T Nation

Selling Our House Without a Realtor

My wife and I will be moving later this year and need to sell our house. We’ve decided to try selling it ourselves in order to avoid the realtor agent commission fee. We’re willing to put in the time and effort to do everything ourselves, but we want to make sure we take the best possible steps to ensure that we can get this house properly advertised and sold.

Who here has gone the “For Sale By Owner” route before, and who has some tips/suggestions on how to make this a smooth process?

We’ve only been in our current house for four years and haven’t built up very much equity, so a realtor’s commission would mean we would actually lose money on the house after closing. If we can avoid that commission, we can come out on top a little.

The part of this whole process I’m most nervous about is the little details involved in the paperwork and such when it gets down to formalizing everything and finally closing. Although I’d also appreciate any tips on advertising and negotiating on our own.

To bad AC is on hiatus he would give you some advice. You could still try to PM him.

[quote]
The part of this whole process I’m most nervous about is the little details involved in the paperwork and such when it gets down to formalizing everything and finally closing. Although I’d also appreciate any tips on advertising and negotiating on our own.[/quote]

You can sell without a realtor, but you’d still want a real estate attorney to assist with the sale. That would definitely NOT be a good place to cut costs.

I don’t think it would be a good idea, at least for someone that doesn’t plan on doing it except for one time. Mostly because of what you said, advertising. If you are not on an MLS you’re not being seen and you’ll likely have to take a lower price.

Yeah, that commission sucks, but you’ll likely blow that much trying to sell it and if you’re lucky you’ll actually sell it. Most of the people I see doing a one time owner sale they take about 5-7x longer than a realtor, and usually give up and a Realtor takes over and flips that ish in a week or two because the price is way lower than market because owners just want to jet out of the home.

Unless you just don’t have the dough, go with the realtor.

I have attempted to sell by owner and ended up getting an agent. It is a major PITA.

You could see if you can find an agent that will do the paperwork for a set fee. I bought my current house from my in-laws and used an agent just for the paperwork, cost me $500 and it was worth every penny.

In addition, any perspective buyers with an agent could be off the table, as their agent will not work with you without commission.

I will echo testy1, you are severely limiting yourself to available buyers by not offering commission, many agents are working as “buyer’s agents” right now. Your cheapest option is to do a “flat fee listing” for something like $350 and offer 3% commission to buyers agents. That way you have the exposure of the MLS and buyers agents but will only cost you 3% + $350. Also create a postlets.com listing for the property that will help syndicate it to many other websites.

As long as the purchase contract is your state’s Board of Realtors/BAR approved contract it wont have any hidden clauses.

If you are going to pay a real estate attorney you may incur more costs than using a selling agent, it’s worth looking into.

How are you establishing your asking price?

*Disclosure, I’m a Real Estate Broker

If you want to sell your house as quickly as the market will allow and as close to the price that the market will bear, get an agent. There are a THOUSAND reasons for having an agent, and a major one is the negotiation.

Don’t take this the wrong way, but a seasoned real estate agent will eat you for fucking lunch. To them you are a silly little “fizbo” and they will joke about you as they set their client (the buyer) up to get a deal of the century. I’ve NEVER heard of a fizbo (a play on “For Sale By Owner”) that actually came out ahead. Half the time, they fuck up the negotiation and lose the potential buyer or get far less for the house than they could have (offsetting the 3% they were too cheap to pay in the first place).

You are going to pay a commission. No buyers agent in their right mind is going to show HIS client a house where he isn’t going to get paid for his effort! Why would he? So now we’re quibbling over 3%. The average home price in Nebraska (assuming that’s where you live from your avatar) is between 100K and 150K Let’s be conservative and call 3% $4500.00. You are going to pay at least $500 to $1000 to get an attorney to review the contract (not to negotiate, just to review it) so now we’re down to about $3500… Your lack of negotiating experience will kiss that goodby, not to mention your TIME. Imaging all the hours you will be investing trying to learn how the advertise correctly or even PAYING for advertizing…

Real Estate agent’s get compensated for a reason. They will save you time, energy, opportunity and will get the BEST price for your house. While it may sound like a good idea to represent your self, it’s NOT. A real estate contract is a 30+ page document designed to FUCK the party with the least experience. I’ve seem them slip ALL kinds of shit in there, from performance penalties, to leaving out all of the appliances, to addenda requiring the seller to practically sign over their first born.

Bottom line, my advice is to swallow your pride and protect yourself by getting an agent. DO NOT, under ANY circumstance accept an agent that proposes dual agency. Stipulate that in your agreement with the agent, that if anyone working under that same broker makes an offer on the house, then you have the right to seek an outside agent so that you can be sure that your interests are protected.

Hit me back with any questions, I’ll be onshore for the next few days.

Oh, and get ANYTHING they promise you IN WRITING.

Thanks for the responses so far, I guess my fears are somewhat warranted. I appreciate your response, AC, I’ve always had a lot of respect for your posts.

