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Should You Sell Your Home Yourself?

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Selling your home on your own might not sound so difficult. After all, Americans are unafraid to take on new challenges. We learn basic plumbing skills to fix the leak in the sink. We learn how to trim our kids’ hair. We change our own oil, fertilize our own laws, tile our own bathrooms. Sometimes this works out well—we save a buck or two. Other times, we end up taking our kids to the hairdresser to fix the crooked hack job we committed in the name of frugality.

Should you sell your own home? The answer is… maybe. If the market is right, you’re not in a huge rush to sell, you’re practical, do your homework and stay focused, organized and diligent throughout the process, you might do well. On the other hand, if you’re not up for the task, selling your home without a realtor might not be the best idea.

Will You Really Save Money?

Listing your home with a Realtor will typically cost you around 6% of the sales price. For a home worth $250,000, that’s $15,000—a fair chunk of change. Selling on your own will save you at least half of that commission (if your buyer comes in with a Realtor, you will probably have to pay 3% or so to that person). So, you may save some money.

Then again, you may not. Savvy buyers know about the 6% Realtor commission. Unless you’ve already priced your home below market value, they may automatically offer 6% less, based on the fact that there aren’t any Realtors involved. Frankly, they have a valid argument. If the exact same home down the street is priced at $250,00 also, but is listed with a Realtor, that seller will receive $235,000. Why should you receive more for your home?

What typically ends up happening is that you discount the price of your home by 6%. Which means that you’re making the same amount of money as you would when listing with a Realtor, but you’re doing all the work of selling your home yourself.

How Are Your Negotiation Skills?

The National Association of Realtors reports that people who sell their own homes typically receive 10-20 percent less than those who list with Realtors, mainly because many sellers don’t have the skills to negotiate the best contract. While the NAR certainly has a stake in that kind of survey, you might want to take an honest look at your skill set before you assume that you’ll save money by selling yourself.

Can You Be Brutally Honest With Yourself?

When you list with a Realtor, she’ll come into your home, look around, and make recommendations about what you need to do in order to get the highest offer possible. While you might not agree with everything she has to say, she really has no reason to lie to you—the higher your sales price, the higher her commission. Realtors have a lot of experience with buyers and their preferences. They aren’t emotionally connected to your home, so they can see it with unbiased eyes.

Last summer, I wrote a fun post called, “The Top 10 Signs The House Ain’t Selling.” It’s meant to be tongue-in-cheek and humorous, but several of the “signs” come from real-life scenarios. Check it out… and make sure none of them sound like you.

Can You Leave Emotion Out of the Negotiation Process?

Speaking of being emotionally connected, this can be a real drawback when selling your home yourself. You have a lot of memories tied up in your home—bringing home your first child, making snowmen in the yard, marking your child’s height in the doorway every year when school starts. It’s difficult to look at your home from a strictly financial perspective. This can bite you during negotiation.

I remember one situation where emotion cost a client money. Mrs. G had a beautiful home. She’d raised four children there and had lots of great memories. One afternoon, a young couple drove by, saw the For Sale sign in the front yard and knocked on her door to ask if they could walk through. Despite my recommendation against that kind of showing, Mrs. G let them in and proceeded to talk to them for four hours. The couple was expecting their first baby and they fell in love with the house. Mrs. G fell in love with them. She had visions of a new family growing up in her home, and she really liked the couple.

Unfortunately, Mrs. G’s home was worth $30,000 more than the prospective buyers could afford. Once I had spoken to them (and their loan officer), I told Mrs. G that they wouldn’t work out—they simply couldn’t afford it. She had other ideas. She called the couple and offered to sell the house to them for $30,000 less than the asking price. They, of course, accepted.

This seems like a nice, philanthropic gesture, doesn’t it? Mrs. G was in the process of completing her own purchase on a condo, but after the sale of her house closed, she found out that she couldn’t obtain financing without the money she had basically given away. Emotions cost her $30,000… and the home she would live in for the rest of her own life.

This kind of scenario is rare when homeowners hire a listing agent. Most of the time, clients take heed of their Realtor’s advice and aren’t present when buyers walk through. But when you sell your own home, you’ll be the one walking every buyer through.

Real estate is a financial asset, much like your 401k and stocks. But you’re not really emotionally connected to your 401k, are you? When selling your home, you absolutely must maintain an emotion-free attitude… or you’ll lose money.

Can You Be Firm With People?

