Has anyone ever sold their own house without the assistance of a realtor? What are some of the pitfalls I should look out for? It seems straightforward enough, and I’m considering it, but I’m curious to know what some of the up and downsides might be.
This seems mor like IMHO material but anyway, here goes. I tried selling my house on my own and after a while hired an agent. IMHO it was worth the fee because they put my property on the multiple listing thing and that brought in a buyer. Maybe you can find a buyer on your own but, believe me, you are going to have to work very hard to get the exposure the ML gives you. You are going to earn the money you save, unless you are extremely lucky and can find a buyer on your own. Other than that the agent also provided some help in the negotiations in the sense that we could play the game of “I have to talk to the owner about this” etc. but I wrote my own contract (which surprised him as it was the first time a client did this) and handled pretty much everything. I still think he was worth the commission. The whole thing was a headache and he definitely helped.
My GF owns a Real Estate business so I may be biased but as far as I can tell the only upside to selling on your own is not having to pay a commision. As stated in the previous post the MLS brings buyers from all the other agencies that have access to it. Finding a buyer on your own is difficult and even if you are lucky enough to find one the contracts can be very complex depending on the buyer and your demands. Commisions in this area (TN) are typically 7%. You can try to up the selling price a little to cover this. Good Real Estate agents and brokers deal with this stuff every day and will have suggestions to help move the property faster and to smooth over any rough spots in the negotiations once it is sold. If you do decide to sell the property yourself I would highly recomend having a lawyer draw up the contract if you have never done this before. People can and do sue over things not covered by a contract written by novices.
I agree. Even if you are a person like me who likes to be in control, having an agent still helps in that they can sound the other party etc. It is the old game played by car salesmen. having an agent most definitely is helpful and their advice and experience (assuming you have a good one) are worth it.
Getting a lawyer is good practice in any case. A real state agent is not a lawyer. Mine was quite experienced and I was quite surprised at how weak he was in this area. Because i am cheap and like living dangerously, I did not get a lawyer but just spent many hours consulting standard contracts and I drafted my own. I am quite sure I did better than the agent would have done. He just wanted to use the standard forms filled with his own alterations and amendments. Nothing wrong with using a computer and printing it out in clean. Real estate agents are not aware of the invention of the word processor so they just shoddily ammend things on the standard form and then fax around. in the end the whole process looks awful. In any other business it would be inadmissible. Just imagine ammending a standard resume like that and submitting it.
People can and do sue but a real estate agent is no substitute for a lawyer. If you want a lawyer then get a lawyer but don’t think a real estate agent will provide the same level of protection. In my experience real estate agents are quite weak in many areas where they should be stronger like legal and financing stuff. They are good at making homes look good and holding customer’s hands but I have not found a single one who could discuss a mortgage in any depth.
Disclaimer: I have a Real Estate Broker’s license in the state of Oregon.
First, you need to decide on an asking price for your house. Remember, a thing is only worth what someone is willing to pay for it. When a realtor suggests a price for you to ask, they have probably done what is called a Competitive Market Analysis, commonly referred to as a CMA. What they do is look on the local Multiple Listing computer at similar houses that are currently listed and have sold recently to see what a house like yours should sell for. Then they will adjust their figures according to any special features in your house and give you a good estimate. Experience helps a lot in this area also.
Second, you will need to advertise, advertise, advertise. A realtor has the advantage in that they get to put their listings on the Multiple Listing computer, where it is more or less immediately available to all the other ML realtors who are looking for properties for their clients. You’ll be competing against them.
Third, you must have to be ready to negotiate dispassionately. Be prepared to have people diss your choice of paint colors, those beautiful curtains in your living room, etc. Also be prepared to meet those people who love to negotiate directly with a seller because they think they can push them in directions they can’t push an experienced realtor. A good understanding of offers, earnest moneys, counter-offers, contingencies, etc. will be invaluable here. Some understanding of the laws of contracts will also be useful when the papers start flying.
Once you reach an agreement, however, things get a little easier, ‘cause then you can set up escrow, and the escrow officer will be glad to help you with a lot of the annoying little details until they place a check into your hand.
If you’re willing to do a lot of research and a lot of leg-work on your own, you certainly can sell your house yourself. A lot of people do. But please, do your homework first.
