Nobody claims that selling a house is a piece of cake. It can be time consuming and expensive. But the keys to selling a house are pricing it appropriately and marketing it successfully.
Sure, many real estate agents work hard at marketing your house, but you certainly pay for this help in the form of a commission: typically 6%. If you're willing to take on that work yourself, you can save thousands of dollars and simplify negotiations with your buyer, since neither of you has to figure commissions into the negotiation process.
1. Pay Yourself Rather Than an Agent
If a typical agent commission is 6% of a sale price, and you sell a house for $150,000 through an agent, you'll owe the agent $9,000. If you have a house worth half a million, you'll pay an agent $30,000. By selling your house as a FSBO property, you will take on certain expenses and will have to do your own research and legwork. But when the day comes to close the sale, you'll be paying yourself rather than a real estate agent for the hard work involved.
2. Make the Most of Low Equity Situations
Suppose you have only recently bought a house or for some other reason don't have much equity in your house. If you sell and go through an agent, you could easily end up having to pay some or all of the real estate commission out of your own pocket.
Consider this scenario:
Your house is worth $400,000 and you owe $390,000 on the mortgage
You have $10,000 in equity ($400,000 - $390,000 = $10,000)
You sell through an agent for $400,000
After paying off the $390,000 you owe, you have $10,000 left over
But you owe the real estate agent $24,000 (since 6% of $400,000 is $24,000)
Since you only make $10,000 on the sale, you have to come up with another $14,000 to pay the commission
Net result: you lose money
By selling the house yourself, you'll keep that $10,000 and make a profit.
3. Get Rewarded for Your Hard Work
Working with a real estate agent doesn't mean that you simply sit back and wait for your house to sell. You will still have to make repairs, keep the house tidy, and have your schedule interrupted for showings and open house events. Furthermore, when negotiating a final selling price, you and the buyer will end up figuring the agent's commission into the sale price in one way or another, and this can complicate negotiations. In short, selling a house yourself can be a lot of work, but you’ll get paid handsomely for it.
4. The Cost vs. Control Math Just Works Out
If you choose to become a FSBO seller, you will have expenses. An appraisal, which can help you determine the best price for your house, will cost several hundred dollars. But this investment helps you price the house to sell quickly and also backs you up when it's time to negotiate a final price with a buyer.
You will need to take out print ads in local papers and shopping tabloids, and should strongly consider listing online with a site like ISoldMyHouse.com and buying our flat-rate listing in the Multiple Listing Service database. You may also hire a lawyer to oversee the sales contract.
But what you get from being a FSBO seller is control. You control when you show your house, what's in your ads, and the negotiation process. Your reward for your investment of time and money is pocketing what you would have otherwise spent on an agent's commission.
If you want the control that comes from selling your home yourself, click here and you can get started on your free listing right now.
- What is FSBO
- Selling A House On Your Own - For Sale By Owner
- Home Sell By Owner: Who Should Sell Their Own Home?
- 4 Benefits of Selling a House By Owner
- Sell Your Own Home! 10 Reasons You Can Do It
- Get The Facts!
- Real Estate Investments 101
- Land For Sale By Owner
- Condos For Sale By Owner: What You Need to Know
- The Florida For Sale by Owner Market: Frequently Asked Questions
- 4 Sale by Owner: A By the Numbers Guide