Real estate commissions... What's the best way to sell a house and avoid paying 6%?
 

We've been kicking around the idea of selling our house and buying one that's slightly bigger. In the current market, in our part of Phoenix, a reasonably priced house is going to last a week or so. Our house should sell for around $340K. So, the lucky agent who we give the privilege of dropping a sign in our front yard and typing up an MLS ad, stands to end up with $20,000 of my hard earned money.

What's the best way to get the house sold and minimize the professional fees?

Well, first the agent will lose 20% to their agency, next they lose 2-3 points to the buyers agent so their 6 points drops to 4 or 3 points LESS the house cut and the taxes off of the top.

Now, Grind them to 5 and it gets less.

Oh and how soon do you want it to sell? oh wait this house over here is just a little more @ $375k and the sellers didn't dick with the price and they're paying 6% so do you think the agent will show you'rs over the 6 point home? hmm.

Let's just put it this way: my mom, a retired RE agent, will let another agent list their house for sale if/when they put it on the market. They will use a guy who is one of the top agents in their city and he will sell it in one day for top dollar. It's triple-prime property.

And no, she and her husband are not dumb or lazy. They have amassed quite the RE portfolio by making smart buys "back in the day".

If you think that you can so better selling by owner, by all means give it a shot.

I know a couple of folks who have done the FSBO thing with good results. Nothing to lose by trying. Same goes for negotiating a lower rate.

Real estate agents are among the most overpaid people out there, IMHO. Very little "value add" for the cost is actually provided - you pay for convenience, a lot like consignment.

I've never known of a FSBO that worked out. Not that that don't.

I bought and sold with Realty Direct with good results. Their commissions are lower. I bought a house using Redfin. Their realtors are salaried, not on commission. They seem to be effective. YMMV

I sold 2 on FSBO and bought one from FSBO. The only issue with doing that is if you put it on FSBO and it stays on the market for longer than you expected, you get antsy and then list it with a Realtor. Those smart buyers out there are looking at all the on line websites. If they keep seeing your house first FSBO then listed with a Realtor, suspicions arise. Not good. So if you do put it on FSBO price it to sell. One other thing, if you do sell it by yourself spend a bit of money on some really good photography. Pictures won't sell it but will entice buyers to come look at it. You may want to prepare for the situation if an agent calls you because they have a buyer and are asking what commission you you'd be interested in paying.

If you are going to FSBO, you need to know how to sell a home.
Understand the emotional part of it, how to stage the home to sell, etc.

Also, all that legal stuff.

I sold my house without an agent. Properly priced houses sell. The most difficult part is getting the house in front of buyers, and since my house was located where potential home buyers were constantly driving past the house, i put a sign out and decided to give it 30 days before i would give it to a realtor. I had three showings, the eventual buyer was in the neighborhood to look at another house for sale. My attorney and a title company handled the paperwork.

Most realtors will negotiate their commissions, you are paying them to get it closed, not to get it on the market. Many things can derail a pending transaction. I have seen clients experience real heart break when the buyer dropped out at closing, or just before, due to cold feet or a paperwork problem. A good agent does not let this happen.

I also sold a condo off of Craig's list. It was an inexpensive rental unit. I had lots of phone calls, many no shows, and finaly a sweet older woman who convinced me to owner finance it for her. She pays like clockwork, has spent money improving the place, and has worked out great.

Find a lawyer that does closings and a good title company. One of the things you are paying an agent for is to line up those folks as well as doing a bunch of paperwork and advertising. Talk to the lawyer, as well as the mortgage broker that you will use to buy your next house. They can steer you through the process.

The way I see it is if you go the cheap route such as comfree or 1% you don't get the exposure as much. I prefer the large real estate companies with a well known realtor. They seem to get the results and the sales. I don't mind paying the commission if they draw in more buyers and get you a higher price.

As an aside when buying I have don't have much use for a Home Inspector. The last time we did this we got a home inspector recommended by the the real estate agent
and all he did was rubber stamp everything. I challenged him on certain things in the house and he said nothing. A waste of $500.:eek:

A friend of mine decided they wanted to sell their house and move closer to work. One Saturday morning he walked out to hammer a FSBO sign in the yard. He did not even get back inside before his cell phone rang. The guy in SUV in front of his house was calling. He had been wanting a house in the area and he was driving by looking for a house when he saw the sign hammered in.

