As the housing market downturn continues, one thing is clear: Folks are having a tough time selling their homes. And if that isn't enough to concern home sellers, here's another: the commission you'll have to fork over to real estate broker.
Paying six percent of the selling price to a broker can often mean the difference between breaking even on the sale or having to dip into your savings. With the median home price at about $215,000, paying a typical six percent commission to a realtor can amount to almost $13,000. If you sell your house for what you owe on your mortgage, you'll have to dip into your savings just to pay the realtor.
Some sellers look at the issue this way: Paying a commission to a listing agent is money paid to a person who does nothing more than put your home on the Multiple Listing Service. When another agent sells your home, the listing agent collects half of the commission. Others say listing a house with an agent can provide marketing advice and save time and the hassle of arranging showings, all of which is worth the commission paid to the agent.
For these reasons, For Sale By Owner, aka FSBO, pronounced "fizbo," without the help of an agent, is an option that seems to be gaining the attention of more home sellers.
It can be a good strategy when your home is in a desirable area, at a price that is affordable to a lot of potential buyers, where a home like yours is in short supply.
There are conflicting numbers on how many homeowners are selling their homes themselves, but industry reports suggest as many as a quarter of home sellers try to do it solo. The average number of days on the market for FSBO sellers is about 114, and about 12 percent actually close, fetching about 96 percent of their asking price.
If you are considering selling your home yourself, it's wise to consider this advice:
Think Like a Buyer: It's important to keep abreast of the trends and what is working to sell a house. The National Association of Realtors Profile of Home Buyers and Sellers can be of some help to home sellers.
In order to successfully sell a home, you'll need to think like a buyer. A report from the National Association of Realtors helps with these insights:
Most buyers use the Internet to search for a home. Such use has risen dramatically over the past few years and now, over 77 percent of buyers report doing so.
Buyers first learned about the home they bought from three main sources: 36 percent from a buyer's real estate agent, 24 percent from an Internet search, and 15 percent from yard signs.
A typical buyer visited nine homes, conducted their search for eight weeks, and bought a home an average of 12 miles from their previous residence.
The take-away from this is that it is critical to your selling success to get your home listed on the Internet and to attract the attention of a large number of real estate agents in your local area.
There are many services where you can, without using a traditional real estate broker, get your house listed on your local area Multiple Listing Service, thus avoiding paying a commission to a listing broker. In doing so, you can still offer to pay a three percent commission to a selling agent, thus creating an incentive to show and sell your home.
But, while every home seller should try to save on real estate broker commissions, being your own real estate broker is not for everyone. There are some things you will need to pay careful attention to:
Set the Right Price: After getting a listing on the MLS, this continues to be the single most important factor in successfully selling a house. The housing market is constantly changing, and you really need to have a good feel for the market and good information in order to set the right price to sell your home. Not only is a home the biggest purchase most people make, it's also the biggest asset people have to sell, and setting the wrong price can cost you real money. You don't want to leave money on the table by setting a price that's too low, and you don't want to scare buyers away by asking too much.