It’s 2018, people. So why are we still selling homes the way our parents and grandparents did? When selling your home, you have lots of new options. The method you choose largely depends on your specific needs, circumstances and the property you’re selling. The process seems overwhelming, but don’t sweat it! We’ve got your back. This guide will walk you through the pros and cons of each option so you can make the right decision for you. Choose wisely.
Tech-enabled Brokerages and Apps — The New Way
Modern technology has simplified almost everything we do in our daily lives. You can find a date, hail a cab, book a vacation and even sell your home right from the palm of your hand.
On top of being convenient, tech-enabled brokerages automate and streamline real estate transactions by giving you more control over the process. The great part is you still have access to licensed real estate agents and attorneys to help you with the parts of the transaction that are more nuanced, legal, complicated and — let’s be honest — boring :). What’s more, by using services like tech-enabled brokerages to list and sell your home, you end up paying a fraction of the cost of traditional methods.
What’s It Going To Cost?:
You’ll pay a low flat fee to both list and sell your home — ranging from $1,500 to $3,500. You may pay an additional buyer agent commission if you choose to list on the MLS and sell to a buyer represented by a traditional agent. However, if you’re feeling confident, you can negotiate the buyer agent’s commission; the typical amount is between 2.5 to 3% depending on where you live.
Preferable If You Want:
- To save thousands by paying a flat fee versus commission to the listing agent
- To have access to a team of real estate professionals and attorneys to guide them through offers and negotiation
- The convenience of completing the transaction almost entirely on a computer or phone
- Sell your home quickly through online marketing that goes beyond the MLS
Hiring an Individual Real Estate Agent
Hiring an individual real estate agent is the traditional method of selling your home, but it can make sense for some sellers. Even though it may seem old school, individual agents are often focused on certain neighborhoods or types of homes and can provide local knowledge that help with pricing and marketing. They offer the level of personalized service that you may be looking for.
A Realtor’s commission is a percentage of a home’s sales price. Commission is typically 6%, but rates are negotiable and can range from 4.5 to 6%.
If you choose to work with a Realtor, you should interview multiple agents and ask questions about their selling experience and what services they offer. Remember, just because your cousin or neighbor is a real estate agent, that doesn’t mean you should blindly hire them without asking a few questions and negotiating the commission rate.
Preferable If You Want:
- Someone to guide you through every step of the selling process
- In-person meetings with your listing agent
- A pricing strategy based on local market trends
- Home staging and marketing suggestions
For Sale by Owner (FSBO)
Many sellers try to sell their home on their own to avoid paying high commissions to traditional real estate agents. Others choose FSBO because they already have a potential buyer interested in buying their home.
For Sale by Owner is not widely recommended for most sellers, but there are still plenty of homeowners who go down this path. According to The National Association of Realtors, over 90% of all For Sale by Owners don’t sell their home and end up hiring a company or agent.
As an FSBO seller, you can’t rely on simply putting up a sign in your yard and crossing your fingers. You need a basic understanding of how the process works — from finding the best title company, getting your home priced correctly, filling out legal documents, having professional photos taken and marketing the property online. If you opt for FSBO, you also need to be on the lookout for potential scams from fraudulent buyers trying to get your personal info.
One of the most important elements of selling your home is the price. Set the asking price too low and you are just giving away your equity. Set it too high and you’ll get little interest, meaning fewer showings and offers. Without the guidance of a professional, pricing your home correctly may prove difficult and come back to bite you.
You’ll save money taking the FSBO route if you can find a buyer and successfully sell your home. However, what many FSBO sellers don’t realize is there are many other fees associated with the selling including signage, photography, flyers, listing on the MLS, attorneys, home warranty, home inspection, a credit report for buyers, contracts and more.
FSBO requires more work on your part, such as being available to show the home to buyers at any given day or time, marketing the property, and gathering the necessary legal documents. When you do get interested buyers, you will need to be available to answer their phone calls, show the home, and negotiate a good price. But if you’ve got the gumption, go for it!
Potential Drawbacks of FSBO:
- Lack of pricing assistance
- No lockbox for buyer agents to show the home
- No listing on the MLS or other real estate websites
- No pre-qualification for potential buyers
- Difficulty understanding and negotiating the real estate purchase contract (REPC)
- If you aren’t willing to pay a buyer’s agent commission (BAC) agents may not show your home to their buyers
Preferable If You:
- Have an interested buyer and a real estate attorney to help with the paperwork
- Want a hands-on approach throughout the selling process
Home Buying Services
Home buying services like OpenDoor and Offerpad are great if you’re looking to streamline the process. These services can get you a cash offer and a close date a week after you put the house on the market. They’re especially convenient if you have already purchased your next home — look at you go — and have a contract contingent on the sale of your current one. This service also gives you the flexibility to move into your new home whenever you’re ready.
You start by filling out a form that answers specific questions about your home including the location, layout, and overall condition. An algorithm will assess the value of your home based on current market trends. You’ll then receive an offer and choose to accept or decline it. In many cases, these companies can close on a cash deal within a few days. After they purchase the home, they typically make any necessary repairs or updates, to quickly re-sell the house like a traditional real estate brokerage would.
You’ll pay a higher rate for the convenience of selling your home quickly, and for cash. These companies charge around 7% for conducting the transaction, but this can vary depending on your home’s location and condition.
If you are considering using these services, keep in mind that you could potentially lose money on the sale because you won’t have the opportunity to compare or consider multiple offers.
Preferable If You Want:
- A low-hassle way of selling your home
- The potential to close within weeks
- A cash purchase so there is no financing risk from the buyer
- An offer on a new home with the purchase contingent on the sale of your current home
The Choice Is Yours
Whether you go with a speedy home buying service, hire an individual real estate agent, sell your home on your own, or use an affordable tech-enabled service, you certainly have lots of options to help you save money and sell your home fast. However, it’s hard to deny that today’s technology makes buying and selling a home more transparent, streamlined and affordable. Only you know what tasks you feel comfortable taking on and what amount of control you want to have. Go with your gut. Take a deep breath. You got this.
The Next Big Utah Tech Startup