I have sold several cars privately over the years and it was quite simple and straight forward. I am now getting a house ready to sell and after hearing about realtors, title companies and escrow companies all with their hand out I wondered why are any of these people really necessary. In other words what makes selling a car any essentially different than selling a house?
Realtors or real estate agents are “needed” because houses are more difficult to sell. Each house is quite different from almost every other one, but a 2010 VW Jetta is reasonably similar to another one and even different makes and models are for the most part more similar than houses are. That means finding a match between buyer and seller is harder for houses than cars.
Escrow is “needed” because a typical house sale involves much more money than a car so someone needs to hold the escrow while things are being settled.
You do need titles for cars, but generally most people don’t get title insurance on a car.
Houses need to be cleared of any potential leans against them. There are all kinds of leans that can be attached to a house and they can go back decades. There are also certain things like termite inspections, and other forms of damage that need to be repaired or signed off on.
If you find your car in a dangerous neighborhood next year, you can move it. If you find your house in a dangerous neighborhood…
If your house has been leaning, even if it’s been decades, you probably have some serious problems that need resolving post haste.
Sure a house is harder to sell than a car but if you are not in a hurry and willing to spend time advertising and showing it then it shouldn’t be a problem.
Why can’t a prospective buyer present a statement to the seller from his bank or loan originator that they are good for a maximum amount equal to or exceeding the agreed upon price.
There must be some simple way to find out the owner or owners of the house. If the DMV can manage to put a bank as co-owner on a car title surely the civic office that handles deeds can do the same.
On a cash transaction, without a lien, a house may be no harder to sell than a car. It is the lending and mortgage people who place all the obstructions in the way, to protect their interests.
Don’t forget there are about 2 orders of magnitude in price difference between the price of a used car a and a house. You’re going to be, and damn weill should be, much more cautious spending $250K than spending $5k.
Good point. Are liens attached to the house or to the previous owner who signed off on the repair? If someone owes money to a mechanic for a repair to a car and then sells that car isn’t the original owner still liable for the bill?
Speaking of mechanics. What exactly would be the difference between hiring a home inspector to tell you about defects or what many people do, pay a mechanic to look over a prospective used car purchase?
Very true but looked at through the other end of the telescope you could say that’s the very reason all these parasites exist. It wouldn’t be nearly as lucrative with the average used car.
Excuse the exageration but not far off I think.
I bought my house directly and it turned out to be one of the easiest sales processes that registrar saw (lots of people don’t research well what taxes and duties are owed and by whom, we had), my cars have generally come from and gone to a dealer.
The two processes can be as complicated or as easy as the people involved.
Good for you! May I ask what percentage of the cost of the house do you figure you saved?
Also, the mileage is the single major fact needed to estimate the value of a 2010 VW Jetta with reasonable accuracy. Houses are much more variable.
In my case that’s kind of difficult to quantify because of how I was looking at the purchase*, but between the seller and I we saved at the very least the 10% commision.
A good agent will have different ways to price the house depending on what the seller wants: do you want to sell fast, do you want to sell high? Appraisals based on mortgage values and based on market values can be very different as well, and they can vary a lot depending on whether they are defining location as “same administrative district” or “within X distance”.
A bad agent will do their best to inflate the price. The house takes forever and a half to sell? Doesn’t matter, a higher price means a higher commision.
Both the seller and I had researched the local market extensively; the price we’d tentatively agreed on, “with the possibility to rethink if it turns out we get something very different from the appraiser” was smack in the middle of the range we got from the official appraiser. We were both working in good faith, and both capable of seeing the difference between “looks” and “is”; again, both the defects and virtues the appraiser pointed out matched our own list. For someone who gets caught up in cosmetics or who doesn’t understand the financial parts, a good agent is a godsend, so in that case they definitely earn their commision. In our case, though, it really wasn’t needed.
- I wasn’t asking for “a house with XBnb, lift, blah blah…”, but “a house priced up to X”. One of the agents I talked to walked me through a “let’s figure out how much house you can afford” simulation and her numbers matched mine. That’s very unusual. Also, at a time when people were asking for 120% mortgages at 30 years I was counting on 20% down and 20 years. “But you could get a bigger house!” “I only have one butt, I don’t need four bedrooms.”
There’s also the fact that houses generally exist much longer than cars. All those extra years are chances for loans to have been taken out on them or right of ways to be established or other complications that mostly don’t happen with cars to have happened.
