Any tips for selling a home privately?

TGIFTGIF wrote: ↑ Hoping for tips on:
1. Does anyone know a good company/appraiser? I've done some research, but I'm not sure how to interview appraisers/companies to find a professional one or determine what rate is reasonable

2. I heard that a lawyer can be used to draft an offer instead of a realtor. Is this recommended? If they decide to use the buyer's realtor, what's a reasonable amount that for the realtor to charge (assuming they do this at all)...

Just wanted to mention again that they're set on this process or not at all, and all parties involved know what they're getting into....
Thanks so much![/quote]Your family/friends can find an appraser familar with the area by searching the registered appraisers association in their province. And yes, this is indeed a good idea,

Not sure about other provinces but very few circumstances in Ontario allow for a buyer and seller to use the same lawyer. It's best practice for byer and seller to have their own lawyers.

There really is no need for a Realtor's involvement in your scenario and it would be a conflict of interest which should be avoided.

I've been directly and indirectly involved in these situations before as the 'appraiser' as the private buyer and also as the private seller.

For what it's worth there are no 'tips'.

Get 2-3 local realtors to do a home evaluation, hopefully they are within 2-3%, net realtor fees + HST out of the equation and then it's just binary yes/no question for the buyer to answer if they will take it.

If the family wants to give a deal, then work backward from the 'market' price and the seller should be clear they are leaving money on the table to help the buyer and proceed accordingly. Both sides need to have their own legal representation.

I guess I do have a tip, if you find yourself in a position where you've offered a discounted price relative to market comps and the buyer attempts any sort of negotiation immediately it's best to walk away. When you are doing the buyer a favour and present them with the favourable price you have to have your number and pose it as a take it or a leave it. Too many people leave this open to interpretation, not to come off rude, or whatever simply making the situation worse, opening up a pandora's box. Two people negotiating directly generally doesn't end well, too much emotion, needs mediation. When no mediation keep it simple: provide favourable pricing - anchor it to comps and take it or leave it.

Don't use an appraiser, it costs money and they generally are lower valued. Get 2-3 agents to give you a valuation and look closely at the comps in the area and then have your parents decide on a price that they would want if they were to list it with an agent.
Then, let their friends make an offer. Your parents can then decide if they are leaving money on the table or if it's close enough to justify the offer. Depending on where they are, having it on the open market generally leads to competition and more money so even the comps and the realtor's opinion may be low.

If you are acting in good faith then you should tell them the number, you are the one with the 3 'appraisals' and the best info on the property, not the unrepresented buyer in this case. You are also now starting a 'negotiation' process.

You want a tip? Don't let two emotionally attached people negotiate. Statistically speaking the deal will fall apart.

Don't overcomplicate it.

Use an appraiser.

Most agents today demonstrate no knowledge of market value, it shows when the winning bids are 20-30% above the next loser. Most are only halfway through their courses, they don't know what they don't know - which is anything other than, list low, throw in a guess number and buy without conditions.

An appraiser's value is lender approved and court approved,. Why is that important? Because in the event of a legal issue, that is where the court will restf, it will be dependent on more than just area price but property deficiencies or intricacies.

No need to pay a Realtor - I'm one, been one for 16 years, The majority of today's agents haven't even completed their full courses,

Imo the best way to sell private is for your parents to hire an appraiser and their friends to hire an appraiser and then average the 2 appraisals and there is your price. Takes all the emotions out of it.
Then have your parents lawyer draw up the contract and then have the friends lawyer review it. Done and done everyone is happy.

An appraiser's opinion of your home value is not a substitute for market competition. When the market settles down, a real estate agent will be in the best position to assess your home's value. The market is not settled. So any opinion is just an opinion on value applicable to a specific moment in time.

Any real estate agent worth her salt will tell you it's hard to gauge. In order to best assess your home's value, you'll need to stage it, you'll need to compare it to similar homes that sold in the area, and you'll have to assess it against the available inventory of homes on the market. None of that can be done by an appraiser because your folks want to avoid the hassle of staging.

