we thought that we needed the help of a professional. We were looking for someone who would guide us and help us get the best offer we could. We turned to a well known Real Estate agent. We sold our first house with an agent and it was a big mistake.
The commission paid on the transaction was 5% (taxable) on the selling price. At that time, we were selling at 184K so the commission including taxes was about $10,580 (5% + a 15% tax rate). For slightly over $10K we got:
- An average selling price (we didn’t sell over the market).
- No extra negotiation skills (he was at the end of his 6 months mandate and rushed us to accept the offer as is *to make his commission*).
- Confusion with the buyers as for the moving date (since we had to go through our agent and the buyer’s agent to negotiate dates, I guess that one agent didn’t forward proper information).
- Wrong paperwork (there were mistakes made by the agent while providing paperwork).
I don’t know about you, but $10,580 sounds a little bit expensive for this kind of “professional expertise”. But it’s okay as we were scared and selling a house sounded highly complicated. We thought that we could make a big mistake while trying to save a few thousand.
Second House, No Agent, More Money in My Pocket!
We sold our second house roughly 4 years after we bought it. We wanted to move to another city in order to have more land (I’m a big fan of nature). Frustrated from our first experience, we decided to sell our house ourselves. We used the service from By The Owner (Canada) – I don’t get any compensation for plugging the link by the way, this is truly what we did and I really enjoyed my experience. This was great as we didn’t have to bother taking the right pictures or attracting visitors as By The Owner gets a lot of traffic. My house was actually seen by over 200 new visitors a day. In 10 days, we had 3 visits and the house sold for the average market price. This was a great experience and we saved $16,245 based on a 5% commission rate minus fees incurred by selling the property (which was roughly $2,500 including home staging). While selling your house by yourself is a great experience and you can easily save $10,000 in the process, there are a few pointers you need to consider before jumping into this adventure.
Here’s How We Saved Over $16,000
Step #1: Assess Your Property
I know… you really like where you live and your house/condo shows tons of nice features that others don’t. Unfortunately, having a well decorated house will accelerate the sales process but you might not sell incredibly higher. In order to find the right price, you need to look-up other properties in your area with similar points such as:
- Property size
- Living space
- Equipment (central A/C, garage, heating system, etc)
- Number of bathrooms (don’t laugh, it’s very important!)
With the following characteristics in mind, you should be able to find similar properties for sale in your area. I suggest that you print their profile and present them to a potential buyer at the time of price negotiation. If you base your arguments with proof, you will have a better chance of getting your price. Remember that you are seeing the “for sale” price, not the “selling” price. If you put your house for sale at $350K, don’t expect to close the deal for that amount .
Step #2: Home Staging
I’ll prepare a full post about home staging next week as it is a sub DIY topic. Home staging is very important in order to help the potential buyer to see the property as his already. Don’t be afraid to de-clutter your rooms and ship the “extra” boxes to your friends house temporarily. Buyers want to see big rooms. Remember; you want to sell your house, not your stuff!
Another trick that doesn’t cost much is to paint the house to freshen up your property. By selecting light colors, you will “create” more space in each room. We spent a weekend on painting and packing unnecessary stuff in order to make our house more attractive.
Step #3: Get Ready – Put Your House For Sale
I decided to use the By The Owner service because I knew that putting a “for sale” sign in front of my property wasn’t enough. On the other hand, 85% of potential buyers look for properties on the internet. By using a web company, you also get a lot of support. We had templates for offers, counter-offers along with addendums. All you need to do is “fill in the blanks”. The best part is that the service has evolved and you can also call and speak to a representative that will help you to put your house up for sale through their website and how to fill the documents.
Don’t hesitate to add a lot of description to your internet page. This is how you will convince people to call you for an appointment. Before clicking on the “publish” button, make sure you know where your limits are in terms of price, occupation date, inclusions/exclusions, etc. These points are often negotiated with the buyer.
One last point to consider during this step is to gather all paperwork relative to your property. It is important to have everything handy if a potential buyer asks specific questions. Prepare a folder that you will keep close by during each visit.
Step #4: Wait & Resist
The very first people who will call you in regards to your property will be… Real Estate agents! They will tell you that they know the market, that they can assess your property value for free, that they have potential buyers but want to visit the house first, that they can sell your house for much higher, etc. The last argument always makes me laugh. Let’s say you sell for $350K by yourself. If the Real Estate agent is to sell at a higher price, he needs to sell it at least for $372K so you can break even and have $350K in your pocket (assuming a 5% commission rate + 15% taxes). If you have done your homework correctly, there is no way an agent could sell a house at 380K (so you can at least get an added value of 8K for doing business with a third party) if you are selling your house at 350K. If it’s the case, you will sell your house in 48 hours as it will be a great deal for the buyer!
This is why you need to be patient and wait. Don’t let your emotions take over and make you sign with a realtor. You will sell your house, just give it some time. Waiting is probably the hardest part of selling your house by yourself. You have to handle the anxiety by yourself and not surrender to the eighth call from a Real Estate agent!
Step #5 Offer – Counter-Offer
Another emotional part is the negotiation rounds. When you use a Real Estate agent, it’s “easier” emotionally as you don’t have the buyer in front of you. But I’m not ready to pay 10K for neutrality! You will get an offer on your property and it will be lower than the asking price. This is why you have to be ready and bring facts to the table to justify your price. It’s hard to debate the sale of a property with 3 comparables showing the same price!
Step #6 Enjoy the Free Money!
Once the offer is accepted, the regular process starts. The buyer will most likely order an inspection while you will be asking for a home loan approval from his bank. There is one last meeting to make sure that all conditions on the offer of purchase has been completed and you then set a meeting at the lawyer’s office.
You can then enjoy the money saved and shop for another house ;-).
Readers, would you sell your property by yourself or with a Real Estate Agent?
Next Friday, I’ll talk more about how we did some home staging and the cost for everything.