The guy called his wife and she came over and they bought the house that day. My friend had to rent the house for two months while they found a house and had a chance to pack and move. The house was on the market for about 10 minutes.

Try to see if you can work a trade into what you are looking for, Maybe someone in your area is looking to down size. commissions saved by yourselves and the other owner.

Post on Craigslist, see what turns up

My in-laws sold their house FSBO, as did my brother/sister in law. As said above, good photos are crucial, as are patience. It WILL take longer than using a real estate agent, but if it's priced well, it will sell eventually.

I don't know many real estate agents (other than the very top few) that are making huge bucks, so I don't think they're overpaid (though their agencies may be), but it's a question of whether you want to pay someone else to do it, or DIY.

Get a real estate license and put your own sign in the yard. Put the 3-6% of fee in your pocket every time you buy or sell a house going forward.

I would have no problem signing a one party contract for showing for the full 3%.

YOu'd have to get a broker's license here in CA.

And its not even all that convenient many times - last minute scheduling, not really knowing how to negotiate, yet they get an 'exclusive'...the whole thing is a racket more often than not. At least thats how it is in my area...it may be different in other parts of the country, never bought/sold elsewhere.

With the way MLS works, with your typical home sale (not the exclusive stuff), I'm of the opinion that it doesn't really matter who the listing agency is. A great agent can make a huge difference. But much like great car salesman, they are exceptions, not norms.

It's like selling a car - make sure the buyers are prepared on their end and not kicking tires. If something they say sounds too good to be true (like they don't have to sell their $500k house (with a mortgage) to buy your $900k house, it probably is. Agents don't do a great job of vetting all that often, so it pays to politely ask questions so you remain in control of the process particularly as you get into the 2nd or even 3rd showing to the same buyers.

Okay, my wife had to go to work through a broker, but that's how we did it here (Louisiana). The broker took their cut, but we still saved enough on the back end of the sale of the old house and the front end of the purchase of the next house to cover the cost of the license and most of a kitchen remodel.

I wouldn't have a problem going FSBO, but I used to work in the mortgage biz and know the whole process pretty well. When I was in that line of work, FSBOs were totally blacklisted by agents. Some of the FSBOs would try to piggyback off an agent's open house nextdoor. But any buyer who was working with an agent knew right away that they'd be on the hook for their agent's commission if they went FSBO. I guess if the inventory is really low in your area, you might have success. But if there are a lot of listings, you'll be waiting a long time to sell.

I sold a piece of property many years ago when the market was pretty hot. Like many, I thought the going commission rate was not warranted, especially when the property would sell for around $1Mil. and move quickly and with little effort on the part of the agent. So I negotiated with an agent for a commission reduced by 25% and a 3 month contract. I wasn't in a hurry to sell. This guy listed the property and never showed it to anybody. At the end of the 3 months, we renewed the contract again. The results were the same. He would tell me he had a couple of calls a week but no takers. At the end of the second contract, I decided to try to sell it myself and put an ad in the real estate section of the paper for Friday through Sunday. During that time, I got 32 calls. I finally sold it to an agent as part of her personal portfolio and agreed to a one percent fee which she (said) would go to her agency and she would handle the transaction through them. It was sold and closed in 6 days after I advertised it. I felt OK with the deal and thought it was a win/win proposition for us both. I also ended up selling it for a decent amount more than the original agent listed it for. It was an interesting experience. About a month later the original agent called to ask about the property. I really enjoyed telling him about how the sale went. The dummy missed out on an easy commission of about $50K.

Bunch of years back was looking for new houses.

Quickly learned to ignore FSBO's for several reasons.

Number 1 reason is most of the sellers were annoying. Far too emotionally attached to the house. Follow you around pointing out things that matter to them when you are thinking to yourself "that's the first thing I'm ripping out". Had one guy spend 5 minutes on the merits of light switches at both ends of a long hallway.

A lot of them were cheapskates, houses needed updating/repair/maintenance and that was the visible stuff. They are going FSBO to keep the commission and don't want to negotiate on anything and were usually overpriced.