Good real estate agents will help you highlight your home's best assets and downplay the weaknesses. Have you seen how some homes present in photos compared to in person? And even then, you're likely seeing the house on its best day ever.

Selling privately limits your ability to get full value on your home. But you can still get a reasonable amount based on recent comps. And in this market, that might still be full value!

But your parents have to accept that by cutting out a listing agent, they may not present their house in its best light. And by cutting out the market from bidding for the house, they may not get the best offer.

If that is okay, here are some tips.

1. Talk to a lawyer before you do anything more. An experienced real estate lawyer will flag the pitfalls of private sales. They will also help you avoid signing a bad sales contract.

2. Fix up the home a bit. Don't give your potential buyer, good friends or not, a reason to question the quality of the home. No need to repaint the whole house. But patch those holes, paint where there are stains or scratches. Make it look decent.

3. Skip the real estate agents' appraisals. You tend to get what you pay for. Instead, spend time on House Sigma. Review recent sales in your area. What did other people get for their houses? Are prices going down, remaining the same, or going up right now? Are there more houses on the market right now that offer the same or better options for buyers? Use RBC's house appraisal tool and include all renos. Use House Sigma's appraisal tool. Both of those tools tend to undervalue houses. It it gives you a good floor. Compare those values to what you are seeing houses sell for near you... now you have your range.

4. Figure out your bottom line. How much do you need to make the move worthwhile? Who cares about property value. If you can't get what you need, then don't sell. For example, I'm still sitting on ADA/Cardano coins. Its just not worth selling right now.

5. Remember, it's not all about money. Once you know how much you need, ask whether it falls within the range of comps and house value you calculated. If yes, consider the other benefits and disadvantages of moving. We can get caught up in hearing about other people's windfall sales. But if you hate cleaning your suburban McMansion, then there's value in downsizing... Even if the market won't make you rich. For me, I needed a home office. So I had to upsize. There's a lifestyle value that is hard to translate into dollars.

6. I don't care how close your folks are to these people, get a healthy deposit. And make sure they can close the deal. That may mean getting a mortgage pre-approval letter. If it's awkward onask for, just say your lawyer told you it's important to so in private sales. If the buyer balks, then you just saw your first red flag.

7. Relax. The complex stuff is almost all automated now. Your folks' lawyer will handle the tough stuff. Moving can be fun. Hopefully it puts money in their pocket.

licenced wrote: ↑ Use an appraiser.

Most agents today demonstrate no knowledge of market value, it shows when the winning bids are 20-30% above the next loser. Most are only halfway through their courses, they don't know what they don't know - which is anything other than, list low, throw in a guess number and buy without conditions.

An appraiser's value is lender approved and court approved,. Why is that important? Because in the event of a legal issue, that is where the court will restf, it will be dependent on more than just area price but property deficiencies or intricacies.

No need to pay a Realtor - I'm one, been one for 16 years, The majority of today's agents haven't even completed their full courses,

I am going to disagree.

Most appraisers are bought anyway.

They are also not going to be as accurate as local agents when 'value' right now is entirely based on sentiment not fundamentals that appraisers try to anchor to.

Easy process. Get an inspection and appraisal , so both parties know where the house stands and what it might need. Compare houses sold in your area, and use websites like HouseSigma that will show that houses sold street by street in your surrounding area. This part is easy, and in most cases you’ll find houses sold nearby with same builder, model, or at least similar specs. Listings professionally staged and with new renovations will fetch top dollar, so ask yourself, is this house checking those boxes? If not, they’re leaving money on the table, as they will get more by doing that. Do they understand this? Are they still ok with that? Then proceed to next steps.

Finally, both agree on a price and use a RE lawyer to close the deal. Easy.

Now on the flip side using an agent is a gamble -let me tell you why. RE agents are biased and paid solely on commission. They will promise you the world and sales pitch you into signing documents that bind you with them. Not worth the hassle. Everyone’s an “expert” when it pays them 30 grand+ for each deal -am I right? Anyone can compare sold prices online. This is 2022. Good luck

RichmondCA wrote: ↑ I am going to disagree.

