So you're thinking about selling your home because it's time to move to a bigger house, a different city, or another state. Whatever the case may be, it is essential to have the proper knowledge about selling your home.
Many homeowners come across this situation in their lives and are left with little to no knowledge about selling their homes properly. Since we understand the significance of this problem, we decided to explain everything you need to know about using the MLS (Multiple Listing Service) and the advantages.
Where am I going to list my house?
As you do your research, you will see over and over that listing your home on the MLS is vital. That's because it's imperative to get the marketing exposure needed to sell for the highest price in the shortest amount of time.
What is the MLS?
Before looking deeper into the advantages of using the MLS, we must know what an MLS is first.
MLS is a property listing database used by licensed real estate agents and brokers to list their seller's properties to agents, brokers, and their buyers.
There are over 700 MLS's in The United States. Each MLS covers a particular area.
"Why can't I sell my home by simply posting it on various real estate sites? Is MLS that necessary for an average seller? "
The most significant advantage of MLS is that it is the single most powerful marketing tool available if you're planning to sell your home. The Multiple Listing Service functions so that every listing on the platform is automatically syndicated to thousands of local and national real estate listing web pages such as Realtor.com, Redfin, and Zillow. This service increases your listing's massive exposure and exponentially increases the probability of success when selling your home.
Is the MLS my only listing option to Sell My Home?
As a seller, you do not need the Multiple Listing Service to sell your home. Another option would be to create a For Sale by Owner listing on Zillow or other real estate listing sites and hope motivated buyers will scroll across your listing.
However, when listing on sites like Zillow, you won't have the same level of exposure as you would by listing on the MLS. That's because most real estate listing sites pull their listings from the MLS databases, and some won't allow FSBO listings on their site at all.
While Zillow is the most used real estate listing site, it still only gets about 30% of the national traffic. That means if you list only on Zillow, you are missing 70% of potential buyers that are browsing available homes on other sites such as Realtor.com and Redfin.
In theory, If you only market your home on Zillow, you are only exposing your home to one-third of buyers. Additionally, on Zillow, FSBO listings go into a section named the "Other Listings" category, limiting your home exposure.
By utilizing your local Multiple Listing Service, you put your home listing in front of thousands of other home lookers by simply creating one listing.
Can I be listed on the MLS Without an Agent?
The catch here is that only licensed real estate agents can access the platform to list houses for sale. Many people think that accessing the Multiple Listing Service without paying a commission from the sale to an agent is impossible, but that couldn't be further from the truth.
Most sellers know of two options listing options when it comes to selling their home:
- Hire a local real estate agent. Using a local agent has some advantages. The main benefits outside of the expertise are that they can open the door for buyers, stand in at showings. For that convenience, you'll be paying around 6% of the value of your home to cover the buyer and seller agent commissions.
- For Sale By Owner. With this option alone, you will have to make your front yard sign and rely on word of mouth from friends, family, and social media. While this process sometimes works, it will save you money on commissions. However, it could take longer to sell your home, and studies show people who sell their home with professional representation sell for 11% less money than represented sellers.
There is, however, the third option to consider if you want to sell by owner:
- Flat fee, full-service agent. A flat fee full-service agent gives you maximum market exposure to prospective buyers, the same negotiation, and legal representation while keeping more profits. In other words, you get the same buyer impressions and professional services of a real estate agent for a low set fee rather than a percentage of your home.
Additional benefits of the Flat Fee, Full-Service Agent
Ninety-two percent of home sellers hire a real estate agent to help them sell their homes. However, most home sellers do not want to pay a significant commission to an agent and want to be a little more involved in the transaction. As a result, these sellers are choosing to sell by owner, otherwise known as FSBO.
Most home sellers opt to hire an agent and overpay on the commission of the sale price versus FSBO because the sale of a house is an immense, complex, time-consuming legal transaction. The possibility of making a mistake during the problematic and legal parts of the transition is why a growing number of homeowners are choosing to hire a full-service agent. for a low flat fee to give them massive exposure and adequately represent their interests in the transaction.
