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Selling Home
Selling Your Home
A traditional broker can expose your home to as many buyers as possible and may present you with a complete marketing plan. But for a little extra effort, you could save yourself thousands of dollars by selling your property on your own. Is the extra work worth it? Below are some pros and cons to consider before making the decision:
Real Estate BrokersThe Pros: Brokers sell houses. Traditional agents continue to dominate the market, despite the advent of the Internet. Indeed, 87% of all sellers sold their homes with the assistance of a realtor, according to the National Association of Realtors. Want promotion? Use a broker. Traditional real estate agents place their property listings in a database called the Multiple Listing Service (MLS). This database is used by nearly a million agents nationwide and contains more than 90% of all properties that are for sale. A real estate agent can do a simple search and find all of the homes in a client's price range. Buyers can even search the MLS themselves at Realtor.com. Agents using the MLS have an agreement to split the 6% commission, so there's plenty of incentive to show a competitor's inventory. A good agent will take care of everything for you. He or she will completely manage the transaction. Your agent will do everything from helping you set a proper asking price and prescreening potential buyers to showing your home and negotiating the final price. The only thing an agent won't do is keep the place tidy. Now you will have plenty on time to spend looking for your new abode. The Cons: Brokers are pricey. You can expect to pay a 6% commission for their services. So if your three-bedroom bungalow sells for $300,000, you'll have to cut a check for $18,000 at closing. Realize though that many brokers charge slightly lower fees and all fees are. An agent may not always look out for your best interest. Consider the open house. Did you know that only 3% of homes are sold this way? And yet buyers are invited to view a home en masse. Why is the open house so popular? They help your broker meet more clients and are used as a means for generating buyer leads. A broker is in control of your deal. An agent is free to show your home at practically any time of day, so be prepared for strangers to traipse through your house at the worst possible time. More importantly, you have to trust that your broker is providing you will all the information you need. Your broker will be negotiating on your behalf, and helping you make a final decision. At its worst, you may be asked by your agent to reduce your price. He or she may be trying to make a quick sale and move on to another property. Discount BrokersThe Pros: Discount brokers are less expensive. Discount brokers charge sellers between 2% and 4.5% for their services. Typically, the more you pay, the more you get as far as service that's provided. So the commission on a $300,000 bungalow could cost you just $6,000, far less than the $18,000 a traditional broker would charge you. You'll get more exposure with potential buyers than if you sell your home on your own. Discount brokerages spend money on advertising and promotion. They generate a considerable buzz which draws visitors to their web sites. For example, Foxtons, which operates only in New York and London, spends $12 million to $13 million a year on advertising, which generates at least 50,000 new visitors to its web site daily. Foxtons boasts that 92% of its listings sell without making it into the Multiple Listing Service database. Some discount brokers will prescreen for qualified buyers. If security is a worry of yours, this is especially important. If you just put a sign in the yard or ad in the paper, someone may view the home just to case the place. Many discount brokers will run credit checks on all potential buyers and makes sure they can afford a sufficiently large mortgage. The Cons: The less you pay, the less you get. Sometimes you are basically paying for a web listing. Sometimes the discount broker will field calls from prospective buyers, but leave the showing up to you to deliver the hard sell. If this is all the benefits you're getting, some industry insiders suggest you run an ad in the local newspaper or pay for an online listing. It costs more to get your home in the Multiple Listing Service database. You will have to pay a higher fee to get this service. Instead of getting the 2%, you may have to pay 4% to 4.5%, for the listing. Don't expect agents to line up outside your door. Even with your listing in the Multiple Listing Service database, many agents may still decline to show your property, because it means less money for them. Many discounters only offer buyer's agents 2% or 2.5% commission, rather than the traditional 3% buyer's commission. While that seems like a small difference, it can really add up. When an agent can make $9,000 selling one $300,000 home vs. $6,000 on another similar property, which one do you think he'll show first? The answer is obvious. Not many agents will want to show your house if you offer them a less competitive commission. For Sale by OwnerThe Pros: More money for you. No commissions. You get to keep whatever your home sells for. You can keep that 6% commission and use it for the down payment on your next home. It's yours to keep and can go toward more important expenses, such as your child's education. You know and love the special features of your home. It makes sense that you are the best person to point out all of the amenities and sell it better than an agent. The majority of agents are not familiar with your home and showing a home they have never really seen. Most are walking through it for the first time. You know what is right for you. You can have complete control over the deal. You set the right price, you determine convenient times to show the home and you get to negotiate the final price. This way, you know all the information. You get to decide when to lower your price or stay firm because your house is attracting a lot of interest. The Cons: Less awareness. You will be automatically limiting the number of potential buyers. Through your lack of presence in the Multiple Listing Service, you'll have a much smaller audience. Also, many buyers feel more comfortable using a broker and want to have a professional on hand to help analyze the properties. Their broker will help them view all of the available homes in a given neighborhood. They get these listings through the MLS. Expect to get less for you home. Homes that sell with a broker go for a higher median price than those sold by an owner, according to the National Association of Realtors. Many buyers feel there is more room for negotiations when they are dealing with the owner. After all, the owner is already avoiding a hefty broker's fee. Selling your own home takes time and effort. You have to set a proper price, advertise and promote your home, take calls from potential buyers, prepare you home and then put on your best smile and sell that house like a pro. Then you have to negotiate. Some industry insiders even argue that buyers are more comfortable with a third party, because they don't want to insult the seller. It's enough to make you crazy trying to juggle all that's involved while working a full-time job and trying to find a new home for your family to move into. Some argue that the hassle is well worth the 6% commission. |
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