Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
The following is a post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
With real estate prices down in so many markets, if you’re looking to sell your home, you want to get as much from it as possible.
One of the ways to do this that quickly comes to mind is selling your home without using a real estate agent. After all, real estate agents charge a hefty fee for their services, that could run as high as 6% of the sale price. If you could sell your home without having to pay that fee, that’s more money in your pocket – a lot more!
As much as we might like to see the real estate agent’s fee – and their services – as superficial and unnecessary, the reality is that they perform certain vital services that spare us of the need to do ourselves. Before trying to sell your home yourself, think carefully about how that will impact the sale, and your efforts to make it happen.
What will you give up – and what will you take on – if you choose to go it alone?
You will have to market the home yourself
If you have ever tried to sell a home yourself, then you know how complicated the process can be. Top of the list is marketing the property – nothing will happen unless you are able to master this process.
If you decide to sell the home yourself, you’ll need to place ads in all of the major publications in your area. You may also have to consider advertising on “for sale by owner” websites. You will have to pay for all of these advertisements.
You’ll also have to purchase a “house for sale” yard sign, and print up hundreds of flyers providing photos, specifications, and a sales type description of your home. All of that will take time – and money.
A real estate agent will do all of that for you and you generally will not have to pay for any of it. In addition, the agent will list your property on the local multiple listing service (MLS). By having your property listed on the MLS, it will make it available to every other real estate agent in town so that they can then show it to their buyer prospects. This is a service that you cannot duplicate for yourself. Is also the system by which most homes are sold. You are at a severe disadvantage if your house isn’t listed on the MLS.
You will have to show the home yourself
This will mean you’ll have to make yourself available to show your home anytime anyone wants to see it. In order to do this efficiently, you’ll have to make a point to be home most of the time until the home is sold. You will find out quickly that most of the people who come to see your home will be “lookers”, either having no real interest in buying your home nor the ability to do so if they did. And, some people who call to look at the property just plain don’t show up. That can get old real fast.
There’s a skill involved in showing a property for sale, and unfortunately, most homeowners don’t have it. In fact, a homeowner is probably the worst person to show the property to potential buyers. You’re emotionally involving in the property, tend to see only it’s good points, and of course, anxious to sell it. This can make for a very uncomfortable experience for the people looking at home.
Real estate agents can handle all of this for you as part of the fee that you pay. Not only will they show the home even when you are not around, but they will also pre-qualify buyers to make sure that they have the ability to buy the house. And, since showing and selling homes is their business, they have the skills necessary to show your property in a professional manner.
You will have to handle the negotiations yourself
Whenever you are selling anything, it will help to have a “middleman” to handle the negotiations for you. Real estate agents can negotiate a sales transaction between buyer and seller, and do so in a way that will not only maximize the sales price, but will also avoid uncomfortable exchanges.
Because the purchase of a house involves so much money, emotions can get in the way of the process. Words can be exchanged that could doom the transaction entirely. With a real estate agent in the middle, such comments can be modified and that can keep the process moving forward.
A real estate agent, because he or she is not the owner of the property, will also find it easier to discuss sticky situations – such as repairs and closing costs – with both buyer and seller. Their position in the middle of the transaction could be the difference between a successful sale and one that never goes to contract.
Is that worth saving a 6% Realtor fee
Imagine doing all of that yourself; do you still think that a 6% Realtor fee is too much?
While many of us that don’t work in the business tend to think of real estate sales as somehow easy, the reality is that it is very difficult and can break down at any point in the process. Since the real estate agent is paid a commission only upon the sale of your property, they have a built-in incentive to keep the deal alive and move it forward. Think of the agent as your partner in the sale of your home.
In today’s competitive real estate market, many real estate agencies are willing to work for less than the standard 6% fee. There are some agencies out there that will charge as little as 1% or 2%, just to put your property on the multiple listing service. You’ll have to handle all of the other aspects of the sales transaction yourself, but being on the MLS is a huge advantage – especially in a tight market.
I’m not a real estate agent, nor is this post an advertisement for Realtors in any way. After being in the mortgage business for many years, I saw a lot of home sellers waste a lot of time and a lot of money trying to handle this themselves. If you really want to sell your home in the least amount of time for most amount of money, a real estate agent is a necessary evil.
How about you all? Have you ever tried to sell your home without using a real estate agent? What would you recommend to anyone who is contemplating it?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/marciatoddrealtor/5986303280/sizes/o/in/photostream/