Note: You will get calls from realtors trying to get you to list your house with them. How you handle them is up to you. However, if they ask you if you will give ‘courtesy to broker’ (it may be called something else where you are.) You should seriously consider it. What that means is that you will pay a commission to a realtor who brings you a willing buyer. That ‘courtesy’ commission is usually about half the usual commission rate for the area, but it could be anything you negotiate with the realtor. Don’t be afraid to negotiate. You’ll also have the knowledge that the paperwork will (probably) be done correctly.
I say ‘probably’ because the sad truth is that there are hacks in the real estate industry just like in any other profession. In fact, the profession attracts a certain number of people who think, like the general public, that the pay is great for not much work. In truth, it isn’t all that great for most realtors, and there’s a lot more work involved than most people realize. Some people do get rich, a lot of others just get by. There are also a lot of people who take a slice of that commission that you don’t know about.
Good luck.
Another disclaimer: I didn’t cover half of the stuff that can and does come up in a real estate transaction, nor may anything I said here be construed as gospel, and especially as legal advice. Real estate laws vary from state to state. Contents may settle during shipping. Not to be taken internally.
I see that others have posted while I was typing my answer, so I’d like to address one thing they talked about. Real Estate agents are forbidden by law to give legal advice. Even if they know the answer.
Lawyers take a very dim view of anyone they think is practicing law without a license. The truth is that some realtors know more about real estate law than many lawyers, but sadly that often isn’t the case. If you have any legal questions, then by all means, consult a lawyer who specializes in real estate law.
I purchased the house I am in now and it was a FSBO (For Sale by Owner). We had no problems with the transacti. Spent 2 days offering and counter offering to get to a set price. I inisted on an inspection and the right to cancel if riar costs were in excess of $1000. They fixed everything that turned up, including repairing the hottub 3 times. I had an atorney look over the offer and I sugesst you reatin one too.
I used realtors to sell and buy my previous homes and will never use them again. I feel that the 7% commision is a major ripoff for the benifits received. If you can negotiate with prospective bueyrs and your home is in a location that people will notice you do not really need the MLS advertisement.
Also the realtor may say they are working for you but in reality they are trying to make a sale to get a commision. If they need to close the deal they may not always give you the best advice on counter offers etc, because they want to close the sale.
MyI suggestions are for after you kind a buyer.
Don’t mess with someone unwilling or unable to put up some “serious money” (earnest money)at the time of contract. Too many people will walk away if all they have given you is $100 or $500. I would suggest 2% of the purchase price. What you want is not the right to sue(although that should be included)–you want the deal to go thru without legal action being necessary.
The other things in the contract. When does possession occur? What personal property or applicances are included or excluded from the sale. And repairs. Be as clear and exact in the the contract as you can on these matters.
My house has been on the market for a week FSBO. This is after firing the realty-guy for not having brought any traffic.
So far it’s not hard – what’s the deal with advertising? “Hi… I’d like to place an ad – you take credit cards, right?” If I go into a store, I put up a poster if there’s one there. Appointments? Sure, come by at 6 with your pre-qual or pre-approval. Local FSBO magazine? Good rates. USENET (and the SDMB) – priceless.
I don’t think a realty-guy’s a bad way to go, if they get you results. Luckily after having had him/her for 8 months, we’re in no friggin’ hurry, and were able to drop the price a WHOLE lot with the same net out. With luck, I’ll report back in less than a month that we’ve got a buyer.
We bought our house FSBO. This is our first house, and the transaction was absolutely painless. We sat down on a Sunday morning with the owners to tea and cinammon rolls, and in 30 minutes had worked out a deal. We each had a lawyer check over the documents, and the final agreement was worked out within a few days.
In our neighborhood it seems that about half the houses are FSBO. We are lucky in that the neighborhood is very desireable, and if you hang a sign outside you’ll get a half dozen responses within a week. Many homes, if advertised at all, are only advertised in a small local paper.
As for the services a Real Estate agent brings to you. Advertising can be a big deal, or not, depending on your location. Valuing the home is nice, but you can buy the services of a professional appraiser. Negotiating can be very useful if you aren’t comfortable and/or experienced in negotiating, especially for stuff you own. Removing effort on your part is worth something, too. Legal/tax advice is basically worthless – talk to a lawyer or accountant instead.
Given that fees around here are around 6%, and houses are about $200k to $300k, you have to ask yourself if these services are really worth $12k to $18k. That’s a lot of clams. FWIW, appraisals cost about $250, legal advice (which you should have anyway!) costs around $1500.