June 7, 2008

Building Wealth | Should You Sell Your Home Yourself?

Should I Sell My Home "For Sale By Owner?"

These days, if you are selling your home, the greatest fear is that it will sit on the market forever, with no buyers, and possibly no one even looking. The second greatest fear is that you will get tons of interest but everyone will present offers far below your asking price, in hopes that you are in such dire straights that you have to take whatever you can get. Add on top of that closing costs, repair costs, and realtor's fees, and you may feel lucky just to break even.

One train of thought regarding getting the most bang out of selling your house is to forego the realtor and sell the house yourself. It seems like a quick and easy way to avoid a cost (which is part of building your wealth) and keep more of the money your house has created for you in your pocket. And for some people, selling a home without a realtor is a great idea. But for most, however, it can lead to your house being on the market longer and missing the buyer that wanted your home.

Realtors Know How To Price Your Home Right

A primary function of realtors (besides actually selling your house) is their duties before even listing the house for sale. One of these duties is helping you to set the price for your house that will both get it sold and maximize your profit. From a homeowner's standpoint, your best day in the market is the highest price a bidder would pay for your house. It is not what you think they should pay, what some magazine or publication says you should be getting per square foot, or any other hard and fast rule. The market determines what your house is worth.

What realtors can do for you before you put your house on the market is find out what the market is bringing for homes similar to yours. A primary way to value real estate is to see what has recently sold on the open market and find properties that match or are very close to your property. What those other properties are selling for is a good indication of what yours will probably sell for. If it is a little nicer than most, it will likely go for a little more. If it is a little less nice, it will likely go for slightly less. Finding out this number, though, is the key to selling your house quickly and getting the most money you can.

(Realtors also serve an important function of looking over your house before it is placed on the market and providing helpful hints and tips for getting your house ready for show to the public. For example, no one wants to see a picture of your grandmother's 90th birthday party. They want to picture themselves in the home. Your realtor can give you great information on how to prep your home for sale).

Realtors Get People to Your House

The way realtors sell houses is getting people to look at them. They don't eat if they don't sell houses. Because of this, when you hire a realtor, you can probably be rest assured that they will be spending some part of their day trying to let people know your house is for sale. This includes listing your house in the newspaper, in trade magazines, and on the multiple listing service, letting all the realtors in their office and other offices know a new property is on the market, and holding open houses for people to stop by and fall in love with your house. The best part of all this is, for you the homeowner, you don't have to do anything. It may seem like they are getting a lot of money from you, but to sell your house, especially in today's market, they have to bust their tail (most of the time).

Realtors Have Lock Boxes At Their Disposal

This again goes back to saving time for you. If you sell your house on your own, every time there is an appointment you are going to have to come by and let the people in, let them look at your house, and show them out. This could become very annoying after a while.

With a realtor, they simply put a lock box on the door and give the buyer's agent the code when they want to come in. That allows people to look at your house without your presence, and without hassling you.

Why Stay Away From Realtors?

I can only think of two reasons why you might want to list your home on your own. First, if your house is either in a very hot area or is sure to sell quick, you might want to think about listing it yourself. In this case contacting the local real estate agencies and listing the house on MLS yourself (small fee) should be enough to get someone to put an offer on your house.

Second, realtors have an interest in selling your house, not selling it for the highest possible dollar. If you didn't know, your realtor typically takes 1.5% of your purchase price as payment (1.5% goes to buyer's agent, 1.5% goes to buyers agent's company, and 1.5% goes to sellers agent's company). If you do the math, a $15,000 increase in price, while doing a lot for your pocket book, doesn't necessarily help out your realtor that much ($225.00!). It only makes sense that at some point they may be more interested in closing the deal than getting you the most money possible. I don't think this is reason enough to go out on your own to sell your house. Having this information at the back of your mind should keep you cognizant enough of the situation.

To Build Wealth Get a Realtor

In the end, getting a realtor is a pretty good deal, assuming they do the work I've discussed above. Selling a home is a big ordeal, and it is much easier to do with help.

Building Wealth, Personal Finance, Creating Wealth

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