How to save thousands selling your home

Did you know that you don't actually need the help of a real estate to sell your home? Property commentator Peter Boehm explores the pros and cons of do-it-yourself home sales in his atricle on Yahoo!7 Finance.  Full article on Yahoo!7 Finance

Whenever we think about selling our home or investment property we immediately think about appointing an estate agent. Why? Well, there are probably three main reasons:

• Because that's the way it's always been done

• Because we believe that by law you must sell through a registered estate agent - which in fact is not the case.

• Because there's a belief that selling through an estate will get us the best possible price.

Are estate agents needed to sell residential property?

But there are signs that things may be changing as more and more Australians opt to cut out the middle man and sell their properties themselves. Indeed, if we look at what's happening around the world in places like the US, Canada, Italy, Germany, and Israel between 25% and 50% of all property sold is done directly by sellers through do-it-yourself or for sale by owners (FSBO) websites. And at home we're following this trend with growth in our own FSBO sites like www.buymyplace.com.au

FSBO sites are based on the premise that property is bought not sold (which, especially in the Australian market, is pretty much how it works) and that technology has levelled the property playing field.

For instance, it's no longer necessary to spend thousands of dollars on newspaper advertising, glossary brochures and magazine inserts or maintain shop fronts (like estate agent offices) to market a property since this can be done relatively cheaply and with greater reach on major property portal sites like realestate.com.au which account for around 90% of all property searches - although it is worth mentioning that realestate.com.au will only accept listings from registered estate agents.

You can save thousands by selling your property yourself

One of the main reasons FSBO sites are becoming more popular is cost savings. Typical estate agents commissions range between 2% and 3% with an additional 50% of commissions being spent on adverting. So on a home selling for $450,000, you could be looking at $11,250 in commissions and $5,625 in advertising – a grand total of $16,875 or 3.75% of the selling price.

The cost of listing on an FSBO site on the other hand is significantly less, ranging from zero (for free listings) to around $900 depending on the level of sales and marketing support you need. Clearly, sellers who sell themselves are going to save tens of thousands of dollars in sales and marketing costs and could as a consequence, be more willing to negotiate on price, meaning there may be a knock-on financial benefit for buyers as well as sellers – for instance, the financial impact dropping the sale price by say $5,000 is not as painful if there's a $16,000 saving in sales commissions.

But cost savings are not the only benefit for sellers, other advantages include: being in control of the sales process; not having to worry about estate agent contracts; working to their schedule and not the estate agent's; and there being less pressure to drop prices (remember an estate agent only gets paid when a property is sold so they want the sale).

You take on the role of the estate agent

However it's important to remember there's much more involved in selling a property yourself than simply listing it. For starters, you're going to have to be more involved and spend more time managing the day to day sales process.

Providing you have the time and the inclination, this is not necessarily a bad thing because buyers generally prefer to deal directly with the seller - after all, who is in the best position to answer questions and know more about your property than you do?

In addition, there are other important considerations to think about- things you may be worried about doing yourself and/or require independent expert support and guidance on. These include:  

• Pre- and post-sale legal advice – you must make sure all the necessary legal documents are complete and accurate and that your legal and financial interests are protected – remember estate agents do not provide this service, this is where your lawyer or conveyancer comes in.

• Pre-sale marketing advice - to enhance your property's sales price it should be marketed in the best possible way so for instance, the property's presentation and the quality of photographs (for inclusion with the online listing) are important. You also need to think about sale boards, brochures and copy writing. Plus, you'll need to consider, in light of market conditions, which sales method to adopt e.g. private sale or auction.

• Managing and conducting open for inspections – historically handled by the estate agent, this is something you'll need to do or get someone to do it for you.

• Sales negotiations – for starters you'll need to work out your target sales price. Then you'll have to negotiate with buyers and complete the necessary sales documents or again, appoint someone to act on your behalf.

• Auctioneering services (where required) – auctions can only be conducted by registered auctioneers so if an auction is your preferred sales approach, you'll need to bring someone in to do it. The auctioneer will also help you assess market interest on the day of sale and help determine your reserve price.

Good FSBO sites will ensure that do-it-yourself doesn't mean do-it-on-your-own. For example, some sites, for an extra fee(s), will provide the additional services noted above, and/or put you in contact with people who can provide them - such as an auctioneer and a lawyer. How much extra you'll pay depends on what additional services you're looking for but all up you'd be looking at paying no more than around $1,800 to $2,000 plus legal costs.

Full article here on Yahoo!7 Finance