Beware The Perils Of Selling Your Home Yourself!
the time comes to put your home on the market, you may be
tempted to try and sell it yourself. The basic reason that motivates owners to do so,
is "saving" the cost of the real
estate commission. A few might deem it a personal challenge or learning experience, but
generally the desire to
save money is the main motivator. You could possibly save money, but
the other hand, it could be an expensive illusion.
There are many disadvantages to selling a home yourself, as opposed to using a carefully selected and experienced realtor.
The following remarks are not intended to dissuade you from attempting to sell your own home, but to place the process in realistic perspective. In the end, you will have to balance the benefits and disadvantages, and decide what is best for you.
If you don't know all the steps involved, from the pre-sale procedures and strategies to completing the deal and receiving the money, you could and probably would make mistakes that would be very costly. It is also important to speak, read and interpret Spanish adequately. In one instance, buyers closed on a condo and went to move in. They thought they were getting a fully furnished condo, only to find out that a very expensive glass top for the dining room table was missing. When the new owners confronted the sellers, they were told that the contract called for leaving the table. The glass, they argued, was not part of the wooden table, and was not specifically listed in the contract.
Emotional roller coaster
Many people, especially with their own home, tend to get emotionally involved in the sale process because of the direct interaction with prospective purchasers. Sellers can experience anger and frustration due to rejection of the house, negative comments or fault-finding. You may find people whose personality you don't like, or people who negotiate toughly or unreasonably on the price. Negative criticisms can sometimes be taken personally, and be a cause of considerable stress. A seller received a full price cash offer on her home. In writing her own real estate contract, she included a clause that angered the seller. Harsh words were said on both sides. Without an intermediary, the sale fell through, and the seller bought a similar unit in the same complex for less money.
You have to have open houses as well as show your property at times that may not be convenient for you. Or, you may loose a sale because you are not at home. Additionally, you will be spending time writing ad copy, printing expensive brochures, and responding to e-mails and letters. If you don't answer the e-mails in the right way, you may loose the prospective buyer's interest. Or perhaps you don't get to your e-mails every day.Your social life will be limited because you'll be staying at home to respond to telephone calls or to people knocking on the door. The owner of a home was elderly, but she was adamant that she did not want a realtor involved. A couple of "buyers" came knocking on her door, and she let the man and woman walk around by themselves because she was busy baking in the kitchen. After they left, she noticed some of her jewelry was missing.
Property Pros pays for newspaper classified advertising, Internet advertising, and a lawn sign. You would pay for these yourself. In addition, you may not know what type of advertising would be appropriate for your property. You may not know how to write ad copy that would attract and hold the attention of a prospective buyer; nor how to identify and emphasize the key selling features of your property. Take a look at these two ads, one done by the seller (appears in Mexonline.com), and the other done by PropertyPros:
There are considerable differences in market exposure in terms of doing your advertising yourself and the advertising and promotion PropertyPros will do for you. There is obviously a direct correlation between the nature and degree of market exposure and the end price. Clearly, limited market exposure means limited prospective buyers. Listing with PropertyPros means you get a free ad on Manzanillo's largest web site with more the 50,000 "hits" a month. This ad, if you were to do it yourself would run thousands of dollars.
The prospective purchaser may supply you with his own agreement of purchase and sale. This contract may have clauses and other terms in it that could be legally risky, unenforceable, unfair, or otherwise not detrimental to you. You may not have the experience to recognize these potential problems or risks. In addition, you could end up agreeing to terms when it would not be necessary or wise, or to accept a legal arrangement that could be risky. In a recent sale, the earnest money check of 10% of the purchase price was held until the closing. Once the balance due had exchanged hands in front of the Notary, and the Notary signed off on all the documents, the woman deposited the earnest money check. It bounced. To this day the funds have not been made good, plus the seller has had to go through the additional expense of filing a lawsuit.
