With the dip of the housing market over the past year, sellers are increasingly anxious about losing money on their homes. As a result, scores of new approaches to selling a house are surfacing, from posting virtual walk-throughs to conducting housing exchanges between homes of equal value. One approach that seems to be losing steam is the traditional one: using a realtor to sell a home. Recent studies show selling your home yourself may actually leave you better off in the long run than if you use a real estate agent.
Maximize your profits when you sell “By Owner”
Because homes aren’t selling for as much as they used to, owners aren’t making the same kinds of profits. It stands to reason then that spending the least amount possible on making the sale will leave you with the most amount of money possible.
A study conducted by professors at Northwestern University confirms this theory, showing that owners pocket more cash from a home sale when they sell the home without the aid (and without the fees) of a real estate agent.
A separate Consumer Reports study supports these findings. In their study, they found that 82% of owners who listed their homes with a real estate agent were more likely to sell below their listing price – to the tune of around $5,000 less. In contrast, owners who sold on their own were more likely to sell for their requested asking price.
The realtor’s commission
The difference in take-home profit really comes down to the commission charged by the realtor. In most cases, realtors charge sellers 6% of the asking price for your home. When your home’s value is already down substantially, as is the case for most sellers across the country, 6% can take a real chunk out of your profits.
Here’s an example: If you’re trying to sell your home for $200,000 (or slightly less than the average home price), listing with a realtor will cost you $12,000.
Why the savings if you sell by owner?
It’s simple: You’re likely going to sell your home for a lower price than you’d like. You still have to repay the balance of your mortgage, which unfortunately did not go down with housing prices. This means less room for profit, which means a $12,000 fee can really make a substantial difference in your net proceeds.
From a different slant, consider the situation of many current sellers who can only sell their homes for the amount owed on their mortgages. If you’re in this situation and you want to use the services of a realtor, you’ll have to dip into your savings to pay his or her fee.
3 tips for succeeding at selling your own home
These are the top three tips for success if you’re selling your home by owner:
- Figure out the appropriate price: Remember, it’s a buyer’s market so you have to set a price appropriate to the type and age of house you’re trying to sell. Conduct market research on selling prices in your area and aim for the low end of price ranges for houses comparable to your house.
- Design your own marketing plan: This is the area where realtors can most help you, so it’s likely the place you’ll have to focus most of your attention. Take advantage of the convenience afforded by the Internet and list your house online with pictures and video. Look at local advertisement options, from the paper to the radio to postings in your local coffee shops. Use a multiple listing service to sell your home – you can find them on the Internet. Remember, you still want to reach out to buyers using realtors. Finally, invest in a yard sign. Roughly 50% of buyers find homes to buy by investigating yard signs within 12 miles of their homes.
- Consider every offer: Start a dialogue with anybody who puts an offer down on your house. Even if you feel they’re trying to lowball you, talk to them to discover what features attracted them and what turned them off. If you feel they might be willing to negotiate, tell them about some of the advantages to your home they may not have considered. You just might have a shot at talking them up in price.
Patience and effort pay off
Offers may be slow to come in when you’re selling your home, but that’s more likely due to the slow housing market than the fact you’re not using a realtor. Take the time to spruce up your home and do the things you’d do at a realtor’s direction, then give it some time. The right buyer is bound to surface eventually.
