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Real Estate Information |
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Selling a House is Easy
The thought of selling a house strikes fear into most people. The contracts, the legalese, the exorbitant costs - they all conspire to make the experience unpleasant at best, and a nightmare at worst. It doesn't have to be that way, though. Let's take a look at three different scenarios for selling the same house. We'll assume an average house in an average town in America, whose market value has been established at $150,000. Scenario 1: A Traditional Home Sell If the value of the home is $150,000, a realtor will often suggest a list price of $149,900 - and rightfully so. Although you lose $100 before the house ever goes on the market, studies show that buyers actually see a difference in the two prices much greater than $100, so the ultimate benefit outweighs the initial loss. Statistics show that the average home sells for 90 to 95% of the asking price, so let's suppose you accept an offer of 93% - or $139,400. That's not bad, but it's not what you actually walk away from closing with. There are several other costs that figure in. The realtor, on average, will take a 6% commission. That reduces your price by $8,360 to $131,040. The average seller contribution to the buyer's closing costs is 3%, so your final amount is reduced by another $4,182 to $126,858. Add in $1,000 or so in realtor-recommended upgrades to make the house show better, and your ultimate take is down to $125,858. The other factor is how long it takes to sell the home. After finding and interviewing realtors, going through the listing appointment and getting the home into the Multiple Listing Service (MLS), your first offer usually will not come in until more than 30 days from the point at which you decided to sell. And from the point that the offer is accepted, it then often takes 60 days or more for the sale to close. So an average home in an average American town will take more than 90 days to sell, and the homeowner will walk away from closing with just 84% of the home's actual value. Scenario 2: Using a Discount Realtor A home selling method increasing in prominence across the U.S. over the past few years has been the use of a discount realtor. These services take a much smaller commission, allowing you to pocket anywhere from 2 to 5% more of your initial asking price - as much as $7,500 for the average house in our example. The downside of discount realtors is that they often provide services much more limited than a full-service realtor, and while your home does get listed in the MLS, it's frequently not shown by other realtors specifically because it was listed through a discount realtor. In fact, the Wall Street Journal reported in May 2005, that U.S. antitrust regulators are preparing to file suit against the National Association of Realtors for practices they believe are intended to stifle Internet-based rivals and discounters. So until those practices cease, selling a house through a discount realtor, while cost-effective, may lead to a time-to-sell much longer than the 90 days under a traditional realtor - still a good route if you don't need to sell right away. Scenario 3: Selling to a Professional Home Buyer Another home selling method that is growing in popularity is selling the home to a professional home buyer or real estate investor. These individuals will buy a home for 80 to 90% of its market value and can usually close in 10 days or less. It's free to get an offer from a home buyer, and there's no obligation. Under this scenario, you could easily walk away from closing with more than you would under a traditional scenario and do it in less than two weeks. Additionally, you set the timetable for closing. If you need to sell the house in two months instead of two weeks, the home buyer works on your schedule, instead of the other way around. The downside of going through a home buyer is the risk of working with someone unscrupulous who doesn't mind taking advantage of you. There are any number of ways to get ripped off and be left with no home and no cash - or, worse yet, no home, no cash, and a mountain of debt. To prevent that, be sure to read "We Buy Houses" Scams - How to Spot Them and How to Avoid Them. So going through a home buyer, the average home in our example could sell for just as much as through traditional methods, but sell in just 10 days instead of 90 days or more. Conclusion These scenarios all assume an average house in an average American town, so your actual experience could vary significantly. Homeowners in red-hot real estate markets like areas of California and Florida, for example, frequently receive offers matching, or even exceeding, their asking price. So it's imperative to review all your options before you sell. Non-traditional methods are gaining in prominence because they're a very viable, and often better, alternative to going through a traditional realtor. They deserve a good look the next time you decide to sell a house. Duane LeGate is president of House Buyer Network, one of America's largest networks of home buyers. Since 2002, they have helped more than 45,000 families and individuals who needed to sell a property fast-processing more than $7.5 billion in property during that time.
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