For many of us, our house is our largest investment. When it comes time to move, whether because you outgrew your old house, or because you no longer need the space and want to downsize, you may be tempted to forego hiring a real estate agent and list your house as For Sale By Owner (FSBO, pronounced FIZZ-bo). And with the prevalence of real estate apps like Zillow, Trulia, or Realtor.com, selling a house without a realtor is easier than ever.
Every year between 10 and 20 percent of home sales are completed without the assistance of a real estate agent.
If you’re planning on selling a house without a realtor, here are 5 things you should know.
When both the buyer and seller are working with real estate agents, the agents usually split the commission, which is often around 5-7% of the total sale price. Selling your house without a realtor can result in significant savings which only increase the more expensive your house is.
If you plan on selling your house without a realtor, be prepared that you may still have to pay some commissions and other expenses. If the buyer is working with a real estate agent, that agent will still expect to be paid a percentage of the sales price. These commissions are usually built-in to the closing costs. You may be able to convince the buyer to forego using a realtor and work through the transaction without the assistance of a realtor, or you can simply refuse to pay the buyer’s agent’s commission and force the buyer to pay the commission him-or herself. However, this would need to be negotiated before-hand and could make the closing more difficult.
Even though you’ll be selling a house without a realtor, there may still be closing costs that include things like title insurance, escrow fees, transfer taxes, recording fees, and home inspections. But don’t feel like you need to pay for all these expenses. You can negotiate with the buyer to determine who will pay for which parts of the closing costs.
Even if you’re selling a house without a realtor, you’ll probably still need to hire a real estate lawyer who can advise you on what questions you should be asking, help you structure the transaction, prepare or review the paperwork necessary to complete the transfer, and even give you advice on how to negotiate the purchase price.
The good news is that a real estate lawyer’s fees are fixed, as opposed to being a percentage of the sale price of the home, and are usually a fraction of those charged by a real estate agent.
Working with a real estate lawyer is a good idea because the real estate lawyer will protect your interests, make sure the transfer is legally binding, handle the real estate closing, and help you comply with any local laws.
Perhaps the biggest key to successfully selling your house without a realtor is an aggressive marketing campaign. Today, Millennials (Americans ages 20 to 37) make up over 35% of home-buyers, the largest single group of buyers in today’s market. To market your house to appeal to this younger set of potential home-buyers:
Traditional wisdom may have been to over-price your house and then come down. However, you could be doing yourself a disservice.
By overpricing your home, you could be losing out on potential buyers. If the buyer is working with a real estate agent, the agent might not bring a potential buyer to the house, thinking that it’s out of their price range. Or, they’ll use your house as an example of a home that is overpriced when they’re trying to get the buyer to move on another property.
And if the buyer is not working with a real estate agent, your home might not fall within their search terms and they’ll never see it.
Once you have an interested buyer, be willing to negotiate. Almost everything is up for negotiation, from who will pay which aspects of the closing costs, to any repairs that the buyer would like to have made. Working with an attorney for advice on these issues can be helpful and, unlike a real estate agent who is trying to close the deal so they earn a commission, a real estate attorney will give you disinterested and unbiased advice.
If you are considering selling a house without a realtor, contact the real estate lawyers at Fremstad Law today by calling (701) 478-7620.
© 2020 Fremstad Law