Sell Your Own Home?

[ronb]

Hi Guys,

Okay - so here is a cost benefit question for the forums.

Real estate agents cost a LOT - between 3 and 6 percent of the purchase price of a home. The more valuable the home, the more you are pay. So, if the home is priced at $200,000 you could pay $6,000 and $18,000 in agent fees.

Does it make sense to sell your home yourself? Or is there too much risk of something going wrong that it makes sense to hire a realtor?

[sv2007]

From experience selling your own home isn't about the risk of doing something wrong (because you'd probably (hopefully) will retain an RE attorney) but more about the lack of marketing.

There are different degrees of selling your own house. You can list with a 1% internet RE agency where it gets up on MLS and they guide you thru the selling process (they are your selling broker but probably won't do much besides the bare minimum).

We normally sell with the best agents (because the money saved with a lesser agent or selling yourself is usually way less than the extra money you'd gain with a good agent) and negotiate a rate. For example, if we have 2 or 3 houses for sale in the same area, we'd negotiate a 5% commission (with our selling agent getting 2%) on the houses. With just one house, we've found 5.5% commission is pretty easy to get.

[snafu]

I'm not a realtor but I think it helps to look at this issue from the buyer's point of view. A home is typically the most expensive item a person buys and there are so many pitfalls. Just defining what you need in home ownership is difficult. What's a need? What's a want? What's a giant red flag? Am I operating with information or emotion? It's an exhausting and confusing process. The buyer is looking at 30 years of debt. To help steady the nerves and answer questions, the majority of buyers use an agent.

Buying a home is a pretty scary experience and likely terribly uncomfortable to talk to an owner about issues with their property, the structure, the taxes, the area, the schools, the local services, what they like best, dislike most, the financing, the reasons for the property being offered for sale and a long list of details a realtor fills in that buyers forget/doesn't know enough to ask.

Fact is the money that pays the realtor comes from the buyer and if you've chosen a good realtor they will have earned their commission via their network and relationships with agents from other agencies. They have extensive data to realistically price your home correctly or for fast sale if that's what you want They offer suggestions to make your home more appealing to buyers, vet/qualify buyers, prepare excellent promotion material, effective on-line presentation and possibly skilled, reasonably priced trades people if needed.

I did buy a house directly from the owner and it was an excellent experience for me. The seller likely paid more in legal fees than costs of agent & typical legal format combined but he wanted to carry the mortgage to fund his retirement plans.

Finally, the percentage/fee you pay can be negotiated with your agent from the start... Tell the agent you're looking for a reduced rate at 1st contact. Don't sign a contract without including all the details you expect. I suspect your home would be on the market longer than average.

[james.hendrickson]

Snafu - great point. If you think the commission rate is too high, you always have the option to ask for a 1/4 point or a 1/2 percentage discount. Nothing says you HAVE to pay the 3 or 6 percent or whatever.