The Real Cost of Selling Your House on Your Own
As real estate agents, we are seeing a lot of sellers taking the job of selling their houses on themselves, in the hopes of savings thousands and thousands in commissions. We are also seeing the same sellers ending up listing their houses with real estate agents because they are unable to sell their house themselves and end up losing months in the process.
I won’t deny that there can be savings in selling a house yourself, but it is really not a huge amount that is portrayed on sites that allow sellers to sell a house themselves. In the industry, these are called mere listings. With a mere listing, a company would typically charge a fixed amount to put your house on MLS, the biggest site for selling houses managed by Winnipeg Realtors.
I will show you some numbers on potential savings that can be realized by selling a house yourself later, but for you to understand that, you need to understand how real estate actually works.
How Does Real Estate Work
When you list your home with an agent, you will negotiate a commission percentage with him/her. Your agent will likely split half of that with an agent that will bring in the buyer. Both agents will essentially get half of the commission percentage and then each agent will split their portion with their brokerage. The key point is that it takes two agents to sell a house: a seller’s agent and a buyer’s agent. The purpose of putting your home on MLS is to invite all the buyer’s agents whose clients would be interested in your home to bring their clients.
When You Sell Your House Yourself
When you decide to sell your home yourself, you are taking on the responsibilities of a listing agent (seller’s agent) and doing all the work yourself: showings, marketing your home, looking for buyers, taking phone calls, open houses, etc. This has relevance to potential savings later on.
So, let’s talk about what you can really save. Most agents will decide for themselves what they want to charge for their services, there is no standard commission in the industry, but I will show you the savings with 4% commission.
I am only showing numbers for up to $400,000 in selling price, as very few people are buying a half million house without an agent; the stakes are too high and buyers definitely do lot more research on market prices before buying.
So, as you can see, the savings of selling a house yourself are definitely misrepresented on many websites. I haven’t subtracted the time you will spend taking calls, doing showings and open houses etc, so real savings are even lower than above when you factor in your time.
Knowing the real cost of savings will help you determine whether you want to take over the responsibilities of a listing agent or not and if you are okay with potentially paying the market commission plus the fixed cost if you are not able to sell your house on your own.
If you still want to sell your house yourself, I will tell you few things that you can do to make sure you have a higher chance of being successful.
Tips to Do it Properly
Answer your phone or get back quickly: I have found that many sellers don’t respond to their calls or return voice messages. It takes few tries to be able to schedule showings and it is really frustrating for many agents. You would think that sellers would be more motivated to sell their house but doesn’t seem to be the case. Answer your phone and return voice messages right away. Most of the time, clients want to see the house that day, so if you want the opportunity for a buyer to see it, you have to be quick with returning calls.
Be flexible with showings: In my experience, most sellers selling themselves are quite inflexible with showings. This is understandable, as most of them have day jobs and are not able to accommodate showings in the mornings. Despite what everyone thinks, Realtors do lot of morning showings and when you are not flexible with certain times of the day, you lose out on lot of potential buyers. Try to accommodate showings as much as you can. The real estate market moves really fast and a potential buyer can like a house and buy it before they even have the chance to see yours at a later date.
You have to pay the buyer’s agent: As I explained above, you have to pay the buyer’s agent if they are bringing in the buyers; that’s how real estate works. If you don’t pay the buyer’s agent, the buyer has to compensate the agent for their work and most buyers won’t. As agents, we let our clients know if sellers are not co-operating and let clients decide if they want to move ahead unrepresented or pay us to represent them with private sellers; most buyers decide not to see the house. As agents when calling private sellers, we always ask whether they are cooperating or not and what % they are paying. We need to know this information to ensure that our clients know if they need to be potentially paying commissions in case they like the house.
Don’t overprice: No matter if you are selling a house yourself or with an agent, you can’t sell an overpriced house. No matter how much custom work or renovations you did to the house, the market will pay the market price. I have seen private sellers list their properties for over $100,000 above market, which is one of the reasons that private listings don’t sell. Price your house reasonably, that’s really the start.
Here is an example from MLS recently. This was a private seller, started with $580K and ended up selling eventually with an agent bringing in an offer of $465K, which, in my opinion is still, overpriced. I can’t imagine an unrepresented buyer buying directly from a seller and paying $100K over market price. It would take decades to recover the $100K.
I hope this information was helpful and next time you decide to ponder selling a house yourself, you can critically analyze what it would cost to sell your house and decide for yourself whether the savings are worth it or not. Remember, any showing that you cannot accommodate is a lost opportunity for a sale.
As always, if you have been trying to sell a house yourself but have been unsuccessful or if you would like to put your house on the market, give us a call! We sell houses 24/7 and know how to do it right.