Most appraisers are bought anyway.

They are also not going to be as accurate as local agents when 'value' right now is entirely based on sentiment not fundamentals that appraisers try to anchor to.

That's fine. I don't know all appraisers to know how many are "bought" Appraisers like Realtors have a fiduciary duty to their client in this case it would be the consumer.

They do two sets of valuations, one on replacement costs the other on market value and then provide an opinion of value. Appraisers are not in the business of opining as to what a buyer may or may not pay, they opine based on the value of the propety at hand. Their opinion is what holds sway in coursts and with lenders and insurers, ours does not, no matter how highly we may think of ourselves - the majority today lack any skills.

Considering as i've said and has been supported by many in here that winning bids are often 6 digits higher than the next best, why the heck would anyone want an agent's assessment of value, most of whom will see dollar signs anyway and try to buy the listing?

I think we are talking about two different things.

Assessing market value and working an offer night are two different things, I am also not trying to put realtors on a pedestal. I still stand by the fact that a good local realtor will be a lot more accurate on market value than some unfamiliar 'appraiser' that uses the same information as a realtor and then plugs in some factors to benchmark to comps that are likely not going to be reflective of reality.

Over covid I appraised 2 of my properties, one residential and one commercial. Residential appraisal was 5% lower than market, with easy comps. The Commercial appraisal was 'bought', cost me 8k, and in the end I effectively dictated the final value with 'proof' on replacement cost and invoices, but the whole thing was a joke. I didn't care to be erroneous, but I used a reputable appraiser as I was shopping the place for refinancing with multiple lenders and didn't want anyone disputing the value....surprise surprise also came in on the lower end.

Long post but there is a recap of a situation at the end that merits reading.

No we're not talking two different things actually. Market value is an estimate of what a property will sell for. Offer prices are based on market value and sentiment. An appraisal is an advanced and studied calculation based on more than sentiment - it is why, as I've mentioned, appraisers are sanctioned as expert property evaluation witnesses by the courts, lenders and insurance cos to provide an opinion of value, while Realtors are not.

RichmondCA wrote: ↑ I think we are talking about two different things. Assessing market value and working an offer night are two different things,..

Over covid I appraised 2 of my properties, one residential and one commercial. ...

Unless you are a licensed appraiser you may not appraise a property. Perhaps you've not completed your courses to know that. But to say you appraise a property is to place yourself and your brokerage in an implausible position with RECO if there is ever a problem because as we're all supposed to know, we may not hold ourselves out to be something we are not. To do so would also invariable put the the type of seller or buyer in OP's post in a bad position if you were to give them an opinion, whether under an agreement or not and call it an appraisal where they relied on it to their detriment in the master/servant relationship. The object of our job after all is to protect the best interests of our clients - implied or express.

To that end, this is also RECO's position, it is the same position as the courts and the Appraisers Institute.

It’s important to note that only a qualified appraiser can conduct an appraisal for you. That means holding a designation from the Appraisal Institute of Canada or the Canadian National Association of Real Estate Appraisers. T
https://www.reco.on.ca/ask-joe-question ... appraisal/

hat same site is replete with disciplinary charges and terminations against agents who think they knew what they could or couldn't do.

Residential appraisal was 5% lower than market, with easy comps. The Commercial appraisal was 'bought',

I appreciate your enthusiasm, but you would not ever want to have to defend this position, you, or any reader can feel free to write the Registrar, Joseph Richer for his clarification as to whether or not you may appraise property or call your evaluation an apraisal if you are not a licensed appraiser.

In any case, as it happens someone who knows me in here alerted me to a post today on a prolific Realtor's blog called 'trb' that is quite timely as it's an expose of what happened with one of his offers and shows in just this example how much we in this business think of ourselves, despite or incompetences.