To answer Adam Bomb’s question, we had a realtor (the same one who helped us get the house 4 years ago and is somewhat of a trusted family friend) do a comparative market analysis. We understand from the research we’ve done so far that many fizbo’s try to price their home too high due to ego or whatever, so we don’t want to go high. Unfortunately, the markets haven’t appreciated over the last few years (although Nebraska hasn’t had it as bad as some markets).

Our analysis recommended a listing price of 134k and estimated a selling price of 130k. We bought the house for 132k four years ago and still owe 125.

In reply to AC’s comment about the commission, we were actually told we’d have to pay 6%, not 3, which makes a significant difference. That’s $7800 dollars on a $130000 house, which would wipe out any proceeds from the sale and would eat up the majority of our savings. That’s why we want to avoid the commission.

Anyway, from some of the responses so far, I gather that it may be an issue to advertise well and get a good crop of potential buyers… Any tips on advertising the place?

[quote]Ulty wrote:
Thanks for the responses so far, I guess my fears are somewhat warranted. I appreciate your response, AC, I’ve always had a lot of respect for your posts.

To answer Adam Bomb’s question, we had a realtor (the same one who helped us get the house 4 years ago and is somewhat of a trusted family friend) do a comparative market analysis. We understand from the research we’ve done so far that many fizbo’s try to price their home too high due to ego or whatever, so we don’t want to go high. Unfortunately, the markets haven’t appreciated over the last few years (although Nebraska hasn’t had it as bad as some markets).

Our analysis recommended a listing price of 134k and estimated a selling price of 130k. We bought the house for 132k four years ago and still owe 125.

In reply to AC’s comment about the commission, we were actually told we’d have to pay 6%, not 3, which makes a significant difference. That’s $7800 dollars on a $130000 house, which would wipe out any proceeds from the sale and would eat up the majority of our savings. That’s why we want to avoid the commission.

Anyway, from some of the responses so far, I gather that it may be an issue to advertise well and get a good crop of potential buyers… Any tips on advertising the place?

[/quote]

Get on an MLS.

[quote]Brother Chris wrote:

[quote]Ulty wrote:
Thanks for the responses so far, I guess my fears are somewhat warranted. I appreciate your response, AC, I’ve always had a lot of respect for your posts.

To answer Adam Bomb’s question, we had a realtor (the same one who helped us get the house 4 years ago and is somewhat of a trusted family friend) do a comparative market analysis. We understand from the research we’ve done so far that many fizbo’s try to price their home too high due to ego or whatever, so we don’t want to go high. Unfortunately, the markets haven’t appreciated over the last few years (although Nebraska hasn’t had it as bad as some markets).

Our analysis recommended a listing price of 134k and estimated a selling price of 130k. We bought the house for 132k four years ago and still owe 125.

In reply to AC’s comment about the commission, we were actually told we’d have to pay 6%, not 3, which makes a significant difference. That’s $7800 dollars on a $130000 house, which would wipe out any proceeds from the sale and would eat up the majority of our savings. That’s why we want to avoid the commission.

Anyway, from some of the responses so far, I gather that it may be an issue to advertise well and get a good crop of potential buyers… Any tips on advertising the place?

[/quote]

Get on an MLS.[/quote]

Oh, yeah and get a Realtor because no one is going to take their client to look at a house on an MLS unless they are going to get paid.

[quote]Ulty wrote:
In reply to AC’s comment about the commission, we were actually told we’d have to pay 6%, not 3.
[/quote]

Compensation usually comes from the seller. If you’re not willing to pay a realtor, a realtor is not going to bring his clients to you.

So, if you don’t have a realtor, you’ll still be paying 3%. Your realtor friend assumed that you’d be paying for two realtors, not just one.

http://homebuying.about.com/od/realestateagents/qt/102208_AgtIncom.htm Here is a link to understand what I am talking about.

I dunno about the US, but here in Québec Canada, we have a website called: duproprio.com.

For 800$, you get your house displayed on their website (which is second to mls), 24h service of consultants on paperwork, a professionnal photographer that takes pics of your house, etc…

But in reality, it’s usually an agent that calls you for their clients… so you end up paying 800$ and about 3% commision, unless you’re patient and wait to have a serious buyer.

You have to be lucky to have a serious buyer without that guy having an agent.

[quote]Brother Chris wrote:

[quote]Ulty wrote:
In reply to AC’s comment about the commission, we were actually told we’d have to pay 6%, not 3.
[/quote]

Compensation usually comes from the seller. If you’re not willing to pay a realtor, a realtor is not going to bring his clients to you.

So, if you don’t have a realtor, you’ll still be paying 3%. Your realtor friend assumed that you’d be paying for two realtors, not just one.[/quote]

Exactly. That’s why I wrote, “now we’re quibbling over 3%” You WILL pay the selling agent (buyer’s agent) his commission for bringing the buyer and encouraging them to buy your house. If you don’t pay him, he will shit can the deal and take his clients to a seller that will pay his commission - they don’t work for free. So, are we in agreement that you will be paying AT LEAST 3%? If you think you’re going to sell your house with NO agents involved, I want some of what you’re smoking.

