Do-It-Yourself Home Sales Can Be Very Costly
Some homeowners assume that they’ll save a bundle on real estate commissions, which usually run 6% to 7% of the sales price, by selling their houses themselves. But do-it-yourself home sales are difficult and sometimes costly. There are several reasons why.
First, many owners don’t know exactly how much their home is worth. To figure that out, they need to get sales price information on comparable homes in the area. Realtors usually have access to this data through computer-based information services or comparable home-sales information provided through local boards of Realtors.
An individual who wants the same information must buy it from a real estate information service--and some services will only sell this information to Realtors. Or they can compile it by looking at public records, filed with the county recorder’s office. County records, though, will generally not provide much information about the condition or size of the home.
That makes it more likely that you’ll list your house for too much or too little. If you list for too little, of course, you lose money. If you list for too much, you can also lose money. The carrying cost--the mortgage, taxes and maintenance--of a property that doesn’t sell month after month can be substantial. And these costs are particularly onerous for those who have already purchased another home.
Individuals who try to sell without the help of a real estate professional face other obstacles as well. Unless they get into the multiple listing service, a guide of all the homes for sale in a particular region, it is tough to get noticed. In addition, if you sell yourself, you probably won’t have a lock box on the door that allows people to see the house when you’re not home.
However, there are self-help services that will get you into the multiple listings and, possibly, help with other details.
San Diego-based New Visions Real Estate publishes a fee and commission schedule that allows consumers to choose just how much help they need and how much they want to pay. For $500, the company will get you into the multiple listing service, give you a yard sign and a lock box and some real estate sales forms.
If you want more help, you’ll have to pay more. New Visions fees top out at 1.5% of the sales price plus $500. And you still may have to pay another 3% commission if a real estate agent represents the ultimate buyer of your home. Similar services, which operate across the country, may charge more or less than New Visions. Most publish rate schedules that will show their fees and charges up front.
At times, the price of a self-help service will come very close to what you’d pay to a full-service agent or broker.
Generally, Realtors charge a commission that amounts to between 6% and 7% of the home sales price, which is only paid if and when the house sells. But these fees are negotiable. If you are selling a very expensive property or have an exclusive listing arrangement, your Realtor may agree to take less. Fees are rarely cut by more than one or two percentage points, however.
If time is more important than sales charges, you might opt to auction off your home. With an auction you are almost guaranteed a fast sale, said Richard Berens, president and chief executive of Alliance Auction & Realty Services in Minneapolis.
Typically, a property is marketed for a month or so before the auction. However, if you put it up at an “absolute” auction, it will be sold on that very day, he said.
Of course, the price you get might not be to your liking. In absolute auctions, you agree to sell the property to the highest bidder, no matter how much that bidder has agreed to pay. In real estate auctions, such unconditional sales are not that common.
Often, the seller will set a minimum price. The auctioneer cannot sell the house for less. Final bidding prices usually range from 70% to 150% of that amount, Berens said. If the final bid is less than the seller’s minimum price, the auctioneer will often go back to the seller and ask if he’d like to accept the lower offer.
If he does, the sale will be completed. If not, the prospective seller may be required to pay a “no sale fee.” Not all auctioneers levy the fees, but those who do often charge substantial sums, sometimes up to $1,000, Berens said.
In addition, auctioneers charge up-front fees for marketing the property. The marketing fees compensate the auctioneer for buying newspaper and radio advertisements, compiling brochures and holding open houses to show potential bidders your home. So, if you are unable to sell the house, you may still face marketing fees.
If you do sell your house by auction, you’ll be expected to pay a sales charge that can range between 2% and 8% of the sales price. The percentage fee usually drops as the price of the property rises.
Selling Your Home Alone Because most real estate agents charge 6% to 7% of a home’s sale price for commission, many homeowners believe that they will be able to save that much if they sell by themselves. That’s not always the case. Some things to think about:
Many homeowners don’t know exactly how much their home is worth. To figure that out, they need to get sales price information on comparable homes in the area. Realtors usually have access to this data through computer-based information services or local boards of Realtors.
Unless a seller gets into the multiple listing service, a guide of all the homes for sale in a particular region, it is tough to get noticed.
If you sell yourself, you probably won’t have a lock box on the door that allows people to see the house when you’re not home.
There are self-help services that will get you into the multiple listings and, possibly, help with other details. San Diego-based New Visions Real Estate, for example, publishes a fee and commission schedule that allows consumers to choose just how much help they need and how much they want to pay.