As far as brokers, some suck, some don't. Some don't deserve a dime and some earn every penny. Trick is to find the good ones.

Selling the last house we were originally going to go with broker #1. She was a train wreck, suit always wrinkled and disheveled like she'd been at the bar all night and slept it off in her car then came straight to the listing. But she could sell houses. We tried to negotiate her commission and she said no way, in fact with the way things were going in the market she was just about to raise her rate. We said no to her. She listed and sold the closest comp to ours (in a less desirable location) in two weeks for asking price.

We went with another broker that my wife knew who did cut her rate but did not do **** for 6 months other than bug us to drop the price.

Then Katie, broker #3 knocked on my door. Opened the door to tell her to get lost and she said, "I have a question, why have you not sold this house yet and why are you selling it so cheap?"

Katie raised the asking price by $50k, marketed the **** out of it, pictures, videos, catered open houses for other brokers, brought more people the first weekend than the last broker brought the whole 6 months. She literally "stole" a buyer from an open house around the corner and we had our first offer. That buyer turned out to be a nightmare and we cancelled his deal. The next day she brought us another buyer and we sold to him for $10k more than the previous guy.

She earned every penny and then some.

In my area there is a FSBO listing service that will get you on the FMLS for about $800 and a commission of .5%. I'm thinking of trying it out as almost ready to sell and I tend to price things to get them sold quickly with minimal haggling.

used home salesmen are very like used car salesmen best avoided by sellers and buyers
but they have a closed shop much like unions with their MLS scam
AND WILL NOT DO BIZ WITH AN OWNER SALE

I fsboed my first house with constant agents falsely claiming to have buyers
I said fine you get the standard 3% split for being the buyers agent
NOT ONE EVER BROUGHT A BUYER TO LOOK
THEY ALL WANT AN EXCLUSIVE LISTING FOR MONTHS [3-6]
NO WAY i WOULD DO THAT

You mean like this?
Ahwatukee home swap? Are you looking to downsize? We need more space!


I did sell our house in Atlanta. I put out a sign, had a couple of open house days, and it was gone. The closing price was the highest any house in our neighborhood had ever sold for at the time.

Our problem is timing. Our house is at the lower end of the price spectrum for our part of town. Agents I've talked to say if priced reasonably, it will be sold in a matter of days. There are few single level, 3 car garage, hillside lots under $400K. Hillside lots were usually reserved for larger, more expensive homes.

We have to find our new house before we can put ours on the market. Then, once we do, we'll want ours to sell quickly. May look into HelpUSell or a similar company.

I have done FSBO, 2% transaction, 6% transaction. The FSBO was a annoying because the market was tight and two buyers fell out in the 11th hr prolonging the process 6 months. We did eventually get our price and get it done.

The $2% deal I brought the buyer and our RE handled the paperwork and closed the deal. The market was hot and the transaction was easy.

Our last sale was in 2005 when the market was just stoopid with crazy offers coming out of the woodwork. We paid a full service 6% realtor and got our money's worth by getting the deal done at full pop price. The buyers got a shady loan and lost the house 2 years later.


How much of the preparation, showing, closing, hand holding, and paperwork you are willing to do determines your need for a realtor.

We sold all three of our previous houses ourselves, BUT:

1. All three were turn of the century homes, so a niche market.
2. I knew what the houses would appraise for.
3. I had in my possession a good real estate contract.
4. We live in a smaller town where a good newspaper ad gets noticed.

If you live is a city where the real estate market is heating up, or you fit into a niche like our houses, give it a try. But nothing is harder to sell than a house that has been on the market a while and is perceived as "stale."

Sold our house in Colorado (Lakewood) ourselves. We had a sign made up that looked like a higher end realtor sign; made up flyers and kept them stocked in the box; hosted open houses on Sundays.... We sold it in three weeks to a real-estate broker for their personal house. It was a good time to sell but we did our homework and worked it like a job...saved 24k.

