A couple of points to keep in mind though:
1. Even if you go the entry only MLS route, you probably need to offer 3% to the buyer agent in order to get much traffic to your home. It's just a sad fact of life that buyer agents won't show their clients your home if they're not going to get paid, and most buyers have agents. DIY buyers without agents will rightly expect a discount of 2.5 to 3 percent versus comparables (since they also have the option of hiring a low-cost agent who will refund most of the commission money to them). So at best you're really only going to save 3 percent on the seller side, not the whole 6 percent.
2. You can negotiate for a lower seller side figure (say 2.5 or 2 percent instead of 3 percent) and find agents who will take you up on that.
3. It does take a lot of time and energy to get youself educated enough to sell your house yourself, and it also takes a lot of time to show your home to all kinds of potential buyers. If you're only saving two percent ($5,500) you may find it's not worth the time. There's also a risk you'll make mistakes.
HOWEVER... if you're the adventurous DIY sort of guy who changes his own oil and fixes his own plumbing and cuts his own hair and doesn't mind taking on some risk if he gets to have the fun and excitement of learning a new trade in the process --- then by all means sell the home yourself. Read a lot. Get advice from lots of people. (You can find people to sell you appraisal and CMA services a la carte for a couple hundred dollars --- remember that going FSBO doesn't and shouldn't require foregoing professional advice altogether.) Have a great time. If it doesn't work out, at least it was an adventure and you learned something. You can always go back and hire a realtor later.
Commission is negotiable and there is no standard percentage. I would suggest you interview a few agents, full service & limited service, find out what they charge and what services they offer you. You have a choice on what type of marketing, services, and exposure you need to get your home sold. Then choose the one you feel most comfortable with.
Guess what? About 2% of the listing on the market within about 25 miles of downtown are foreclosures and it is going to get worse. We have over 6 months of inventory on the market and there will be more. Can you sell your house without a Realtor? Sure, but 80%+ of FSBOs end up listing with an agent. At this time of the market time is money because you are heading out of the buying season as well.
Now I am guess that with a home that we are assuming is worth $275K, you are either educated, lucky, or had a good agent that helped you find it. So do you think you are going to pocket the whole $16,500? 95 times out of 100 you will have a buyers agent that will bring a buyer and either you or the buyers will pay for that agent. The agent is going to do a market analysis of the property and tell them what it is worth and if they have to pay their agent, in the end it will still be you paying because they will just subtract that from the purchase price plus want a discount for you not using an agent.
Honestly, I have other Realtors that call me to assist them with finding or listing thier property if they are not local.
As parent to parent are you going to open your home to complete strangers with a child at home?
As a graduate of The University of Texas, I would like to know where you got your pricing because it cost me a lot more than that about 10 years ago.
there are a lot of sellers who can't keep their mouths shut at the time they most should.
So true. Even buyers that can't resist or don't know when to hold 'em. In any serious negotiation, if you can have a proxy deliver and receive news for discussion in private you have the advantage over someone that is the decision maker doing the talking.
Most Americans do not know how to negotiate. We were never taught and our culture doens't respect it. I wonder why that is.
As a buyer, assume you are not working with an agent, would you subtract the typical fee in your area from the price you offered or would you give it to the seller acting on their own?
You can negotiate your fee.
You can hire a discount broker.(you get what you pay for)
You can try to sell it yourself. (risky)
I recently considered selling and after crunching the numbers, I was pretty shocked at what all the costs are in selling. But even though I am a lender who has read hundreds of contracts and have a certain comfort level in this industry...... I, personally, would pay a full price realtor. I have seen what happens in the 'other' transactions.
This reminds me of something else. I can't tell you how many times sellers have been in the house to let us in, and actually spilled their guts to me and my buyer about their financial position: usually the fact that they can't afford the house anymore and they're in over their heads. When we get outside the buyers, after they finish laughing, tell me to put in a super lowball offer because the seller is so "desperate" as they put it. I should ad that usually these sellers still hold out for unreasonable prices and don't sell, but my point was there are a lot of sellers who can't keep their mouths shut at the time they most should.
If you don't want to do all that then hire a professional.