So, as I said before, now we’re quibbling over the remaining 3%. Which will get eaten up by attorney fees, time and opportunity cost, advertizing out of YOUR pocket and lost ground in poor negotiation. You might as well just pay the other agent.

Unfortunately, you’re probably going to have to come out of pocket to close this deal. It’s too close to short sale, you’d be stupid to fuck your credit up by doing that. You’re just going to have to take a bite of that shit sandwich. It sucks, but you are better off than A LOT of home owners that I know. Be grateful you’re not 30% upside down looking at a bankruptcy…

Here’s another idea I just had:

When I was in the DC area, some of the banks were limiting the total amount of commission allowed to both agents. Sometimes it was like 4% TOTAL. That was last year, so there MIGHT be some wiggle room with the listing agent if you go to him and say, “look, this is all we can afford to pay you and the other agent. If you don’t take it, we’ll have to short sell which will be a giant pain in your ass and the bank will probably limit your commission anyway”.

You won’t get a Long and Foster or REMAX agent to agree to something like that, but there are PLENTY of smaller companies with part time agents that have slowed down and are desperate. It might take going to a few offices and playing a little hard ball, but you can probably find either a new agent or an agent that is doing poorly to work with you for less than the total commission.

I wouldn’t worry too much about “but why would I work for a shitty agent?”. Remember, the all work for the BROKER and HE ain’t gonna let anyone mess up HIS deal (he makes a percentage on all the agents, so he has a vested interest to ensure all deals close properly). So even though the person you’ll talk to is the shitty agent, the person calling the shots and answering the shitty agents questions is the Broker. And to become a broker you have to have at least SOMEWHAT of a clue about what you’re doing.

That approach is worth a try at least. Remember, in these times, EVERYTHING is negotiable.

For clarification, when I say that the Banks were limiting commission, I’m referring to REO property, not the lender for the new mortgage.

If the property is in good shape, definately sell with a realtor and RE attorney. Just find one that will work on the lowest commission. I sold a condo last year for 3% in a bad and declining market and was very happy. A good RE agent will earn every penny and then some.

Having said that, I’ve sold property without RE agents on two separate occasions. Both were cases of neglected homes belonging to elderly people long passed away. Both were in neighborhoods where such properties were being purchased by builders who demo the house and promptly built new ones. In such cases, there are no RE agents. Sell directly to the builder (with each party represented by their own attorney, of course). They were easy deals because:
(1) no fixing up the propoerty for showing
(2) no cleaning out the attic or basement
(3) no ‘buyers inspection’, but I still had to get a CO from the town
(4) the builders had cash, so no waiting for financing

I would NEVER recommend a transaction where one side had an agent and the other didn’t.

This is the best time of year to sell! The highest prices are usually in Q2 and Q3.
Google city-data.com (or is it data-city?) and put in your town to see median selling price/selling frequency history for your location.

Hopefully, you’ve decided to get a RE agent. This is a whole 'nutter conversation because there are really really good agents worth their weight in gold, and there are stupid ineffective agents.

I had an agent that I really liked (personally) but couldn’t sell lemonade in a drought. I dropped her when the agreement came up for renewal and hired a annoying ‘elite seller’ whose company I couldn’t stand for more than 5 minutes.

Remember, you don’t have to LIKE the agent! You want one that will take charge and command the highest price and has the widest range of contacts & advertising. Find an agent that sells A LOT, one that’s rockin and rollin in the selling groove, in short — a perpetual closer. Avoid the pain of a milqtoast agent.

I have sold two houses by myself and had no reason whatsoever to hire an agent or a lawyer. I came out way ahead both times. The long and short of it is if two people want to make a deal, it will happen. Not sure how a realtor will “eat someone for lunch” unless they let it happen. Do your research, price your house appropriately, figure out your bottom dollar and stick to it. Be flexible, but do not be a pushover. I really think people make real estate a lot more difficult than it needs to be.

[quote]VanderLaan wrote:
I have sold two houses by myself and had no reason whatsoever to hire an agent or a lawyer. I came out way ahead both times. The long and short of it is if two people want to make a deal, it will happen. Not sure how a realtor will “eat someone for lunch” unless they let it happen. Do your research, price your house appropriately, figure out your bottom dollar and stick to it. Be flexible, but do not be a pushover. I really think people make real estate a lot more difficult than it needs to be. [/quote]

So your saying that someone who earns their living by negotiating and representing a buyer’s interest and someone who has never read a real estate contract more than once or twice in his life are “equal” in a real estate negotiation?

Why don’t you step into the ring with a professional boxer? You should be OK - he won’t beat your ass unless you let it happen…