To List Or Not To List, That Is The Question
Sorry if this isn't the best place for this question - but I didn't see where it would fit anywheres else!
Me never having been a seller before: Is it better to hire a realtor, or can I sell the place myself? Am I really saving any money by doing it myself - I have many connections in the advertising world as I am a graphic artist by profession - I can get ads almost anywhere in the area at a good discount.
I feel 6% realtor commission is high - but then someone recently mentioned to me that, as closing costs are based on the sale price of the home (at 4%), the realtor pays the majority of those fees. Is that true, because in that case, it's worth it to me to hire a realtor and not have to worry about anything other than keeping the house in pristine shape.
Next stupid question: do I have to have the fees for closing in hand (which is fine) or does it just "come off the top" of the funds before I get a check?
And yet another "oh my gosh how clueless can you be" question: Do I need to notify the current mortgage holder that the house is up for sale? Do I pay the mortgage company back, or does the title company handle that?
Thanks for your patience!
-Grey
All good questions. Usually the seller won't have to pay any fees really. For the deal. But it helps to pay for certain things like; have the home inspection and the apprasial already done for the buyers, get a termite inspection done, If there is any damage to the house get it estimated and or fixed. and If you don't want to spend the money offer a buyers credit for any major work. How ever alot of buyers will request things in there offer. Like seller pays closing cost. Which if you are making good capital on the sell of the property I would recomend it. I usually don't offer to pay them but if the buyer request it then I usually pay it. It helps the sale go easyer when the buyers get what they want.
An usually a realor will fit there fees in the deal so that you hardly notice that they are there. At least my realor does. I've done a few deals and never really notice the a differnce.
An by current mortgage holder I would assume you mean the bank? Once there is a deal structured to sell the house the escrow company will handle all of that.
You can sell the house yourself if you would like, but if you are new to it I wouldn't recommend it for the simple fact that there is allot of liegal things involved in real estate contracts. check out other options. There are companies that help with for sale by owner. If you have a HelpUsell in your area there great!!. Hope this helps good luck.
as far as FSBO (for sale by owner) it's going to be determined by your ability to show the house, understanding your local market and prices, how much equity you have in the house and so on. Sometimes you get what you pay for.
The are additional closing costs on the seller side besides the realtor fees which are typically taken right off the top which could run a half of a percent (recording fees, state deed tax, etc). The title company will be responsible for paying off your mortgage.
IF you pay 4% closing fees based on your sales price, and IF your realtor is paying all of that from the total 6% commission, I'd say not a bad deal.... cost you a net 2% commission - but that's not really how it works.
I personally would find 4% closing costs too high, and I certainly consider 6% realtor fees way too much, for what they actually do in most cases. The reality is that you're likely paying 2 realtors, one to list it, another to bring in the buyer, with them splitting the take, but there are other options, and I am one of many who prefer to sell it myself and preserve the lion's share of the profit that they are after. I don't like paying retail for anything.
With connections that you have in advertising, why not try that route first - you have a lot more to gain than to lose imo, unless you're desperate and need someone to do it all for you - but then you pay retail. Don't be intimidated by the realtor stories, they have an agenda too!
The single most valuable piece I've found of the realtor business is getting your property listed on the MLS which is the main realtor bulletin board- which you can do by negotiating simply a flat fee (I pay $99/mo) to a registered "listing agent" or broker, and then you pay the bulk of your marketing dollars to the actual selling agent who brings in the buyer, in my area 2.8% is standard. On say a $250k home, if it takes 6 months to sell, it's cost you $7,600, rather than $15,000 you'd pay if you sign for 6%. The listing agent focuses on these $99/mo listings and doesn't have to do much else, so it works well for them too. This is much more fair I feel.
Remember, EVERYTHING is NEGOTIABLE! The realtor business is but ONE way to sell a house, and they don't own everybody's business. They'll mention that 98% of all homes sold are through realtors, and while that may be correct, it mainly states the success of their own marketing campaign. As a creative type, you might even find it fun to try it yourself, using flyers with photos, websites, various ads, referrals (I pay $1000 to anyone who brings in the buyer, and mention this in my flyers).
IF you still choose to hire a realtor, you can still negotiate for less, such as 4% depending on your local market, and always get the details spelled out as to exactly WHAT they are going to do for that substantial cut of the entire pie - how many open houses, what kind of advertising, how long are you obligated to them - especially if you find they've sold themself really well, but can't seem to sell your house for top dollar. Become educated, there are tons of resources out there, and on TCI!
Thank you all!
I thik I will try to list it myself. I was already planning on signing on to MLS, since that way realtors can find it when they do a search. I was also going to try the website idea, so people could see pictures of the home on the inside.
The $1,000 to anyone who finds a buyer is a great motivational idea - I like that very much!
I figured I would have the info tube with the sign at the house, plus flyers, plus advertising in three to four different publications which I have connections with. I'm self-employed so I am around quite a bit and can be reached fairly easily.
Next question: can I find a good RE Contract on the 'net, or should I hire an attorney?
Thanks to everyone!