Your choice and good luck. But oh, just two reminders the buyer that buys a house that is being sold by the owner isn't interested in saving the seller the money they want it themselve and sellers don't sue buyers. buyers sue sellers because the buyer is left with the problem and the seller has the money.
Thank you for your question.
You have a couple of options to consider:
1. Sell it yourself. On average about 10% of homes are sold without professional representation in the US.
You should know that the average owner-represented property sells for about 16% LESS than properties sold by Realtors
2. Use an MLS Entry only broker. You'll pay the buyer's agent their fee, plus a fee to the MLS Broker, for an additional fee they might help you do the paperwork.
3. You could hire a full service Realtor.
Here are some interesting statistics that might give you some food for thought.
I survey my MLS quarterly for the performance stats of Limited Service and MLS Entry Only brokers and this consistently is what I find:
1. Homes FAIL to sell 30% more often with a MLS Entry Only or Limited Service Broker.
2. Homes sell for less. On average homes sold by MLS Entry Only or Limited Service Brokers sell for about 2.2% less
3. Homes takes longer to sell with MLS Entry Only or Limited Service brokers.
So, if you really don't need to sell, have money and time to burn, then go for it. You might be lucky.
So getting back to the point, in most transactions I can show my clients that I actually SAVE them money when I negotiate. You should try looking at questions posed by Trulia members when they are using a Discount or MLS Entry Only Broker.
Usually they are asking "why is my home not selling. It's in the MLS". The fact is that if Realtors did not bring value to a transaction, we would not have been around over 100 years.
The questions I would suggest you ask the Realtor you interview should help you understand how we help you make the most money when you sell. This post is not long enough, however I am confident if you interviewed three Realtors you would see differences in how Realtors work.
Here is one example.
In any given market, about 20% of the listings sell within 30 days. About 80% sell in a longer period of time. We (the top agents) know that our job is to get your home sold in 30 days if at all possible.
Homes that sell within 30 days, on average, sell at about 99.54% of asking price. Homes that sell at 120 days sell for 93.67% of asking. So a good Realtor will monitor the market, sort of like chess, and make sure that your home sells. It's like getting a check for 6% instead of paying 6%. But the problem is that you'll never know this unless you interview and ask.
Hope this is helpful to you. If you need a referral to a top agent in Austin, I'd be happy to help you.
Now to your question
"How do real estate?"
Why not ask around with friends, associates or family members and get some recommendations to call 2 or 3 experienced real estate agents and interview them about marketing your home. It really takes more than a few paragraphs here to tray and explains what years of education and experience are worth. I do understand your reluctance and somewhat distrustful attitude because there are plenty of people in real estate industry who do not perform up to professional standards. On the other hand there are many full times professional who work diligently every day to earn every dollar for their services along with many satisfied customers who are glad they employed a real estate agent to help them with what (for most) is the single most important investment of their lives.
Good luck â€“ Russell
Please remember the 6% commission is not all going into your Realtors pocket. Consider first they only really get 3% for each agent, Lets not forget their Broker will take between 50%-10% of that 3%, then there is the tax man- bye bye to 33%, then there are the costs of the listing,: signs, flyers, open houses, and administrative time to enter your home into a dozen internet sites, Errors and Omissions Insurance $200, etc.
All of a sudden that 3% is gone in a flash. I figured it all up on the sale of your $275K home.
6%=$16,500. for both Buyer and Sellers agents
3%=$8250. for one Agent
35%=2887. 35% Broker Fee
$200 for E&O Insurance
$600 Printing, gas, flyers, photographs, virtual tours & signs
Grand total $2794 earned, how long did it take to sell your home? Two months is pretty average. Could you live on $2794 for two months? Realtors work hard to make a living and it is not easy being on call 24/7. We do it because we love the business.
Good luck and I hope you are able to sell your house.
I wish you the very best of luck!
Plain and simple...I, and many of the other REALTOR here value our time and efforts in the process of selling homes. Many uneducated to this process don't want to hear the truth. By the way, I encourage you to try to sell your home without a REALTOR in a Buyer's Market...Sound like you might get it sold quick in these times? When your discouraged and tired please call on licensed REALTOR to help you sell your home. I willing to bet by then that your going to want to pay even more just to get someone to buy your "Golden Nest".
