My sister and I inherited a house from dad. (Actually, it belongs to the trust, and the turst – of which sis and I are the trustees – will get the proceeds from its sale.)
Are there any realtors who will sell it without charging us 5% (or more) of the selling price? How do we sell it without being stuck with hefty fees?
Also, the tenants say they can’t buy it because the husband is self-employed (contractor). Whould that really cause them not to be able to get a loan? They’ve been in the house for 30 years, and I hate to kick them out. But I want to buy my own house after I move up north!
Having bought and sold several houses over the last 20 years, doing one by myself and the rest with realtors, I wholeheartedly recommend going the realtor route, unless you want to spend LOTS of time learning how to do what they do. But talk to several before contracting - rates can vary.
Do the tenants WANT to stay in the house? Perhaps a lease/purchase agreement would work - and since they’re already in place, a realtor might be willing to do the deal for a much reduced fee. In any event, being self-employed does not necessarily preclude getting a mortgage.
You might also find a realtor/property manager who’d buy the occupied dwelling as an investment, so the tenants wouldn’t be tossed out.
You can sell it as a rental house and the tenants would be able to stay; it’s just a transfer of the lease from one lease-holder to another. Of course, the tenants have no guarantees that the new landlord won’t be a real SOB.
Being self-employed does make it hard to get a loan. Most banks would view them as a high-risk lendee, and either refuse them or only give them high-rate loans.
Depending upon how marketing savvy you are, you could sell it yourself. That means you have to take out the ads, put up flyers, hold the open house, etc. As you can probably guess, it’s probably worth the 5% in comission to just let the realtor do it. S/he is also strongly motivated to get more for the house, so in the long run you could end up better off.
A lawyer could do it but you have to pay them too. This is something you do not want to skimp on. If you don’t sell it properly you can be sued later. Thats why a realtor is fine. Forget real estate agents. Get a Realtor. Find one in the phne book under Realtors. Agents can say anything they want but Realtors have a Realtor board on their back.
I have no problem getting a realtor, but my sister wants a specific amount of money and doesn’t seem willing to part with half of the realtor’s fee. I work with a woman who has a realty license (but she doesn’t want it generally known) and another woman who has a realtor-friend in the area.
Explain to your sister that you two make the decision on what price you want to accept from the buy, not the realtor. If she has a specific amount in mind, then she automatically knows to reject all offers that are less than that amount, plus the realtor’s commission. The worst that the realtor will do is try to convince you to accept a lower offer, but s/he would do that only if he knew your sister’s price was out of line with the current real estate market.
Caveat: I work in a realtor office, but am not licensed, so take this with a grain of salt.
Considering how much you have to actually do to market your home, paying someone a reasonable fee (and that 5% is usually split between the buying and selling brokers) is by far and away your best choice. I see what the agents here go through to sell and buy homes on a daily basis, and you don’t want do do that.
By the way, 6% is pretty much the standard here in Chicago, with 3.5% for the listing broker and 2.5% for the selling broker. Other areas may have their own levels.
This, in my honest opinion, is just dumb. I’m sure your sister wants a specific amount of money for the house, but I want someone to give me a new Saab, too. Doesn’t mean it’s gonna happen.
In my limited experience, working with a good realtor is worth every penny. You have less hassle, you’re dealing with someone that knows the market (and consequently the realistic value of the house), and you have someone working for you that can probably sell the house quicker, and negotiate a higher price, than you can yourself.
I’d recommend, also, you check the price that your sister expects against actual property values. Is her ideal price in line? If not, you’re gonna be sitting around an awfully long time with an essentially unsalable house on your hands, whether or not you have a realtor.
Also, realize that, even if you sell your house yourself, the majority of interested buyers will have their own realtor. Like JosephFinn says, the commission is usually split between the buying and selling realtor. So, even if you don’t hire a realtor, you’re still probably gonna have to pay 2.5% to 3.5% for the buyer’s realtor’s commission.
Well, I would; but she’s handling the Trust (I work and she doesn’t). We’re joint Trustees, but I can’t even find time to send out as many résumés as I want… online, yet!
Several months ago, she didn’t want to sell at all. Now she’ll sell, but has a “minimum” limit. If I work on her long enough (or work her over? ;)) she’ll probably see the wisdom of hiring a realtor. Of course, I can collect half of the rent while I’m unemployed after I move. I haven’t collected my half because she has a baby and I have a good job. But I’ll be collecting my half as soon as the next tax and insurance bills are paid (which she’s been doing).
Still, I want my own house; and we’ll need to sell the property for me to do that.
Another way to consider:
Keep the house as a rental, hire a good property manager to split the proceeds between you and your sister and pay the taxes and insurance.
You will not only each have income to apply to whatever you want (your own house), but you can also use the house as collateral for a new loan.
That way you not only receive the great tax benefits from owning rental homes but you also benefit from appreciation.
Do use a property manager though, will save you lots of hassle.
Unless you want to get out from under the house.
In that case you won’t want to hear this: get a trusted family lawyer into the picture(I know, Handy suggested this first).
In my case the trusted family lawyer added about 20 pages of legal boilerplate and charged me $50.
That legal boilerplate saved my ass.
Good Luck!
I work in real estate, but I’m not a real estate agent. In the course of my job, I’ve purchased hundreds of properties of various kinds, mostly residential, but some commercial and industrial, too. Even with my experience, when Mrs. ricepad and I wanted to sell, we hired a realtor. Whether you realize it or not, selling a house is a business transaction, and you want a professional representing you who will not take things personally.
For this same reason (maintaining professional distance), you should probably NOT retain friends/acquaintances as your agent. Interview a few agents…get a feel for them…and let them do the selling.
One other thing - don’t let ANY of them talk you into a listing contract that is longer than 90 days. Good realtors have the confidence in themselves that they’ll sell it within 3 months…crap realtors know that sooner or later, most properties sell, so if they have a 180-day listing, odds are good they’ll get a commission without having to do anything.
I don’t believe that the statement that a person selling a house himself, unrepresented by a realtor, is automatically legally liable for the buyer’s realtor’s commission. This is a matter of contract, and if the seller does not agree to pay the buyer’s realtor’s commission as part of the contract for the sale of the house, then the seller isn’t liable for it. Buyer’s realtors will tell the seller that he is liable, and that such practice is “standard” but the seller isn’t liable until he agrees to become liable. The seller is free to negotiate this point, or to sell to a buyer unrepresented by an agent.
There are alternatives to using a full commission real estate agent. For example, ehome.com has a 1.5% commission. I have no affiliation with them, and I don’t really have an opinion of whether they are better or worse than a true real estate agent.
I seem to recall hearing about an internet service that would sell your house for even less, but I can’t find it. The basic idea is that they want to make money by recommending insurance/mortgage/etc to the buyers and sellers, so they cut their commission rate.
I heard that they use actual real estate agents to do business, but I have no idea if the service you get is substandard. Has anyone else heard positive/negative things about them or other services?
Sure, that’s true; however, if you are a seller, and you’re dealing with a buyer who’s represented by a real estate agent, then that agent is going to be paid somehow. If you, the seller, don’t pay the agent out of the proceeds of the sale, then the buyer pays the agent directly.
If the buyer only wants to spend X dollars, then he’s either going to offer you X dollars, and you pay the commission, or he’s going to offer you (X - commission) dollars, and he pays the commission. Either way, you get the same amount in the end, but it’s easier for the buyer if he can stick the commission into his mortgage.
Of course, as you say, you can always look for a buyer who doesn’t have an agent (I had some friends who did this, and it worked out fine), but then you limit your potential market.