What is the reason someone puts a for sale by owner sign on their yard instead of listing with an agent?
They believe that they will have more money in their pocket after the sale if they don’t have to pay commission to a REALTOR. After all, the commission paid to the agency is a lot of money!
So, let me ask you, what does the buyer expect when buying a private sale?
That’s right! They expect to get a massive discount from market value because they know that you are not paying an Agent!
I know investors who love to buy private because they are skilled at bullying down the price on a private sale. I assure you, that by the time the negotiation is complete, the seller has not made any extra profit! The seller’s advantage becomes the buyer’s advantage.
Serious buyers are already working with an agent! Up to 99% of local houses for sale are listed with an agent. In order to view these homes, the buyer needs to make an appointment with an agent. Their agent can show any house listed on the market, regardless of which agency it is listed with. These buyers are pre approved for financing and shopping within their budget! These buyers are willing to pay market value for a house! These are the buyers you will want to view your home!
I have shown private sales to my buyers. Buyers are used to going into a vacant home when shopping with an agent and feel very uncomfortable when the owner is in the house. They don’t feel free to voice objections about the property in the presence of the owner. That makes it hard for the agent to overcome objections.
I have successfully sold several private listings. In all cases, the seller left for the showing! In all cases, the negotiating was done through me.
Buyers also do not trust a private sale. They are afraid that the seller is hiding something about the house. For example: renovations done without permit or inspection(no electrician), foundation cover ups, grow op history, mould, or other defects.
When writing an offer on a listed house, the buyer is educated by their agent to know that they can ask for a disclosure statement and a home inspection if they choose.
Why are agents hesitant to show a private sale? For starters, we don’t want to work for free! Secondly, it is frustrating. We would prefer to see a listed house, know in advance what the commission payable is, write an offer, deliver it to an agent and then get paid. We want to enjoy the experience of the sale.
Do agents get paid too much? Let’s do the math. 30% of their pay goes to income tax. 30% of their pay goes to the overhead of running their business. Most REALTORS work on a commission split. If they keep 60% and give their office 40% that totals their costs to be 100% of their income! If I was on a commission split like that, I would not be able to afford to advertise your property! Most offices do offer a better pay split once the agent reaches a certain level of sales. Do these numbers help you understand why some agents are so pushy?
In conclusion, it is not likely that you will end up with more money in your account through a private sale than if you list with an agent.