Saturday, January 30, 2010

How to Save Yourself $7,500

A few months ago, I sold my house. I spent about a day of effort putting the information online myself, and saved myself $7,500. Well, almost half of that amount, anyway. Let me explain ...

In Canada, when you buy or sell a house, the seller usually loses about a 6% commission to the real estate agent. My house sold for about $130,000, but I didn't have to pay any commission to an agent. It's not that hard to save yourself the same money if you're selling. Here's how:

I started off by making a web page about the house. Granted, I find it pretty easy to throw together a quick web page, and I have my own server account, so that's not exactly the easiest thing for everybody. But if you're trying to sell, you don't have to create your own personal website to benefit from this post. There are ways around that, as I'll explain in a minute.

Once I had the web page together, I put an ad on Kijiji. Anybody can figure out how to do this. You don't even need your own web page - you can let Kijiji "be" the web page. The only reason I made my own was so I could add a bunch of additional information (several pages worth, plus a ton of photos) so interested buyers could figure out more about the house themselves, without having to pester me with questions. Basically, I wanted a filter to save myself some time.

Once the Kijiji ad was posted, I decided to invest a bit of money. I spent a little under $100 and got some major extra publicity for the ad with things like highlighting and home page rotation. You don't actually need to do this, because you can post an ad for free, but I figured that if I was [hopefully] going to save myself several thousand dollars in commissions, it would be worth trying to make sure that more eyes saw the ad.

After that I sat back and waited. I got my first call from someone wanting to look at the house about seventeen MINUTES after it was posted. I definitely did not expect those kind of results. That person didn't turn out to be solid lead, but over the next month I had about a dozen calls. And one of those calls led to the sale.

I wasn't in a huge rush, otherwise I probably would have throw a few extra weapons at the fight. For instance, I had considered buying a professional listing on - a full-package there is definitely more pricey than just putting an ad on Kijiji, but at $1,400 they agree to market your house basically "forever," until it sells (and they also have much cheaper packages). After a bit of investigation, that seemed like a smart idea, although as it turned out I sold the house before getting to that point. I was also considering using Google AdWords to bring more traffic to the Kijiji ad, but again, I wasn't in a big rush.

Of course, most people don't have their own real estate agent training, and selling a house is a complicated issue. I went down to one of the local lawyers, explained what I was doing, and he took care of everything for me for a total of under $700.

The reason that I am mentioning this is because I just read an interesting article in Report On Business that talks about the major changes that are about to happen within the Real Estate industry due to the influence of the internet. If you think you might either buy a sell a home in the next five or ten years, it's definitely worth a read:

And by the way, remember something else. You may think that you're not going to benefit if you're a buyer, because only the seller saves the commission. However, when I was picking a price to sell, I had originally wanted to list it for $134,000. But then, when I realized I was going to lose almost $8,000 in commissions, I thought that I'd "split the difference" and list the house for four thousand less, to help sell it faster, and still come out $4,000 ahead. So if you're thinking about buying a home, it's definitely worth your while to go through Kijiji and the other non-MLS websites out there.

Good luck ...