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

[LeeH]

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?

[Jim Bremner]

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.

[speeder]

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".

[speeder]

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

[Porsche-O-Phile]

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.

[Jim Richards]

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

[Instrument 41]

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.

[cashflyer]

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.

[Noporscheform]

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.

[matt711]

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.

[recycled sixtie]

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.

[GH85Carrera]

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.

[tevake]

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

[Christien]

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.

[Shuie]

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.

[Zeke]

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

Originally Posted by Shuie

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.

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

[RennSport911rsa]

Originally Posted by Porsche-O-Phile

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.

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.

[Shuie]

Originally Posted by Zeke

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

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.

[Rick Lee]

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.

[Evans, Marv]

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.