Some good advise so far. I'd add that if you go with a "discount" broker, expect a discount service. Plus, if you do negotiate the commission down to 5%, the agent will likely still split the co-broke, offering only 2.5% to buyer-brokers. As mentioned, your listing will then be skipped over for listings offering 3% or more (wrong/shady as it may be). On the flip-side, it's not uncommon to see 7% or 8% listings (3% to lister, 4%-5% to buyer-broker) to incentivize the buyer-agents out there. That said, it should be an easier "sell" to knock down a listing commission if you use the same agent to find your new home.

houses on my end of my street are often sold privately to friends - the key is to buy a house with a high level of amenities that will attract buyers, then you don't need to worry about comprehensive listings

BUT... it can be risky to sell it yourself - if someone asks you a question and you fail to tell the truth there could be trouble; OTOH a 3rd party can say "I don't know" - this works for anything not required to be disclosed

I agree that the RE biz is full of lobbyists and a nasty bastion of monopolistic power as per a couple of the above posts

I'm sorry to hear that several of you have a distaste. For sales people. I believe that just like in any trade there's good ones and bad. I interviewed over twenty when it was time to sell my old house and buy my new one. One agent under valued my house $100k another 80k on a 700k house

Please don't paint us all with the same brush. I've worked hard in sales all of my life and there's only 2 big sales that I was paid well on that I was spoon fed. I've stopped several customers from walking away from a company.

Just like any sale, there will be a lot a scavengers out there looking for a quick buck.

You have to get rid of the emotion, and present it every single time like it will be gone tomorow.
You have to know your legal RE proceedures by heart. Take a class or three at night, memorize the redbook, and have good title companies and financing references lined up.
You now have 3 more careers.
You have to be able to hustle at a moments notice, present a good personal image even if your exhausted, and be prepared for paying months of taxes on an empty home which still needs maintenance.

You must have to know your local market and your competition:
Search the web weekly and look at trends in recent sales (asking vs. close) and current comparitables(comps).
How is your property different, or better, or worse?
Price accordingly.

Good Realtors can sell s***-on-a-stick for top dollar if the market is right.
I know. My parents rebuilt house on a lake went to a doctor couple who wanted a $700K(cough) summer cottage for their new family.
It still had i$$ues, but the presentation was excellent and there were attractive features to the area for the long run.

Remember this:
Many people sign for a 30-year financial obligation on emotion alone.
They want the feeling of 'being in charge'.
Of 'being home'.
They are tired of driving around, but exited and anxious to claim something for their own.
They are willing to overlook blemishes if the feeling is right.
You make that happen.
Because you have the solutions available and are fully prepared.

You can list on the MLS for $400: Flat Fee MLS Listing - For Sale By Owner - Save Thousands | Owners.com

If willing to go through all that, then all power to you.

One question about agents avoiding showing a discounted listing.

Don't most buyers now either have direct access to the MLS or receive an e-mail feed that shows homes from the MLS? How would an agent keep a house with a lower commission from appearing on a buyer's feed of MLS data?

Realtor companies use special instantaneous software with extensive background data: realtors mls software - Google Search
Not sure what the major names are, but I'll gander the bargins are snatched up minutes after hitting a hot market.

A smart agent will send the client "personalized" MLS listings.

Like anything else I think their willingness to show a house / accept a lower commission is relative to how much time they have invested in the client.

i have friends who are realtors, but the system is set up as a monopoly

Almost every metric on the agent-side of the MLS is customizable. So while setting up a search to send you homes matching your criteria (for example: only 4+ bedrooms, at least 2000sf, etc.), they can also set it up to only send you homes offering at least a 3%+ co-broke. They can also omit short-sales, and/or any other listings they wish (listings tied up in probate, etc.). Shady and unethical, but unfortunately it is common-place.

A Savvy buyer will seek out other avenues to search rather than solely relying on an agent's MLS emails. However, a large percentage of buyers will only see what an agent puts in front of them. The flip side to that coin is that a good agent can sometimes put properties in front of them that aren't (readily) available to the general public like pocket or exclusive listings, etc.

I recently purchased my house (closed on the 31st) FSBO, but I had been renting it for 18 months and knew I wanted to stay in the same area, and was able to get the house for $30K less than it appraised for, and $50K less than the exact same house sold for one street over. Since it has been a rental it needs a little TLC.....

Since the owner was not in Colorado, I drove the entire process. I ended up retaining a Real Estate Attorny and the whol process was pretty painless.

I do not have a problem with realators and would not hesitate to use one if the situation warranted it.

Bill