Here are some questions often asked of Realtors by sellers:
What is the normal commission and why is it so high ?
Actually, there is no “normal commission”. The percentage is negotiated between the seller and their agent. The commission is usually split evenly between the seller’s agent and the buyer’s agent when the transaction is complete. Traditionally commissions have ranged from 5% to 6% of the selling price. The cost is high because the agent has a business to support, and this may include a team of support personnel who all receive compensation for their work. The broker who employs the agent maintains a physical office, telephones, business equipment, and machines. Every listing in today’s market needs to be advertised on line, with professional photos and virtual tours. These are all up front expenses that the agent must pay for even if the house doesn’t sell. The buyer’s agent must advertise to attract clients, and they spend a lot of money on gas previewing and showing homes. To summarize, simply, there is a significant cost to running a real estate business successfully, and that is paid from the commissions earned when a sale is completed.
What must I disclose when selling my house ?
You will want to disclose everything you know that you, as a buyer, would want to know. First, you want the buyer to be happy with the purchase and not experience unknowns in the future. Secondly, the laws are strong enough that undisclosed problems can lead to lawsuits and significant costs/judgments. It is simply not worth it. A realtor will walk you through a lot of common issues that should be disclosed. The agent should also do a visual inspection and disclose anything they see of concern. Be honest in all of your responses, and share things with your agent that might be relevant even if they are not on the forms. Honest won’t bite you. If someone knows of a concern, and moves forward, they do so knowing the risks or potential costs they may face.
Will I make more if I fix up the house ?
Unless you have a fully upgraded, showcase, home with pristine gardens, most buyers are going to make changes to your home. Often they will add up the cost of their changes and want to deduct it from the asking price. Of course, you are not responsible for paying a homeowner to remodel the house. If you spend a lot of money fixing up a home the way you like it, just to sell it, you are not likely to benefit from the investment. Buyer’s today talk about the “bones” of the house. Is it something they can work with, and make exactly like what they want? You want to present what you have in good shape, so it is wise to invest in cleaning, refreshing landscaping, and painting/repairing areas significantly in need. Beyond that, your best advantage is to retain some room to negotiate in the price. It’s not unusual to provide for a flooring allowance, and perhaps some money toward appliance replacement. If you spend too much, you are not likely to see a return worth the expense.
I’m thinking of putting in a pool ( or room addition ). Will it add value to the house ?
You add space, or a pool, to your property when it is something you are doing for your personal comfort and/or enjoyment. Unless you do most of the work yourself, you are not likely to earn back the amount you invested for many years. If you do add a room, be sure you are not overbuilding for the neighborhood. Ultimately your property value reflects what is seen in the neighborhood, and people tend to prefer homes that are in the middle of the value range.
I’ve been getting letters / cards inviting me to sell my house direct. Is that a good deal ?
Stay up after midnight and watch some of the get rich quick infomercials about real estate. They push the “buy low, sell high” flipping techniques. The cash buyers who will work with you directly are looking for those bargain properties they can obtain for a very low price, add to them cosmetically, and then resell them for a lot of money. If you have a house in need of significant repair, and are willing to accept a rock bottom price, then this might be an OK transaction. Even then, beware. This must be an all cash offer, no hold backs, close in 15 to 30 days, and handled through reputable Escrow and Title companies. Anything else may actually cause significant harm. Before even talking to the person making the solicitation, request references and check them out. This is an area you need to proceed with significant caution. Yes, legitimate investors may be willing to buy your property in an ethical and legal transaction, but others may be waiting to pounce and profit at your expense.
I’ve looked online and seen estimates of what my home is worth. Are those accurate ?
They might be close, or they could be far away from reality. Those online estimates have no idea about the upgrades you may have performed, or needed repairs. If the market in your area is slow, there is little data for predicting your value. Not all neighborhoods are the same, so predicted value can often be a reflection of a marketplace in which you are not at all involved. In many cases the data is not even close. I’ve seen $800,000 homes with an estimated value of over $2,000,000. That’s not very helpful. When an agent does a market analysis, they look at the homes that actually sold, and adjust those prices based on what is known about the interior and exterior. Adjustments are made based on items not found in a database on a website, and the value will be an excellent reflection of the actual value the appraiser will likely suggest to the lender. Those estimates are fun, but not very helpful for serious buyers and sellers.
What can you do that I can’t do myself?
Perhaps nothing ! If you have the time, training, and resources to market and sell your home, you may be able to do it yourself. There are a few things you need to consider before embarking on this journey:
- Are you prepared to be present to show your home whenever someone expresses an interest?
- Do you know how to pre-qualify buyers?
- Do you have a marketing plan?
- Are you prepared to work with an agent who has a qualified, interested, buyer?
- Are you familiar with all of the paperwork that must be completed in a sale?
- How will you handle Escrow and Title requirements?
- Are you a negotiator?
- Do you understand the market, and the actual value of your house in comparison to others?
- Do you have experience selling very expensive items?
The list goes on and on. You can do the job, IF you know what it entails, and IF you are very comfortable in the process. Some people do sell their own homes. Most turn to a realtor who has the resources, training, and experience to remove the frustration from the process.