The Challenges of DIY Home Selling
For most home owners selling a house is a fairly rare occasion. Most often, home sellers utilize a real estate agent in the selling process for the many advantages they can provide. Sometimes though, sellers choose to sell their home themselves; you’ve probably seen those “for sale by owner” signs before. This is most common with homeowners who own and sell properties on a regular basis, and also for those homeowners eager to maximize their return by eliminating any realtor commissions. DIY selling is wrought with pitfalls and many sellers are in over their head before they realize it’s too late. The home selling process can be complicated and involved, and most sellers are unaware of the challenges surrounding DIY home selling.
Here’s a DIY sale scenario:
A home owner has a property located in a busier part of town, adjacent to a commercial zone, and they want to sell it without using a realtor. Since the home isn’t located in a cozy subdivision or ideal residential area, the type of buyer they are looking for is going to be fairly specific. Using public tax records to determine their home value to create an asking price, they are approached by an excited potential buyer who expresses interest and says they will surely buy the home. 2 ½ months later, after a string of empty promises, the buyer walks – costing the seller all of that time, and probably some money too. Another buyer approaches, makes an offer well under the asking price, and out of frustration the seller accepts, leaving money on the table they could have gained.
When trying to sell a home there are a few major pieces of information you’ll want to have to ensure you’re asking the right price, and partnering up with the right buyer:
1: How do I know if I am asking the right price?
Most often, sellers will look to the County Appraisal District to get their answer (in Houston, it’s the Harris County Appraisal District). The County Appraisal District utilizes property tax records on file to estimate the market value of a home. The problem is that these records can’t always be trusted (and most often shouldn’t be). If someone owns a home worth more than their property taxes reflect, they aren’t very likely to contact the County to pay even more taxes. This means the County’s appraisal amount is going to reflect a lower value than the home might be actually worth.
This presents a challenge for both the seller and the buyer. Sellers will want to get the highest sale price for their home, and buyers are looking to get the best possible deal. Buyers will look at the home value, according to the Appraisal District, and decide that’s what the home is really worth. They will treat this information as fact, using it to drive a hard bargain. The only way to determine the TRUE market value for a home is to compare recent closed sales for properties in the area. A realtor can do this work for you, helping you justify a higher asking price and negotiating with buyers on your behalf.
2: How do I know if the buyer is REAL?
Just like in the above scenario, some buyers will promise to buy over and over again, and then disappear without a trace. This leaves sellers in a lurch as they may have turned down other potential offers, or have shouldered additional expenses in the interim. When determining the seriousness of a buyer, there are two key components to look for:
Readiness: If the buyer hasn’t completed any of the preapproval process, they likely aren’t ready to purchase a property. Sometimes a buyer will get excited about a property but either isn’t as committed as they say they are, or just aren’t yet in a position to make a serious offer.
Capability: Does the buyer have enough money to execute a purchase? Unless the buyer has cash, or an official credit approval letter, don’t be so sure they have enough money to pay what you’re asking. This doesn’t necessarily mean they are trying to get over on you; they just might be ignorant of what they are getting into.
3: How do I handle multiple buyers/offers?
If you’re selling without a realtor, the time you spend with a prospective buyer can be significant. For this reason, many DIY sellers choose to deal with only one potential buyer at a time. If a seller takes the home off the market for a potential buyer, they won’t be able to find out how many other buyers are seriously interested. This means they can wind up selling for a price FAR below what could have potentially been had they entertained multiple offers, creating an auction effect and driving up the home price. A realtor’s job is to sell homes; they can source and balance multiple offers, increasing the price as buyers attempt to outbid each other.
Get the most with a licensed realtor.
Ultimately you’ll have to decide for yourself whether or not DIY selling is the right selling method for you. The initial savings gained avoiding a realtor commission will likely be eclipsed by the larger amount you could miss out on, selling the home yourself. When you use a licensed realtor to sell your home you gain their industry knowledge, their years of buying and selling experience, and most importantly you get peace of mind that you wouldn’t have in a DIY sale. I have closed on hundreds of sales in the Houston area – I bring a wealth of experience when it comes to selling your home. If you are thinking of selling a home, explore the options available before you commit to a DIY sale.
