Q I would like to sell my house myself and also put on an effective advertising campaign. I don’t want to deal with the real estate agents and multiple listings because I think they are too expensive. Do you have any suggestions?
M.M., Lynnwood
AWith all due respect to my friends in the real estate industry, no one likes the idea of paying a real estate sales commission.
The typical commission rate is 6 percent of the sales price. That’s a lot of money, and many sellers think, “Why don’t we just sell it ourselves and keep the extra money?”
Frankly, in most cases that’s a mistake. Real estate agents earn their money, and they will probably get a higher price for your home than you could get on your own. But since you are determined to go the for sale by owner route, here are a few tips:
First, you have to realize that the odds are against you. The vast majority of all real estate sales are closed through real estate agents. You will not have an army of agents working to sell your home, and the buyers who are already working with real estate agents will probably never see your house. After all, why would an agent show your home for free when there are many other homes for sale in your neighborhood that pay a sales commission?
So, my first tip is to offer to pay a commission to any agent who presents an offer from a qualified buyer. Now, you’re probably thinking, “We don’t want to pay a commission, that’s why we’re selling the home ourselves!” I’m not suggesting that you pay a full 6 percent fee, just the half that would normally go to the selling agent. Typically, the listing agent who markets the home receives half the commission and the selling agent who produces the buyer receives the other half. So if you offer to pay a 3 percent sales commission to a real estate agent, he or she would earn the same amount as if they were selling a home listed by a real estate agent, but you would save half the normal commission rate. That will open your home up to many more prospective buyers. All you have to do is include the words “agents welcome” in any advertising and marketing materials prepared for your home.
But what if you are adamant about not paying any real estate commission? You will have to earn the commission that you are saving because selling a home can be hard work. First, if you haven’t already done so, clean up your house to make it present well. A fresh coat of paint makes a big improvement for a relatively small investment. You also may want to clean your carpets and refinish badly worn hardwood floors. You want your home to make a good first impression. But don’t go overboard with expensive projects that won’t significantly increase the market value of your home. For example, don’t do a major kitchen remodel just before putting your home on the market. You want to concentrate on relatively inexpensive cosmetic improvements.
Once your home is ready to hit the market, you need to establish the asking price. This is where most owner-sellers run into trouble. Not only do they want to keep all the money that would go to the real estate agents, they also tend to get greedy when setting their asking price.
That is a serious mistake. Remember, you are at a competitive disadvantage when selling your home without a real estate agent, so you have to do something to stand out from the crowd.
In my opinion, you should price your home for less than you would list it for with a real estate agent. For example, if a real estate agent suggests pricing the home at $250,000, you might advertise it for sale at $244,950. You would attract savvy buyers who recognize that the home is well-priced, and your chances of a quick sale are greatly improved.
The mistake many owners make is that when the agent suggests listing the home for $250,000 they think “my house is worth more than that” so they try to sell it themselves for $275,000.
Even a good real estate agent can’t sell an overpriced home, and it’s doubly hard when you’re trying to sell by owner. Be realistic. Tour Sunday open houses in your neighborhood and check out the competition.
Try to put yourself in the buyers’ shoes. How much would you be willing to pay for your home compared to similar homes on the market? Be honest. We all tend to think that our home is better than the neighbor’s house, but prospective buyers don’t have the same emotional attachment.
To them, it’s just another house among the many options available.
The good news is that March and April are the prime home-selling months in the Puget Sound area. If you price your home right, you can sell it yourself.
One of my mortgage clients recently sold their own home by taking my advice and pricing it very low in comparison to similar homes in their neighborhood. As a result, they got a full-price offer within a week. And they also got a backup offer in case the first buyer failed to close. The key to their success was pricing their home low and then holding firm, rather than building in negotiating room with the intention of coming down later.
Mail questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com.
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