Please remember, in real estate or anything else, you get what you pay for. Isn't selling your home- the single most important financial investment you have- worth the value of a good Realtor?
If you do that, though, make sure you're using a good real estate attorney. And understand, too, that even if you do choose to sell it yourself, most FSBOs do offer a commission (perhaps 3%) to the buyer's agent, if your buyer is using an agent. So, there's a reasonable chance that even if you do sell it yourself, that your savings will be closer to 3% than 6% (or whatever commission you might have negotiated).
Hope that helps.
Do you know which lenders close on time?
Do you know how to keep the earnest money if a buyer doesn't close?
Do you know what questions to ask to ensure the buyer's lender is on track?
Do you know what keywords on a listing are prone to lawsuits?
Do you have a board certified real estate attorney on retainer to ask vital questions to your contract?
Do you know the latest changes to FHA financing requirements or if your house qualifies for FHA or VA financing?
Do you know what to do if the title company goes out of business after the buyer closes, but the lender has funded, or hasn't funded the second loan yet? (This happened last week with United title)
Do you know if 100% financing is still avaialble and for which borrowers?
I do.....and many many many other questions-situations-problems that come up......and so do the realtors I work with in Austin. They're worth 6 or 7 or 8%....heck they might even be worth the entire $275,000 if they sell your home in this Austin market and under these challenging times. This is no market for do it yourselfers or the $99 will get you in the MLS agents.....Call me and I'll recommend one of my favorite Austin agents for you to work with and who will take good care of you.
Realtors are not there to take a big cut of your money. They get compensated for providing you a safe selling environment to a qualified buyer who found your property because the Realtor spent their own money on advertising trying to sell your home. The Realtor only gets compensated on a successful close. The Realtor is providing you with strategic pricing that coincides with your local market so your home does not sit longer costing you more money through your monthly expenses. The longer your home sits the more you pay for it.
Try it yourself! Be available 7 days a week from 9:00 am to 8:00 pm... normal showing times. **Warning** If you deny a buyer a time to view your home because it was not convenient for you, or you were working.....good luck trying to get that buyer to come back on your time. You are the one selling so you have to make it available at all times. Do not schedule a vacation or a quick weekend get away, because that is a risk probably when your buyer will come around.
Try it yourself! Have that Real Estate Lawyer ready to review an agreement for you so you do not end up in court battling legal situations that could cost you thousands....because you, or the buyer overlooked something in the agreement. By the way **Warning** the lawyer will charge you each time to review, or by the hour, even if the buyer decides not to buy. Realtors only get paid when the property closes and you can have them review as much as you want and if the buyers walk he does not get paid.
So you can think you are saving $16,000 however, If you subject your family to unsecure practices that puts them in harms way, or puts you in court because you did not adhere to the fair housing act, or several hours of Lawyer review and no outcome...... It cost you more than that and you did not sell the home yet. Try it and see if you like it.
Not trying to be a wise guy I just know you did not take that in consideration. I have many conversations with those that want to sell on their own and they thank me when I am done....because they then understand what an important role I play in selling their home, and how much it actually does save them.
6% = $60.00 for every $1,000 you still get to keep $940.00!
If you had to deliver $275,000 to many entities, and make sure every $ was accounted for, and it was done legally, correct, keep all entities out of a litigious situation, & you were held accountable for it..........you would think 6% is worth handling that kind of responsibility.
Sorry so much to read.
863 557 3300
Carol Pease, ABR, CRB, CRS, e-PRO, GRI
It seems we seldom get what we bargained for with children, in-laws, or dinners...
It does seem as if a good number of agents stress their value much more than the Services they actually provide...Kinda like.
We do a lot of Services stuff so you need to pay this if you want the Services stuff otherwise you'll get less Services stuff from inferior Agents who charge less for their lesser Services stuff....I have to pay for gas, refrigerator magnets, internet, electricity, water and garbage, breath mints, and much other stuff needed because of the High Quality Services Stuff I offer....Email me if you have any other Questions
Remember, Pay what I'm asking if you want Quality Services stuff pay less than that and get Less Services stuff...
.Maybe someday more Agents will understand it's the Services consumers are in need of learning about so they (the consumer) can place a value on it.