Fortunately, these are not the only benefits of working with a flat fee agent.
Stop unwanted solicitations
Because the MLS is a database accessible only by licensed agents and brokers, you will have to work with a brokerage when listing on the MLS. Essentially, the brokerage will act as your reference point in the MLS database.
Because a brokerage technically listed your home for you, your home will not be listed as For Sale by the Owner. However, the benefit of this is that your home will not be labeled "For Sale by Owner," which in turn means you're no longer a target for agents.
On the other hand, if you list on Zillow without an agent, Zillow does have the authority to sell your contact information as a lead to numerous agents. Unfortunately, these agents tend to be relentless when it comes to phone soliciting.
Listing on the MLS means the calls you receive will be from interested buyers rather than agents trying to get your listing.
Set Your Commission
In addition to being listed "with an agent," there's one other benefit: You'll get to choose what commission you are willing to offer to the buyer's agent.
To be listed on the MLS, you must offer compensation to the buyer's agent of at least $1. The average commission offered is 2.7%. You decide what to offer, but we recommend that it not be more than 2.5%.
However, there is an unfortunate truth to consider. While it's sensible to save money by offering a 1-2% commission, it could make it less likely for a buyer agent to show your home to their buyer. For example, if you offer a 1%, it would be more likely for the buyer agent to show the house up the street, offering the higher 3% commission. Agents are not supposed to steer their buyers away from an available property; however, this happens all the time.
Tip: If you want to pay 1% or less, consider offering a fixed dollar amount instead. $10,000, for example, is sure to get someone's attention vs. "1%".
If you want more information about how commissions work or how to set commissions properly, then browse our article "How do real estate agent commissions work?".
What To Expect After Listing My Home FSBO?
Listing your house for sale on MLS or Zillow is relatively easy. Still, the process of communicating with buyers, scheduling showings, fielding offers, negotiating, handling paperwork, and legal disclosures are a little more complicated.
What can I expect when my home gets listed?
Once you are officially listed FSBO or with a flat fee MLS, you can expect to receive a flurry of calls. We typically see the following three types of inquiries immediately:
1. Seller Agents:
If you have not listed through the MLS, most of these calls will be coming from Agents who are calling to persuade you to list your home with them. Some will be very direct and ask for the listing outright, and some will try to convince you that listing with an agent is better than doing it on your own (FSBO).
TIP: While the urge to hire a local, full-fee agent may be high at this point, we recommend practicing patience before moving forward with an agent. If you are thinking about hiring an agent, check out Is a Local Real Estate Agent Right For You first.
2. Buyer Agents
If you have not listed on the MLS or already set your buyer commission, then you will initially get calls from buyer agents asking if you will pay them a commission if they bring you a buyer. Some of these agents may work with potential buyers and ask to set up a home showing.
3. Direct Buyers
The calls you want are from buyers interested in buying your house. These buyers may or may not be working with agents, but they will call to ask specific questions about the property and schedule showings.
All these calls and solicitations may frustrate you or feel "noisy," but you have to be patient with the process. Typically speaking, the first two weeks will be busy, and you will get more online views and calls during this period than any other time but will begin to level out after a couple of weeks.
What if you haven't found a buyer within the first two weeks?
If you have not sold your home after a few weeks, the most commons reasons are due to one of three factors:
1. Home Exposure
As we previously discussed, Zillow is just one of the thousands of websites to market your home for sale, so if you only listed on Zillow, you are only getting in front of about 30% of potential buyers. Therefore, our first recommendation is to add your listing to the Multiple Listing Service (MLS). On average, your listing will get you on all of them and increase your exposure by over 400% versus Zillow alone.
2. Home Price
Price may be the most significant factor in whether a home sells or not. In a strong seller's market, you cannot underprice your house because you will get buyers competing with each other (multiple offers) to raise the price. On the other hand, overpriced homes tend to sit on the market unsold and with little to no activity until the price is adjusted lower. Even a price adjustment of $10,000 can make a big difference in action and offers. Better to price the house low and negotiate than start with a high price with no room for negotiations.