The author priced a listing, arbitrarily discounting it to come up with a list price. He proceeds to tell the tale about the varying offered amounts from an ensuing 21 offers, supporting exactly what I’ve stated – most of us in this industry have no idea how to evaluate property, to wit:

Author’s seller’s goal is $1,100,000, his is $1,200,000, they list at $898.900, why? for no logically stated reason since no one actually searches in anything other than $000 increments, especially when list price means absolutely nothing This is exhibit #1. List is 82% of seller expectations and 75% of agent expectations.

Exhibit #2 - Calls and offers line up as follows:
$1,000,000 – 2 calls testing the waters at that price
$1,100,000 – 5 offers (Essentially 30% valued the property between $1.0mm and $1.1mm, 23% of all bidders)
$1,150,000 – 4 offers (48% valued the property at no more than $1.15mm, 43% of all bidders and 19% of bidders valued it at $1,150)
$1,185,000 – 1 offer
$1,200,000-$1,225, 000 – 4 offers (69% valued the property at no more than $1,225mm, 19% of bidders valued it at between $1.2mm and $1,225mm)
$1,250,000 - 2 offers
$1,265,888 – 1 offer (83% valued the property at less than $1.3mm 81%of all bidders)
$1,305,000, $1,306,500 and $1,310,000 (13% valued the property as worth more than $1.3mm, 14% of all bidders)

Exhibit #3 revised offers are: $1,350,000; $1,321,500; and $1,321,000

That’s a swing of $ $310,000 from low to high on initial offers and $350,000 on final sale price, 34.4%/38.9% more than list price, respectively, 32% more than the lowest one-third of bids, 12.5% more than the author’s valuation who aligned with 19% of bidders and was on side with 62% of all bidders.

Why is it possible that agents with all the same tools at their disposal can value properties with such drastic differences? From start to finish there were a whole mess of guesses.

OP's family and family friends can toss the dice and get a swing of 32% or get a number by an appraiser from which they can decide on a premium or not.

It's really that easy and we ought not to be trying to convince people who don't like or trust in our services that we're athe answer to their problems,

We're very often, not.

We will agree to disagree.

I can appreciate the time you took to clarify your position, however I don't agree with your arguments and I think we are going off on a tangent. I wasn't going to respond, but because you are highly knowledgeable when it comes to regulation/compliance you are owed a response.

For starters, this thread is not about regulation or making a court case which is where you keep going.

Second, appraisers are not the gold standard for market value, market participants are the gold standard for market value - they set it. Market is driven by sentiment, not by what someone punched into a computer that is completely unaware of what's happening on the ground floor.

Third, in my personal experience appraisals always come in lower than 'market' value. If OP relies on an appraiser for this private transaction, he is going going to leave money on the table and short change himself.

Suggest that if have recent sales in same area for similar properties then use those. If really going to hire someone then an appraiser imho.

Appraisers can't always account for market coldness/hotness [yes, very technical terms ] and for most part I believe they come on lower side although not necessarily by alot.

Agents, especially newer ones, don't really have the knowledge other then getting sale done. There are very knowledgeable agents but gotta find them... there is one in this thread
Listing price is same games played for years... list low so have more offers and competition. That's why see all the signs that Sold $X above listing. I would rather see Sold $X above market value. That ain't happening.

Suggest try one attempt to see if can reach mutual amount that best comprises what seller wants to sell at, what buyer wants to pay, what house would get on open market. One or both party(ies) will invariably feel slighted however if can reach some compromise based on my first sentence then less so.

I think OP is better off going with a sold database like house sigma. In my experience, appraisers seem to always be behind the eight ball in a hot market. If OP is in a rural or other slow market then appraisals could be more accurate. Appraisers typically work for lenders whose philosophy is to minimize risk by not lending an amount the bank does not think it would be able to recover. In our red hot Edmonton market, where homes were selling above asking under a multiple offer scenario, I had a bank appointed appraiser come in $10k under what my buyer had offered. No way considering that seller ended up getting higher back up offers. Anyway, I digress.