I know when I was working I valued my Services at about a Quazillion Dollars a minute but never found someone that would actually pay that for my Services, so I had to settle for less.
So far there have been plenty of "you get what you pay for's"......and "if an agent can't negotiate his own commission, how can you expect him to negotiate for you". and "experts don't discount"....etc .etc etc.........as an agent myself, even I cringe when I see those old cliches being typed, as though they are new and novel ideas!
Oh well................I paid a lot of money for dinner out the other night with my son and daughter-in-law.......I did NOT get what I paid for!
Agents have ample opportunity in this Forum to explain their value and why they charge what they charge, won't work for less than, people who do work for less are.......Just don't see the need to dig up a year old question to have another platform for .....I'm worth because
It's one of those darn questions that never goes away!!!!!!!!
pssst.......... (just don;t say "you get what you pay for" in front of Dunes !!)
Can you negotiate a real estate transaction?
What if something gos wrong?
6% sure seems like a lot. But what if you set your price 3% too low? Or worse.... 3% too high!!!
If your home sits on the market too long you will think that 6% is very small.
Beware of most discount brokers. Good realtors are wort their fee. So are 'discount' brokers.
Rather than discuss who will diminish their fee and how much, I would ask you: Do you really care how much fee you pay, and aren't you really interested in the net result? All agents are not the same, do not provide equal service, are not educated equally. I have a series of 7 questions that you can ask agents who interview for the job. I will gladly send those questions to you. As a member of MAX AVENUE, I have access to the Maximum Value Home Selling System, which is a significant cost to me. However, I believe that I bring added value to my clients, so it pays off in the long run. All houses have a 5-15% price elasticity. A qualified agent can show you how to get most, in the shortest amount of time. No magic. It takes your motivation and cooperation, as well. In the end, what you walk away from the closing table is what will be important. The issue is that people make too many assumptions about the brokerage business, without understanding how it works. Key is understanding how the agent works!!
I would say to any agent who reads this: interview to become part of MAX AVENUE-not a broker, you stay with your current broker. It is a matter of adding value to your clients.
If you really do understand the numbers, you will find that agents who quickly discount their fees do not have the funds to effectively market your property. Also, if an agent drops their fees as easily as you see that some will, how effective will they be in negotiating the best price for you. After all, the consulting and negotiating are what you are actually paying for. I hope this is helpful to you.
I am curious why you think the listing agent, who is going to incur the most expense, deserves 1%, but the selling agent should get 3?
For example, they may accept less (5%? or 4.75%) if the buyer is not represented by an agent.
Just as it is supply and demand with houses, it is a matter of supply and demand with agents. You may find a good agent but who is struggling. They may be willing to reduce their fee in a creative way. In my opinion, 6% is a great value. But if you think you can save the money and it won't hurt you financially, go for it. I don't believe that everything needs an agent; but many people THINK they don't, and they truly do!
Also there are two more fees: continuing education and annual membership to the local Board of Realtors and the Texas Association of Realtors. That is a couple thousand dollars each year too.
Now that you know how it breaks down do you still feel the Realtor is overpaid? I am curious to know how a civillian realy feels about it. Thanks for your time and listening to my two cents.
Betina Foreman, Realtor Austin Texas
Please keep in mind; I really think all of us just want to make sure you do not get hurt in the process and have your best interest at heart, and give a little more insight as to how we are compensated and why.
The question of determining the value of your home has come up frequently in this post. It's simple--call a licensed appraiser. Because regardless what a realtor says your home is worth--the home will need to be appraised; this is usually the first step of the mortgage process.
So if you decide to go the for sale by owner route, find a good mortgage person to pre-approve your buyers. They'll know good appraisersâ€”in fact, theyâ€™ll take care of most of the issues after you sign the contract: Appraisals, title, closingsâ€¦.
In fact, if you want to go the FSBO route you may want to invest $300 by buying an appraisal ahead of time as this will help you defend the price of your home. Then if someone asks you "how did you come up with your home's value"--just show them the appraisal. It's kind of hard to debate a disinterested 3rd party. Then, before signing a legally binding contract, make sure talk with their mortgage person so you'll know if you're working with a legit buyer.
Earnest money usually runs .5-1%
Close in 20-30 days.
Good luck, but don't skimp on the buyer's agent