In times of low inventory and strong buyer demand, it seems that any home can be sold, before even so much as a for-sale sign goes in the dirt. In fact, demand is so good that just whispering to a friend or family member that you might be selling your home is often enough to garner at least informal offers. At times this can be so commonplace that many homeowners at least consider selling their home in a private sale vs. public sale on the MLS.
When a home owner is deciding to go the route of a private sale vs. public sale on the MLS, the first question they need to ask themselves is: what is most important to me?
For some people, the answer to that question is they want the sale to be quick and easy. They don’t want the hassle of cleaning, repairing, and staging a home for sale. For those people, selling via a private sale might appear to be the best way to go.
Other folks will simply want that the home go to someone they feel is a “deserving” owner: a friend or family member they know well, or perhaps someone from their church. They want to sell to someone they feel shares their same values, and will maintain the home and observe the same sorts of traditions that have been followed by those who have owned it previously.
If quick and easy, or knowing your home’s next owner well are most important to you, selling your home via a private sale could be in your best interests. But keep reading – there’s more to consider.
For most homeowners, the most important consideration is how much money they will walk away with at the end of the sale. For those people, the way forward is more clear. Opening the home up for a public sale on the MLS will present the home to the widest pool of potential buyers. A larger pool of buyers increases the odds of finding a buyer who will pay more for your home than, say, your neighbor or one of your old drinking buddies.
If selling your home for the most amount of money is your most important criterion, then selling it via public sale on the MLS is your best bet. Unfortunately for many home owners, it isn’t as simple as all that. –Seb Frey, Real Estate Guy
The tricky thing is that for some people, they won’t really be able to identify what is most important. Some things will be equally important, or perhaps, one thing will be most important but the others important as well. For example: a lot of home owners actually need the sale to be quick and easy – but they also need to get the most they can for the property. Perhaps they are ill, or simply don’t have the energy to get the home into prime shape, but need the money to pay for something expensive, like medical bills, long-term care, or a child’s college education.
The primary virtue of a private sale is that they are usually quick and easy, or at least, they have the potential to be quicker and easier than a public sale. In most cases, private sales happen between parties who already know each other, and with the buyer already being at least somewhat familiar with the property. Likewise, the seller often knows the buyer well enough that they feel the home will be left in good hands, and won’t turn into a den of iniquity or bulldozed and replaced with a McMansion.
Where a private sale starts to look less attractive is when it comes to netting the most money for the sale. Often times in a private sale, there is no commission, or a much lower commission, and you may not need to lay out cash preparing the home for sale on the open market. But will that be enough to offset the potentially substantial increase in sale price with a public sale? How can you be sure, either way?
The truth is, there is no way to be 100% sure, unless a buyer is offering you such a price premium it would be clear folly not to accept it. Given the absence of a too-good-to-be-true offer, the best you can do is be reasonably sure, by determining what the home would sell for on the open market, both “as-is” (without doing much or little in the way of getting it ready for sale), and by selling it in prime condition using a proven, guaranteed system for selling your home for the highest price, in the shortest time possible.
It may well be that your neighbor (or ex-college roommate, or whoever!) is in fact willing to pay a price that nets you the most for your money – or close enough to it that you won’t miss the difference, especially considering it might save you time and effort.
But before deciding to who and how you sell your home, it’s important you first make a realistic assessment of the home’s current condition. You should do this before talking seriously with anyone about how much you’ll sell it for. You’ll then want to figure out how much you could net for it for as-is, without doing anything to the home, and what you’d walk away with if carried out the required repairs, staged the home properly, and marketed it to the general public for sale at the highest price possible.
It’s important for you to understand your home’s worth on the open market when negotiating with any buyer – even one that you already know. It’s best to have the facts on the table – the home’s condition, it’s as-is market value, an as-is repaired value, the cost of sale with a public versus a private sale, and all the rest. Once you have run the numbers and have a clear-eyed view of your home’s condition, market value, cost of sale, repair costs, and are really in touch with what matters most to you, you’ll be able to make the best decision regarding a private vs. public sale on the MLS.