3. Home Listing Presentation
The issue may be poor photos, too many photos, too few photos, or other marketing faux pas. You have to have a fantastic presentation to attract quality buyers. High-quality photos, drone photography, and virtual tours are essential to get a buyer interested in seeing the home in person. Think of listing a house for sale like an online dating site. Good photos attract interested people and cause them to take a closer look. If they like what they see, they want to meet to learn more. Upon meeting, they know almost instantly whether it is something worth pursuing or not. So when presenting a house for sale, you want a great cover photo and an enticing photo array with just enough information to get them to see the place in person.
How Should I Show My Home?
As much as a thorough real estate marketing plan can drum up online exposure to your home, buyers will likely want to do a walk-through before making any official proposal. That's why house showings are an essential part of the process.
As a well-prepared seller, you can reduce the amount of communication and work with tools and software. However, you will need to be flexible and prepared to leave your home at a moment's notice.
As out-of-town buyers are becoming more common, agents may ask for a show without much notice. If you're still living in your home, be ready to head to your local coffee shop so the buyer and agent can come and see the house. With digital lockboxes becoming more common, you will rarely need to be in your home for the showing.
Here are some ways to be prepared for home showings:
- Coordinate your schedule or using scheduling tools
Put an open time frame in your MLS or Zillow listing when you are out of the house so an agent can inform their buyer. Also, look into home showing scheduling tools that allow agents to see when your home is open for the show.
- Share your schedule
Whether on an online calendar or a paper notepad, share your calendar to reduce back-and-forth communication with agents and buyers.
- Always plan ahead
Always have a plan to help prepare for last-minute showings — start with this emergency clean-up checklist and know your local spots with free wifi.
How do I Secure a Buyer?
When it comes to securing a motivated buyer for your home, the dream scenario is to get multiple bids from buyers competing with each other to raise the price. Fortunately, it is not unusual to receive ten or more offers for your home in a hot seller's market. So whether you have just listed your house for sale by owner or are preparing to offer it for sale, you should be ready to process multiple offers. It is essential to discern the difference between the offers and leverage those differences to get the best proposal.
Negotiating your terms
Organize the different offers in a way that makes sense to you. You want it to be easy to see what each one includes, so you can smoothly and efficiently weigh the pros and cons.
Salient points to compare are:
- Purchase price
- Close date
- Commission to agent
- Earnest money deposit
- Down Payment
- Contingency removal timelines
- Proof of funds
- What additional services are needed, and who will pay
- Change of possession terms
Giving additional points to offers that have loans pre approved, allow ample time to move, are flexible, and have few or no contingencies is essential to a good sale.
Tip: Buyers are told not to open with their best and final offer. If you have been through a home selling process, you will know that there is always a negotiation. Do not eliminate buyers even if the initial offer price is a low ball. It is always good practice to counter all offers in writing with what you will do and what you won't do.
Just because they offer the highest does not mean it is the best.
Sellers tend to prioritize money in offers, but money should not always be the top priority. If the buyer can't follow through with the offer, then it is pointless. Therefore, you want to evaluate the proposals based on the likelihood that they will close.
The best offer is the one that will meet your needs as the seller. For example, is your goal to close fast? Be able to stay in the house for a few extra weeks? Are you worried about having a long list of contingencies? What if your home does not appraise at the listed value? Sometimes a buyer's offer addressing essential items to you (other than price) could be preferred over the highest bid.
Tip: Always counter if you have multiple offers. You can counter the highest bid with better terms and counter the better terms with a higher price. Often you can leverage one offer into giving you the best of both worlds before deciding which one is right for you.
Get Ready For A Bidding War
The difference when responding to a single offer versus multiple offers is the multiple counter offer form.
