Can you really sell your home without paying high real estate commissions?
Yes, you can. Some options will require a lot of time, effort, and learning, but it’s possible and in the end, you can save up to 3%-4% of the total value of your home.
If you decide to sell your home on your own, you need to understand the process. What options do you have when you sell without an agent? What is the potential risk of not involving an agent? Are there alternative real estate agencies to work with?
Today, we help you understand all these aspects before you make the final decision to list your home.
What options are available to sellers selling without paying high commissions?
Typically, if you don’t want to pay obnoxiously high commissions, you have a couple of options. Let’s quickly cover these options and the pros and cons for each.
1. Sell to a cash buyer
Cash buyers might not be the best option, but if closing a sale quickly is the goal, you can sell to cash buyers. Cash buyers include real estate investors or Instant buyers (iBuyers).
The iBuyers and real estate investors can purchase your home immediately as they don’t have to go through the mortgage process. The process of selling to an instant buyer is pretty simple:
- Request an offer by submitting your property details online via the iBuyer’s website or through a phone call.
- Receive a cash offer, typically within 1 or 2 two days.
- Get an assessment where a contractor from the iBuyer inspects the condition of your home.
- Accept the iBuyer’s offer
- Close and receive the payment in 14 days or less
Some iBuyers to consider when going this route include Opendoor, Offerpad, Knock, Zillow Instant Offer, and Redfin Now.
With cash buyers, you can expect convenience and a quicker sale. However, this is at the expense of your profit. A 2019 study shows that selling to an iBuyer can cost you 13% to 15% of your home’s sale price.
On the upside, cash buyers don’t warrant as much home sale prep. Some real estate investors may buy the house as is or require minimal repairs. In addition, you’ll save time since you don’t have to stage your home or make upgrades and renovations.
Selling to an investor or an iBuyer should only be an option if you need to sell fast.
2. Hire a real estate attorney
If you’re selling to someone you know, the best option is to have a real estate attorney help with the sale. Having an attorney ensures you get all the legal requirements right.
The real estate attorney can review all your documents and make sure they are aligned with your state laws. In most cases, real estate attorneys review the sale contracts, appraisals, and any contingencies stemming from negotiations.
3. Remote flat-fee real estate brokerage
Your other option is to use a remote flat fee real estate brokerage firm. It’s the same as using a local except for minor differences. You get the help of a team of professionals that handle everything from marketing to closing. You save cash since you’re paying a flat fee of less than $5000 (buyer agent commission still applies).
A flat fee real estate brokerage is better since you know upfront how much you’ll spend on the agent commission. In addition, you’ll get professional full-service representation listing to speed up and increase the profitability of your home sale.
For instance, a flat fee real estate agent can help you;
- Market your home
- Advice on staging
- Value your home professionally
- Increase the exposure of your home
- Coordinate all your showings
- Provide legal consultations
- In some cases, provide insurance for omission and errors
You can sell your home faster and more profitably with such a service, minus the high 3% listing agent commission.
4. Sell the home yourself via For Sale by Owner (FSBO)
Your final option is to handle everything yourself with an FSBO listing. This is a less popular method, with only 7% of all sales happening the FSBO way. If you have the right experience in marketing, home valuation, and negotiation, you can pull off selling your home through FSBO.
Plus, having this experience can help you sell your home faster. Typically, FSBO sales are best for individuals who already know a seller or are selling to a family/friend. In fact, in 2020, most FSBO homes sold in less than two weeks because the seller usually sold to individuals they knew.
A significant negative of FSBO sales is they sell for an average of 6% less than agent-assisted home sales, plus you have to factor in your time and effort. FSBO sellers cite preparing the home for sale as the most challenging task. Conversely, having a realtor help would save you this trouble.
If you choose to sell by way of FSBO, here are all the steps.
Know your home’s value
Pricing the home is the second most challenging task FSBO sellers face. The process is more straightforward when working with a realtor since they can provide a professional valuation. When selling without a realtor, you have to rely on other means to get the price of your home right.
Most FSBO sellers rely on professional appraisals to find the right price for their homes. A professional appraisal costs an average of $341, but it can help you avoid undervaluing or overvaluing your home.
If you’re going for a cheaper option, try researching recently sold homes comparable to yours. You can use a real estate marketplace like Zillow to find these recently sold similar homes.
Prepare your home for sale.
Once you know your home’s value, the next step is to prepare it for sale. At this point, you want to carry out any repairs, renovations, and improvements. For instance, you might have a pre-sale inspection to understand what repairs your home needs.
Typically, an inspection is paid for by the buyer. But by doing your pre-inspection, you can have a leg up in the negotiations. In addition, inspecting your home beforehand can help you close the sale faster. Inspection issues account for 16% of closing delays. By having the inspection ahead, you catch needed repairs or improvements early, reducing delays and getting your house off the market faster.
You also have to think about staging since it’s one of the most time-consuming aspects of selling your home. You want your home to look inviting and warm or cozy and luxurious, depending on the taste of the buyers you’re targeting. You can simplify matters by hiring a staging company. They’ll do it more professionally, and it will save you lots of time.
Get a professional photographer.
With most buyers discovering homes online, photos are one great way to tag their hearts. A professional photographer will help capture the charm and beauty of your home. This way, buyers see all the best features and perks your home offers in the best light. Also, about 87% of your potential buyers find photos very useful.
Market your property
Marketing is another essential part of selling your home. You want to expose your home to as many people as possible. In normal circumstances, seller’s agents are responsible for marketing the listed home. But since you’re selling your home without a realtor, you’ll be in charge of marketing your home.
You can subscribe to a Multiple Listing Service Agency for a flat fee. This way, your home gets syndicated to multiple real estate marketplaces. You can also promote your home listing on social channels, classified ads, yard signs, and open house advertising.
Consider and negotiate offers.
If you’ve priced your house right and invested in great photography and marketing, it won’t take long before offers roll in. When it’s a hot seller’s market, you’ll have multiple offers and the upper hand when negotiating. Conversely, a buyer’s market can make negotiating more difficult.
Negotiation is made even more challenging when you don’t have an agent. Remember, buyer’s agents have more experience negotiating the best deals for their clients. This makes negotiation harder if you don’t have the expertise to hold your own in the process.
Accept the offer and manage the closing.
Depending on your state, you might need an attorney at closing or an escrow account. For instance, California requires you to have an escrow account to close the sale of your home. You also have to provide disclosures about needed repairs and improvements.
Real estate paperwork needed for closing an FSBO sale
- Sales contract
- Title report
- Certificate of compliance with local laws (especially if you made renovations and improvements)
- Inspection and appraisal reports
- Tax records and statements
- Property survey
- Comparative market analysis
- Mandatory disclosures
- Purchase agreement
- Property deed
If you want more details about selling For Sale by Owner then I recommend downloading the Step by Step Guide to Selling FSBO. This guide will go into detail about the do’s and don’t as well as help understand the require real estate contracts.
You can simplify the process by working with a flat-fee real estate brokerage. While there are both advantages and disadvantages when working with a flat fee brokerage, on average, sellers earn more money than listing with a local agent or on their own. Learn how Everhome helps you save on commission fees and get you top dollar fast.