Real Estate Secrets When Selling Home
Discount Brokers/Limited Service Brokers Can Be a Good Choice.
Regardless of what the industry tells you (including real estate agents) these firms have a place at the dinner table and serve a vital function in the industry. Let’s be honest – all people are a little frugal, and if you could find a cheaper alternative to paying a Realtor, you would. On occasion, discount brokers/limited service brokers can save you money.
Here are two specific cases where we refer our clients to limited services/discount Realtors:
Scenario 1: You have a home under $120,000 (don’t be jealous, Californians and New Yorkers).
Real Estate is a business, and agents are people who rely on that business to pay their own bills. So, if your agent works at a firm that takes a cut of the commission (in many cases 30-50%), the agent must determine if selling your home is a good business decision. Lets look at the numbers:
- Home Price = $120,000
- 3% commission (Listing Side only) = $3600
- Minus Firm Split (35%) = – $1260
- Minus Taxes (25%) = – $900
- Minus marketing = – $800
- Leaves a net commission of $640, to the agent
If the agent only nets $640 on the deal, how much time can you reasonably expect them to spend on your behalf selling your home? In this case, using a limited service broker could save you $2000+ dollars on the listing side after the cost of the limited broker fees and expenses are deducted.
Scenario 2: You are in a super hot market.
If you are in a market that is so hot that all you have to do is put a sign in your front yard, then limited service is a good option. They put your home in the local MLS system and buyers just show up. AWESOME! The key to making this work is to have your home appraised before you call the limited service brokers to make sure you are selling your home for the right price. Once you get a contract from a buyer’s agent, hire another agent or lawyer to help you with the details on an hourly or fixed-rate basis. The key is making sure you only accept contracts from buyer’s agents. If you are not sure what that means, get clarification in your state. (I can’t give you all the secrets!)
All Agents Are NOT Created Equal.
Just like any industry, there is a range of competence within the Real Estate world; However, many people believe that all agents are the same. I suggest that when you are interviewing agents, request that they send you the contracts ahead of time, and prepare a set of questions for them to answer. If you are in North Carolina, here are just a few questions I suggest:
- What is dual agency? And do you practice dual agency?
- What is the difference between due diligence and earnest money? And what happens if a buyer cancels the contract?
- Am I required to do repairs on my house, or is my home sold as-is?
- Show me the marketing plan for my home, not a generic presentation.
Some Agents Will Try to “Buy the Listing.”
This is when an agent convinces a homeowner they can sell their home for a price significantly higher than market value. This tactic is successful when an owner uses money to select the agent. The agent’s intention is to have the owner sign the listing agreement under the auspices of an inflated sales price, and then the agent will steadily lower the price of your home until it actually sells.
For Sale By Owner (FSBO) Homes Don’t Save Money and Time.
The company line for agents is that they will help you buy any home; however, most agents do not like to deal with FSBO properties. First and foremost, Real Estate is a FOR-PROFIT job. Owners selling their own home have made a decision not to pay a Realtor, but your agent does not work for free. Therefore, as a buyer, if you choose to consider FSBOs, you need to have a discussion about who is responsible for paying commissions. In many cases, you as the buyer could be responsible for paying the commissions on the deal in addition to closing costs and down payments