When a buyer makes an offer in a single offer scenario, the seller will counter, reject, or accept. Assuming the seller counters, the buyer has the option to accept, reject or counter and this process continues until the parties agree or one of the parties quits.
This process does not work in a multiple offer situation. For example, if you have three offers and you counter all of them and all three buyers accept, which buyer will you take into escrow? Of course, you can't sell the house to all of them, so we use the Seller Multiple Counter Offer form when negotiating with multiple buyers. This form discloses explicitly to the buyer that you have various offers. Even if they accept your counter offer terms, you are not in escrow until you confirm their bid over the others.
There are many nuances involved in a complex multiple counter offer negotiation that maximizes price and gets preferred terms. However, using the correct form and the appropriate language in the offers protects you from accepting an offer until you fully explore all submissions.
Tip: If you have one high offer and one low offer, you want to do the multiple counter offer process to leverage the higher offer to go even higher. Use the low bid to create fear of loss in the good offer and leverage to get an even higher price.
What if I need some help with negotiation or paperwork?
While it's vitally essential for you to prepare during this process, you will likely need some form of professional guidance. As we explained before, There's much more to selling a house than negotiating a sales price and close date.
If selling a house was that simple, it wouldn't require a 19-page legal document with over 100 paragraphs of legalese. Instead, the purchase contract is a binding legal agreement that specifies who will do what, who will pay for the contingencies, when contingencies will be completed, and what happens if contingencies are not met as stipulated in the contract. Additionally, there are dozens of other forms, advisories, and mandatory legal disclosures that buyers and sellers must prepare, sign, and share, which do not include the legal documents required by escrow and title.
In response to this, we often hear three typical replies:
- I will have the escrow company represent me.
- I will let the buyer's agent handle the paperwork.
- I have a friend or relative who is a real estate agent that will help me.
Escrow Isn't the Answer.
Escrow's role in a transaction is to be completely neutral. Escrow may provide required forms upon request, but they are forbidden to represent one side over the other. Escrow holds the buyer's funds and coordinates the transaction to ensure all the parties involved perform as agreed. If there is a negotiation or dispute of any kind, escrow cannot help you. They only do what each party agreed to in the contract.
Don't Trust the Buyer's Agent.
The buyer's agents have a fiduciary agreement with the buyer. That means the buyer agent has a legal obligation to put the buyer's needs ahead of the seller's. They may deal with you fairly, but that does not mean they will fight for you to get the best price or terms in the sale. Even though you pay the buy, the buyer's agent commission doesn't mean he or she represents you.
A Friend or Relative May Help
If you have a friend or relative who is a licensed real estate agent, this may be a viable solution. Topics you will want to discuss with them before agreeing are their previous experience, if their license is still active, and they have access to the Association of Realtors forms. In addition, it is critical to make sure they are familiar with the legal documents, disclosures, and advisories required. You will also want to be confident they are prepared to handle multiple offer negotiations, issues with buyer non-performance, and contract disputes. Their ability in these areas will be instrumental in getting top dollar for your home and mitigating the risks associated with mistakes, accidental exclusions, and non-compliance with the legal requirements of selling a home.
Workbook: If you are still thinking about it, here is a checklist of common documents needed in a California real estate transaction.
Submitting Paperwork and Preparing for Escrow
Once you've accepted an offer, sign the offer agreement and submit it to the escrow and title company. The escrow company or title company (depending on the area you're in) acts as the third party to gather documents and payments between you and the buyer.
Once your house is in escrow, the house's title report confirms the home's legal owner (which should be you). It's common for title issues to hold up a sale, even if you're unaware of the topic beforehand. Title and deed issues make up 7% of the contractual problems in delayed settlements as of May 2020.
Along with your title report, the escrow company will provide a big packet of documents to look through, including a grant deed, state-specific forms, property information statement, and more. Review these documents to make sure there aren't any issues.
Tip: If you are thinking about doing this on your own, you may want to consult a real estate attorney to resolve any issues like liens, trust complications, lender balances, property taxes, or encroachments.