Selling your home: Should you list it with a real estate agent?
Pop quiz: 1. True or false: A real estate agent represents both buyer and seller. 2. A real estate commission can be (a) 5, (b) 6, (c) 7 percent.Skip to next paragraph
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3. It's impossible to sell a house without a real estate agent. True or False.
Pop answers: (1) False. The agent represents only the seller and earns a living only by selling a house. (2) None of the above. There are no laws setting commissions for real estate agents. The fee can be negotiated. But beware: A disgruntled agent might not be an eager salesperson. (3) False. You can - and that is the subject of this article.
First, consider what normally happens when a house is sold.
A real estate agent is engaged and performs a valuable service in bringing prospective buyers to the house and facilitating the purchase. Given the extensive ''multiple listing service'' network real estate brokers maintain and the energy agents put into the art of selling, a house usually can be sold quickly and painlessly this way.
It costs, however.
For that work, an estate agent receives 4 to 7 percent of the sale price of the house.
Usually the homeowner simply builds the real estate commission into the selling price, so that the agent's fee is covered. Right there, however, one should stop - at least to question whether the agent's fee is really worth the effort.
Most of the time it is. On a $100,000 house, you are talking about $4,000 to house, you are talking $20,000 to $35,000! Even if you grant that (1) real estate agents perform valuable and unique services in facilitating the actual sale of the house, and that (2) you could perhaps jack up the price of your house - still, that kind of money might be better spent.
You, the seller, could get the money. Or you, the buyer, could benefit in the form of a price reduction. Or the two of you could split the difference.
When should you consider selling a house without an agent?
If you're confident your property is desirable and you'll have little trouble drawing the buying public to it, you might go it alone. If the buyer is already known to you - a neighbor, family member, current tenant - a sale could be an easy affair. If your house has appreciated so little that the amount that goes to the real estate agent's commission would eat into your initial investment, you might want to save the agent's fee.
A word of caution: You should not attempt to circumvent a real estate agent when a listing contract is in effect. This is unfair and the agent could well sue for recovery of the commission.
OK. If you are still ready to go it alone, these are some points that real estate agents, lawyers, how-to authors, and veterans of the for-sale-by-owner experience advise that you keep in mind:
First determine your price. Real estate agents usually help you with this. Without an agent, you might want to call an appraiser in the Yellow Pages. Or if you understand what comparable houses in the neighborhood have sold for (this is public record) and what the market will bear, you might be able to arrive at a sales price. But try to be objective; don't overvalue the property. You'll find that the house doesn't sell and that you have to consider dropping the price. Next, call around to area banks, savings-and-loans, and mortgage companies and make a list of mortgage terms. You can hand out photocopies of the list to prospective buyers.
Prepare a spec sheet on the house also, listing price, property taxes, energy costs, square footage, number of bedrooms and bathrooms, type of heating and cooling, and the age and type of furnace, water heater, kitchen appliances, roof , etc. You can accentuate the positive, if you wish, by listing, say, the new fence, deck, in-ground pool, and other amenities. Also make a note of what items go with the house - draperies, carpeting, lighting fixtures. A good photo of the house should be included.