Former Realtor: Benefits of Selling a House Without a Realtor

As a former Realtor, I would never have admitted this, but if you are willing to work a little harder then you can sell your home without a Realtor. The main benefit of a Realtor is the MLS - Multiple Listing Service. This is a computerized listing serve that is open to real estate agents and brokers. Now there are companies that will simply list your home on the MLS without representing you. You pay a nominal fee (about $500) for the listing and that's it. It's far cheaper than the 5-7% commission you would pay a realtor.

About that 5-7% commission, a real estate agent will charge you that commission for selling your home, but he or she does not get the entire commission. Let's say that the commission is 6% and your home sells through an agency for $200,000.00. That would be $12,000.00 commission. Unless the agent is the buying agent also (working both ends of the deal) then the selling agent's side is 3% and the buyer's side is 3%. In other words, the buyer's agent gets the other 3%. That means that the selling agency gets $6000.00. Then the agency will pay the agent from that $6000.00, and if it is a 50-50 split, then the agent will make $3000.00 from the sale of your house.

To save most of that money, you can sell it yourself. The downside of that is that you wind up showing the home yourself. This is where most home sellers blow the deal - they try to oversell a house. Be sure to ask for a driver's license when showing the home. There are some robbers that will prey on people showing their own home, only to rob them during the showing. Assuming the person to whom you are showing the house is a legitimate buyer, let the them make up his or her own mind about your house. Let them picture themselves in your living room or on your patio. If you have done your homework properly and gotten the house ready for sale (cleaning, getting rid of clutter and fixing), then the house should sell itself. When you take them into the kitchen, don't point out that they are in the kitchen. The stove, dishwasher and sink pretty much announces that they are standing in a kitchen. Rather, point out some features of the kitchen. This should be your watchword when showing the home - features. The buyer is putting his or herself in your home in their mind. They can see that they are standing in a living room or a patio. Let them envision hosting barbeque or watching a movie by a roaring fire. Remember that in terms of talking when showing a home, less is more.

A word about pricing your home for sale. Since you are forgoing a real estate agent, you really have no idea what your home's market value is. Here is where you can ask a realtor to help. Many realtors will do an assessment of your home with comparables to determine your market value. They will then ask you to list, but you are under no obligation to do so. Remember, that the appraised value (the real estate agent cannot call it an appraisal because they are not licensed as appraisers) is not necessarily the market value of your home, it is simply what the lenders will lend. If somebody is willing to buy your home in cash, then the appraisal is not really needed.

Once you've made the deal, then you're all set, right? Wrong. Many real estate deals fall apart while in escrow. For one thing, you should not hold any money down on your home. You should have a title company do that. They are there to create escrow accounts and to help get the paperwork (other than the contract) done on your home.

As for the contract, a visit to your state's government web site or real estate licensing site may get you a sample contract. If not then a business supply store will have simple real estate contracts. Use common sense when using these contracts. Leave room for negotiation and don't let yourself get caught in the trap of allowing too much for repairs (giving a credit) or not allowing enough. Watch the contingency issues the buyer may have. You will want to avoid buyers that have to sell their home before they will buy yours. They will try to put a down payment on your home and then make the escrow last until they have cleared their escrow. Unless you have an infinite amount of time, you don't want any part of that deal. For the most part the only contingencies should be the appraisal and the home inspection. Anything else should be a red flag that this deal is headed for trouble.

Another thing to watch out for is buyer's agents. I'm sure you have seen the For Sale By Owners (called FISBOs in the business) signs with "Brokers Protected" on them. This means that you are willing to fork over 3% commission for a buyer's agent to show your home. Remember, that buyer's agent will do more than just show the home; they will also negotiate on behalf of their client, which is not to your advantage. Use them to help sell the home, but don't let them take advantage of you. If necessary, involve a real estate attorney if you feel you are in over your head.

Remember, when selling your home, you are going to have to invest either time (selling it yourself) or money (engaging a Realtor) to have a successful sale.