-Grey
I could write a book on this subject.
The FSBO attempt is succesful about 10% of the time. That means 9 out of 10 people who choose the FSBO route ultimately list with a brokerage firm and loose the money and time they spent trying to market it themselves.
FSBO's are successful if:
1. You are in a very hot sellers market.
2. Your property is priced as an exceptional deal.
3. Your property is very unique and desirable.
Most people don't price their property correctly right out of the gate... mistake one. Most people think their property IS unique... mistake two. Most people think they can find a buyer themselves... mistake three. At best, you will save 3% on commissions because it is almost certain that a realtor will present you with a buyer rather than just someone buying it from you on your own. After factoring in your marketing dollars and time, the savings may be closer to 2%. Still that's not bad but not when you realize the deck is stacked against you.
I too find it a rip off to pay 6% to sell a property. But the reality is that 6% does not go to one person. On average, it is split up among four realtors. Two brokers and two agents. Does it take that many people to sell a house? No. But that's how the system works.
I find most realtors to be borderline incompetent (sorry realtors, but that's my opinion) but they do find buyers. And they're generally good at convincing those potential buyers that they should buy your property. They may think your property is a dog but that won't stop them from expounding it's virtues to poteitial clients.
There are countless reasons why it's so hard to buck the system. One example is that most buyers are clueless too. They need a realtor to hold their hand and they would not even want to meet the seller much negotiate a deal with them.
And as for signing with discount brokers, sometimes that's worse than trying to sell it yourself. When you understand how commissions are split, it makes sense. When the network of brokers know that your home has a smaller pie for everyone to split, it goes to the bottom of the their list. Don't expect them to put the same marketing and sales effort into properties with smaller commissions.
Realtors have told me they will not show homes that are listed through discount brokers or listing services, even if getting full 3% as buyers agent.
They feel they will have to do all of the work, for both sides of the transaction, for the same money, and deal with amateurs to boot.
Apparently, I am in a buyers' market.
I suggest you make a visit to an open house on a rainy weekend afternoon and play "20 questions" with the agent. You can often learn more from that bored agent than you will in a visit to a busy office.
[addsig]
I am in a seller's market. Homes do not last very long here (a few days to a few weeks). I have no doubts that my remaining rental will go quickly - my concern is my house.
Our area is such that some houses are nice, and others are NOT nice. Somehow the nice ones like ours go for plenty of money in spite of the neighborhood. In our area, on the same block, you will get homes selling for 140K, and ones selling for 55K. Also makes it harder for the appraiser - I have pulled the comps for our area though, and have heard that if you have done that and hand it to the appraiser, it helps them out.
I have bought and sold my own property before. Alot of realtors don't want people to know how simple the process really is and all you need is a good attorney with some experience with it. Its a good option if you are starting out or have a very slim margin of profit.
...but as others point out, you have to price the property well, to make up for lack of exposure on the MLS. Depending on the property value, it can still be better than paying that large commission. If you can, its better to have enough juice in the deal to have the realtor do the showings and selling. As far as the rest of the process, most of the legwork and closing costs are in the buyers corner of a sale.
Thanks All.
My husband suddenly remembered that his mom has a close friend who is a realtor. So we took her out to dinner and she was more than willing to give us a few tips on selling the home ourselves (she lives an hour away).
She mentioned that if we are unsure of how to handle the paperwork, we should talk to realtors about taking 1% commission for doing the paperwork. We handle the advertising and the showing, we find the buyer.
And I discovered you can get on MLS, for $499 for six months. Not too bad.
My better half is a realtor. For the national average...If you do a fsbo you will get 15.4% less then using a realtor as of November 2004. This was for homes purchased from mid 2003 through mid 2004. However I would agree if you are in a hot selling market then you would probably do better then the national average.
My better half is a realtor. For the national average...If you do a fsbo you will get 15.4% less then using a realtor as of November 2004. This was for homes purchased from mid 2003 through mid 2004. However I would agree if you are in a hot selling market then you would probably do better then the national average.
My better half is a realtor. For the national average...If you do a fsbo you will get 15.4% less then using a realtor as of November 2004. This was for homes purchased from mid 2003 through mid 2004. However I would agree if you are in a hot selling market then you would probably do better then the national average.
Thanks Meddac.
We just got our first offer this morning - for 10K less than asking. Will counter, see how it goes. They seem pretty serious, they have 30K to put down with the bank and say financing has been taken care of (I guess a prequal letter) Only had the sign up for three days, and the ads don't even start until Tuesday.
Definitely a seller's market around here. My phone is ringing like crazy - so glad I put the listed number to a cell phone, not my home. And we are asking a decent amount of money for our home, I know we are not low.
We are asking a realtor to handle the paperwork for 1%. Seems a fair deal to me.
Hi, find a title that you'll have to do the closing for you they may help you do the paper work in return for doing the closing with them, You don't really need an attorney either The title title company will do whatever is needed. At least they do for me. They'll at least give you FSBO forms so you can also do it yourself Really not that hard but they'll probably help and save you the 1%.