Lack of familiarity
You may not have a clear or objective idea of what similar properties in your area are selling for, or the status of the real estate market at that point in time. This can place you at a distinct disadvantage. For example, if you are being unrealistic in your pricing, along with limited advertising exposure, you could literally price yourself out of the market. Prospective purchasers may not even look, let alone make an offer. You may eventually sell your property, but only after several price reductions and after a long period of time. Naturally, this depends on the market and the nature of your property. Conversely, you could have a property with unique features or investment potential that could justify a higher sale price than you might be asking. A home had been listed For Sale By Owner for more than a year. In a conversation with the sellers, it was learned that they were really getting desperate to sell because of a personal situation in the family. They took the first offer, without any negotiation, though the buyer was willing to pay at least 20%more.
No pre-screening of Potential Buyers
Most sellers in For Sale By Owner situations do not know how to pre-screen prospects. The end result is that you could waste your time talking to people on the phone or showing them through the house, and they are not and never will be serious buyers. You could also end up accepting an offer from someone who does not realistically have a chance of paying for the house, or a buyer who asks for unrealistic time periods to conclude the transaction. Accepting an offer from an unqualified buyer would effectively would tie up your property during that time, and you would have to start from scratch if the deal falls through. One property has had 3 offers, and each was accepted in turn. In the first instance, the buyer was to mail the earnest money check to the seller when he went back to the states. It never came, though the house was taken off the market for 3 months. The second sale fell though because the buyer committed to purchase the property, left an earnest money check, then on the drive back to Puerto Vallarta, found another property. Leaving a deposit check for that home, he then went back to the states to stop payment on the first check given to the seller in Manzanillo. She was never informed by the buyer that he had changed his mind, so when she deposited the check, it bounced. Not only did she not sell her house, but by the time she learned the check was no good, another month had gone by. And the bank charged her $80 for the bad check. In the third instance, after the home was sold, the buyer was told by a neighbor that the property was condemned in the 1995 earthquake, so he backed out of the sale feigning illness. The story wasn't true, and if the seller or buyer would have used a reputable realtor, the transaction could have been concluded.
You may think the offer from a prospective purchaser is the best one you'll get and accept it. That purchase price may not be the best one at all. You may have made your initial asking price too low. Your asking price may be based on emotion or needs, not reality. You may have received a "low-ball" offer from a buyer that he never intended to be accepted, but was designed to reduce your expectations. You may be inexperienced in applying real estate negotiating skills; or you may be up against a buyer who is an experienced closer. Many realtors are coming to invest in properties in Manzanillo. If they are licensed in the states or Canada, they attend schools and seminars so that they know how to get a person to commit to a purchase. That skill is called "closing." When you're up against a true closer, the object is for them to win. If you've ever gone to a "Vacation Club" (time share) presentation, you'll know what we mean. Your buyer is probably a good guy, but he is talented, and out to get the best deal he can for himself. Who's going to be looking after your interests?
Lack of skills
This problem was alluded to previously. You may lack any negotiation or sales skills, and feel very uncomfortable or anxious. As a consequence, the price and terms you eventually settle for may not be as attractive as they could be when a professional handles the transaction.
It is common on For Sale By Owner properties for the prospective purchaser to ask to have an additional discount equal to the real estate commission you've avoided paying. The main reason why prospective buyers are attracted to FSBOs is the prospect of getting a better deal than if the property is listed with a realtor.
The primary reason why you are selling the property yourself is to avoid paying a commission. But in this case the buyer asks you to discount your property further for the amount of the commission. What have you really saved? In practical terms, it is an illusion to think that you will save the amount of commission. Most probably, you could have netted more if your property was listed with a professional.
Buyers in this type of market are very price sensitive, negotiate toughly because they want the best deal, and have the time to be selective after comparing what is available in the market. You are at a disadvantage if you don't receive all the exposure possible and use all the negotiating and selling skills available.
As you see, there are distinct advantages to utilizing the services and skills of a professionally trained and experienced realtor. We hope you'll choose PropertyPros, but if you don't, and decide to sell your house yourself, read a book, take a course, be smart and be safe!
E-mail Carlos & Susan
Tel: 011-52 (314)
333-3678 (from U.S. or Canada)
Office: Km. 15, (15000) Blvd. Miguel de la Madrid, Santiago, Colima