The For Sale By Owner situation in Charlotte is a very interesting one. We are very much in a sellers market. That means that the negotiating leverage, in most situations at least, favour the owners. This can make the job of selling your home easier. Any time a market goes like this you may see an increase in For Sale By Owners as people think they can take advantage of the market and save the commission of hiring a real estate agent.
Is it as simple when selling your home yourself to save money by not hiring an agent?
Let’s say you hypothetically have a home you think is worth somewhere between $300,000 and $320,000. You decide to list it at $320,000 because its a hot market. If you hired an agent, that may mean $18,000 in commission. You decide then if you can sell it for any price above $302,000 that you are coming out ahead. So is this true? Are you coming out ahead?
For starters, many homes that sell by the owner still end up paying commission to someone representing the buyer. This is not always the case but its just as likely you’ll be paying a buyers representative as that you’d sell without. If that commission is hypothetically $9,000 then you need to sell for at least $311,000 to still come out ahead on the commission savings from not hiring a representative.
It’s not that simple though. Are you a trained negotiator? Real Estate Agents negotiate day in and day out. It’s a skill, its not just an innate ability that people possess. If you are not a strong negotiator you could easily lose more than that $9,000 savings. A good real estate agent may have even been able to get more than $320,000.
Here is an example that we’ve seen played out: We have a buyer interested in a For Sale By Owner property. The property is listed at X price. The owners selling their home say that they’d be willing to pay 3% of the sale price on the commission to the agent representing the buyer if the offer is above 97.5% of the sale price. So imagine its that home mentioned above listed at $320,000. That means if they get an offer above $312,000 they will pay $9,360 to the agent representing the buyer. By having said that they’d pay that for 97.5% of the purchase price though (poor negotiating skills) no one is going to give them an offer about $312,000 now unless in competition with other offers. That means they are getting after the commission about $302,640 (this doesn’t take into account other closing costs but those are in any deal). If hiring an agent to represent you was going to cost $18,000 (this number can vary a lot, a lot of agents out there and they all can charge any amount they want) then that’s a very nominal amount you’d actually save.
Is that worth it? In that situation probably not.
We haven’t even touched upon the other ways that agents can help. Certainly many people are capable of selling their home themselves. It’s everyones right to try and do it. Just remember that while you may save a certain amount of commission you may be losing more by either not listing at the right price or not being a strong negotiator. You may save $10,000 but cost yourself $30,000 on the sale price.
Go into the for sale by owner market with your eyes open and run the numbers. See if its worth it in your situation. Everyone has a different situation. For some for sale by owner may legitimately be their best option. For many though it can ultimately cost them time and money.
Do the research, run the numbers, speak to different agents on how they can help you and what they charge, and then make an informed decision if selling your home yourself is the best option.
Author:Harrison Long Phone: 704-724-6644 Dated: July 11th 2016 Views: 432 About Harrison: ...
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