How to Sell Your Home Without Paying Huge Commissions

house hacking Aug 19, 2022

Some friends called me recently and said they were ready to sell their home and wanted my advice on how to maximize their profit.

Here’s what I told them (and what I’d tell you):

  1. Sell it “For Sale By Owner”
    1. In other words, try to avoid real estate agents. Just to clarify, we love real estate agents around this blog. I’m an agent and so is my wife. We also have a brokerage that employees agents. Nothing against agents, but you often won’t make the most money if you use them (especially at full commission on both sides of the transaction). Real estate commissions will eat up a huge chunk of your profits.
    1. The summary of how you sell it by owner is: buy a FSBO (For Sale By Owner) sign at Home Depot and put it in your front yard, post your home for sale on sites like Zillow, Redfin, Trulia, etc, take phone calls, set-up showings, accept an offer on the property, and then close a month or so later. I’ll go into more detail in the following points.
  1. Have it staged
    1. I spoke extensively about this in another blog post so I won’t belabor the point here but staging is crucial to selling your home at top dollar.
    1. Staging provides professional help furnishing and decorating your house to appeal to retail buyers.
    1. The cost of staging can vary based on how much of your own furnishings and decor the stager wants to use. It could cost anywhere from a few hundred to several thousand.
  1. Take professional pictures
    1. This is often overlooked but always worth the cost, in my opinion. While you can take pictures using your iPhone, they’ll likely never look as good as ones taken by a professional photographer. And even if they do look great, you may not know the angles and post-edit processes to really highlight your home.
    1. Prices for these can vary but we’ve typically paid $100-$200 in the past to have pictures taken by a professional.
  1. Determine list price
    1. Some states are “non-disclosure” states and some are “disclosure” states. The difference is that "disclosure" states disclose the purchase price of a property on the warranty deed (for the public to see) and “non-disclosure” states do not. What this means is that if you live in a “non-disclosure” state, you’ll likely need to offer a real estate agent a flat fee (not a commission) to run some comps for you (and they may do it for free). Whereas in a “disclosure” state, you can do the research yourself on Zillow.
    1. Filter on Zillow (or have an agent do this on MLS in a “non-disclosure” state) for properties that have sold in the last 6 months around your house. Use the filters to find houses that are comparable to yours (similar size, bed/bath count, square footage, year built, condition, etc).
    1. Determine what they are selling for per square foot on average. This will give you an idea of where you may end up selling your house. But of course you don’t want to start there because you want to maximize your profit. I would take the highest price per foot comparable property, and assuming yours is in similar condition, I would start by listing yours some margin higher than that one. It could be $3-5 per foot more or $10-20k more. You’re simply seeing if your home can push the market a bit.
  1. Create the listing on Zillow & other sites
    1. In the listing description, use vivid language to describe your home. This is your chance to brag. Don’t just put in a few sentences. Share all the things that are so wonderful about your home. List all of the upgrades you’ve recently done. Use your description to sell the value of your house.
    1. Zillow & other sites will give you a few options to have people contact you. I like to have my phone number there, rather than an email or contact form, so I can build rapport with the potential buyers from the first call. You will get quite a few calls from agents wanting to list your house for you, but you can kindly tell them you’re planning to sell it yourself.
  1. Give tours of the house
    1. People will call you and want to tour the house. This is a great opportunity for you to show them around and point out all of the great features. We love showing our own homes because we are the best at selling them.
    1. An alternative approach is to do group tours only. This can be great if you’re pressed for time or if you want to create a frenzy around the sale of your home. If you’re pressed for time, this allows you to show many buyers your house all at one time rather than scheduling individual showings.
    1. Creating a frenzy is exciting but requires a slightly different pricing approach. If you price your house under market value to draw attention to it, you can have large group showings that encourage buyers to bid against each other and drive up the price. We do this in our real estate business but haven’t typically done it when selling our own home.
  1. Collect written offers and choose the best one
    1. If you notice that your home is getting a lot of interest right after you list it and offers are starting to come in, make sure you tell everyone you are going to collect offers for a few days before deciding on one. That way you’ll have plenty to choose from rather than just working with the first one.
    1. Remember the best offer isn’t always the highest price. If someone offers you $305k but with the contingency that they must sell their home first, you might take the offer for $302k that has no such contingency. Just look at each offer to determine which is best for you when you combine price and terms.
    1. Make sure each offer is written and comes with a pre-qualification letter from their bank so you know they are pre-qualified to buy.
  1. Draft the contract and send to Title Company
    1. Depending on if the buyer is familiar with the state promulgated contract or not, they may just give you an offer written in a Word document. That’s fine. At this point you’ll want to move the offer to the state contract that agents use. And don’t worry if you’ve never used it before. A local attorney or title company will be glad to help you. Note: The title company will probably help you for free if you use them for your closing.
    1. If you have questions or want advice in this process, you can talk to a local attorney for a few hundred bucks. This beats the thousands you’d spend in real estate commissions if you were talking to an agent instead.
  1. Negotiate repairs after the inspection
    1. Your buyers will get an inspection in the first 10 days of being under contract with you. Once they do, they will almost always bring you an amendment asking you to fix things the inspector found. This is totally normal and to be expected. This also is a negotiation.
    1. Usually your buyer will expect a counter-offer, so if they ask you to repair 6 things, offer to do 3 of them. Negotiate back and forth. If you don’t want to make any repairs, often a buyer will be ok with you crediting some money toward their costs at closing to make up for it.
  1. Show up at closing and get paid
    1. This is the exciting day! You’ll go to the title company, sign some paperwork, and get a cashier’s check or a wire with the funds from the sell of your house (after the bank and closing costs have been paid). And, best of all, you won’t see thousands in real estate commissions deducted from your profit!

A few caveats:

  • If selling your home by owner after a few weeks or months is not getting the exposure you’d like and you really want to put it on MLS, consider hiring a discount brokerage that has a flat fee listing so your total costs are only the flat fee (often around $500) plus 3% to the buyer's agent. If you just go the traditional route of paying for your agent & the buyer’s agent, you’ll likely pay 6% in commissions at closing, a huge chunk of your profits.
  • Some people want the convenience of not having to think about any of this and they’re willing to pay a hefty chunk of money for someone else to handle it for them. In that case, you might want to contact an agent and just try to get the best discount you can off the traditional 6%. To get your business, some agents might do 5%. This is not the path I’d recommend for most people though, especially readers of this blog wanting to make extra money for ministry.

 

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