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| The Basics | 3 cut-rate ways to sell your home
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There's no need to pay top dollar to sell, especially if you live in a white-hot housing market. The best option for you depends on your home, your market and your time.
By Liz Pulliam Weston
Jennifer and Dave Hampton of Atlanta tried, and failed, to sell their home without a real-estate agent. But the replacement house they purchased was FSBO, or for-sale-by-owner, so they know it can be done.
The seller priced the house about $30,000 below comparable homes, Jennifer Hampton said, but still came out ahead since he didn't have to pay a 6% commission to an agent.
"We had a great experience. No hassles, and everything except the closing was handled between the previous owner and ourselves over his kitchen table," Hampton said. "We were nervous and hesitant at first, but it worked out great and saved us both money by not paying the (agent) commission."
Traditionally, sellers have coughed up 4% to 7% of their home-sale proceeds in commissions, with half typically going to their own agents and half to the agents representing the buyers.
But if you live in an area where home prices are soaring and houses sell within days, you may well wonder if the agents deserve such a hefty cut. Even if your market isn't white-hot, you may be tempted to save a little money by reducing or eliminating the commission.
3 ways to reduce costs
If so, you're not alone. Real Trends, a company that tracks the 500 largest real estate firms, says the average commission on residential property has dropped in recent years to 5.1% from 6% as sellers cut better deals.
Have you recently sold your home? We want to read about it. Did you sell sooner than you expected to take advantage of rising real estate prices? Or, did your house sell for less than you had hoped? Click on the "e-mail us your comments" link at the bottom of the next page and tell us your story.
So you do have options besides paying the full load, but whether you should take them depends on your home, your market and your available time. Three popular options include:- Selling it yourself.
- Selling with the help of a discount or flat-rate broker.
- Selling with a real estate agent, but negotiating a lower commission.
Before you decide how to proceed, you should take the following steps:
Research your market. Is it a seller's market, with homes selling fast for more than their asking price, or a buyer's market, with houses sitting for months before a purchaser can be found? Is your house in great condition in a top neighborhood or a falling-down wreck next to a freeway? The worse the market, the house and the location, the more you may need the skilled intervention of an experienced real estate agent to market your home.
Prime your house. Regardless of who's showing it, your home typically will sell faster and for a better price if it's in decent shape. Don't embark on major remodels, but fix whatever is obviously broken, rid the rooms of clutter and freshen up with new landscaping and clean windows.
Get three proposals. Getting "comparable market analyses," or CMAs, from three experienced agents can help you determine the best selling price. Smart agents will cooperate even if you let them know you're thinking about FSBO'ing, since 80% of do-it-yourselfers give up and hire an agent, said real estate expert Ilyce Glink, author of "50 Simple Steps You Can Take to Sell Your Home Faster and for More Money in Any Market."
Once you've taken those steps, you're ready to decide which option fits your needs.
For sale by owner
Glink has sold two properties this way, and cautions that it's a big investment of time.
In addition to all the tasks an owner usually does -- prepping the house, keeping it clean, containing kids and pets -- you have to perform the tasks usually overseen by the agent, such as: - Setting the asking price;
- Advertising and marketing the property;
- Showing the house to prospective buyers (often with little notice);
- Differentiating between well- and poorly qualified buyers;
- Making disclosures required by federal, state and local laws;
- Negotiating the final deal;
- Opening an escrow; and
- Ordering a payoff for your mortgage.
The process is complex enough that you might want to pick up a good primer, like Robert Irwin's "The For Sale by Owner Kit."
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