My sister works as a legal secretary mainly handling real estate work. 90% of her time is spent tracking down paperwork over mortgages taken out, paid off, seeing to it all the proper paperwork was completed and filed and recorded and what all.
I mean, it can be, right? Just offer cash and trust that everything is fine with the title. No title insurance or inspections required. Just give a wall a kick, say “looks good”, hand over $500,000 and transfer the title.
Of course, there are a bunch of reasons people choose not to do that. For one thing a house is typically a huge investment compared to a car. In my neighborhood you’d be hard pressed to find a house under $500,000. So if things go south and there are unexpected liens or other issues you could be in for a world of hurt. So you might choose to purchase title insurance to minimize that risk. And you might hire an inspector to do a more detailed study of the structure then you could do. And you might hire a lawyer or an agent to do some more due diligence.
And then you get to the case of requiring a mortgage, where the bank will also demand many of these insurance and inspection services to be done to protect the asset that you’re using as collateral for the loan.
I guess many of these risks exist for the car too, but at only say $10,000 down you might be more willing to roll with the risk.
Well on the other hand, lenders may still have their interests and the buyer is out a lot and a lot of money…
See with buying a used car, if its 12 years old and has been worth only a few thousand for a the last 5 years, its quite unlikely to be under lien, and really not worth hunting for and repossessing even if it was. The buyer can get a statement signs saying it is not under lien and it would be a crime for the seller to sell it… see why would they be committing a crime for such a small value ?
In the internet age, is this really true?
I’ve bought and sold 2 houses , and never used a realtor.
Lawyers , yes. They provide a professional service that I need.
But a realtor?–I did fine all by myself.
I looked on the internet at 20 homes in my area, visited 10 of them, and figured, yeah, my house is about the same as those 2, so I’ll ask/offer the same price.
It won’t work for every situation of course, but I’m guessing that many people could do fine without an agent.
We complain about this in the UK too. but it looks as if we have it fairly easy.
As far as the sale is concerned, many houses are sold on the estate agent’s, or consolidation websites. That’s certainly where I would start if I wanted to buy or sell. A run of the mill house with a reasonable price tag will move fairly soon.
As a buyer I would have the house professionally surveyed for structural defects; the solicitor would check that the house actually belonged to the seller (most houses are registered these days, so they can check online), and the mortgage company would value the house to make sure that their loan was safe if I default.
Any debts that the previous owner has are no concern of mine. Loans, liens or any other debt. good or bad, are theirs. If they didn’t pay their property taxes, it’s them who will be pursued.
When you buy a used car, you still have to check ownership and have it checked for defects.
A house is property. Well, so is a car or a cell phone. Hmm… I must be looking for a different word. OK. Houses are dirt cheap, people will give you one for free – you just have to load it up onto a flat-bed, and tow it away. What? You want the house and the land its on? Oh, pilgrim, that’s a situation – there was only so much land made, and they’re not making (much) more. This is really gonna cost ya.
You could buy 1000 cars for the cost of one house. What’s that? You intend to stay in the house? Call it yours? Not leave because people don’t like you? Do whatever you want inside this “house” and expect the police not to enter without a good reason? You want vote in a district and lay claim to municipal resources of the region? That’s more than 1000 used cars will give you.
Arkon has it right. The big problem is property. Yes, spending several times your annual income on a house also makes it a big deal, but the issue is basically title to a plot of land.
Nobody says “wait a second, I think the left rear tire on your Toyota is actually mine.” Plus absent Hurricane Sandy, land doesn’t end up gone when you’re done with it. So your mechanic can have a bill that you owe, that’s not attached to the car, because the car could become a cube of crushed metal next week and pretty well is guaranteed to be junk in 20 years or so. Land will (almost) always have a decent basic resale value, which means that sooner or later title will transfer - hence a good place to lodge a debt that is having trouble being collected otherwise. Plus, not too many Toyotas have caveats that they cannot be driven on Interstate 95 or cannot be parked facing north. Restrictions on property can be interesting. Plus, not too many Toyotas used to be part of a larger Toyota that got parcelled out, but we’re not sure who got this particular fender.
Of course, if both sides trust each other and the property’s history is straightforward, the transaction can be quite simple, as previous posts indicate. Many jurisdictions are moving to electronic database land registries, meaning the classic title search going back decades (or centuries) will become a quaint obsolete custom.