Smart Realtors only show homes to buyers who have been pre-qualified with a lender. Otherwise, they’d spend a lot of valuable time walking through homes with people who are just lookie-lous… playing “let’s look at nice houses we might be able to afford someday.” When you sell your home yourself, you should also insist that prospective buyers bring a pre-qualification letter with them. Otherwise, you’re wasting your time and potentially bringing people into your home who might have nefarious plans.

One well-known scheme is for people to walk through a home, taking notes of all the expensive items they can then come back and steal later (or, if left unattended, they may take small valuables during the walk-through). Other people may want to enter your home with the intention of doing you harm. Realtors are aware of these criminals (and others) and are both wary and prepared.

If saying, “no” to people makes you uncomfortable, you probably shouldn’t sell your home yourself.

Are You Willing to Do the Work?

It’s tempting to feel as though Realtors make way more money than they’re worth. For some rare transactions, that might be the case. But most of the time, your Realtor is spending many hours working on marketing your home and getting a contract to completion. When I worked as a Realtor, I regularly worked a 65-70 hour week. I had years of accumulated knowledge. I answered the phone when it rang (even at midnight) and went out in snowstorms to show homes or attend closings with clients. Was I worth my commission? Absolutely.

Many people think that selling a house is easy—you just throw a sign in the yard and wait for someone to come along and offer you money. You need to be prepared to put in the work required to sell your home.

Rhonda Taylor, a Realtor with seven years of experience, told me, “I understand that

Rhonda Taylor

people are trying to save money. However, it’s not just about getting an offer on your home. That’s the easy part. My value comes in when all the unimaginable things that you can’t even fathom come up. I’m a master at keeping things together and making sure it the deal closes. I have the resources and experience. I know how to market, sell and handle the paperwork required for real estate transactions. That’s what I do for a living, and I’m good at my job.”

Realtors deal with some pretty crazy issues. If you’re selling your own home without a Realtor, it might be advantageous to get inside their heads a bit and see what their daily work looks like. One of our recent posts, “What Your Realtor Wants You to Know About Buying and Selling,” talks about the crazy things that buying and selling clients do that drive Realtors crazy. Make sure that, as a seller, you’re not doing any of them! And read up… because you’ll soon be dealing with buyers.

Sell Your Home Yourself.

Despite my cautions above, selling your home yourself might be a really good idea, if you can do the following:

Be reasonable about the listing price.

Think of the transaction as strictly financial—leave emotions out of it.

Be firm with strangers.

Be prepared to work hard to sell your home.

If you honestly think that you’re unable to do those five things, then call a Realtor to sell your home for you. If you can, great! Read on for plenty of great tips to help you be successful.

How Much is My Home Worth?

Well, there are three answers to that question: the tax assessed

value, the current appraised value and the actual market value. It seems counterintuitive, but they can be quite different numbers. Here’s a breakdown on each.

Tax Assessed Value

This is the number on your property tax statement. It could be several years old, and it might not represent the full value of your home. The assessed value is the amount used when calculating annual property taxes. Your tax assessed value is determined by local government: your state, county or city. Some localities assess properties at less than full value; as little as 70%, for instance. Some assess annually; others much less often. If your home was last assessed during the real estate bubble, the number might be very high (most assessors have adjusted for the crash at this point. If yours hasn’t, you need to ask for a reassessment). Whatever you do, don’t think that your home is worth what the local government says.

Current Appraised Value

This can be a tricky number, too. If you hire an appraiser to give you a current value, make sure that you tell him that you’ll be using the value to price your home for sale. He’ll come to your home and walk through, then measure everything. Then, he’ll look at similar homes recently sold in your immediate area—the “comps.”

Your appraiser will gather the comps, then make adjustments based on the differences between your home and those. For instance, he might add another $5,000 if you have 4 bedrooms and the others only have 3. Or he might deduct $10,000 if the other homes all have tennis courts and yours doesn’t (I’m just throwing random numbers in here, by the way… those values will vary wildly). At the end of all the adjusting and figuring, the appraiser will come up with a number that he feels accurately represents the value of your home.

It can be difficult to get an accurate appraisal in a recovering market. There may not be any recently sold homes in your neighborhood that are similar enough to yours to use as comps. Or, there may have been many sold, but they were foreclosures, and as a result, sold for much less than market value. This puts the appraiser in a tricky position; he doesn’t want to over-appraise your home, but he doesn’t really have any good numbers to base his appraisal on.

Most of the time, appraisers are looking at homes that have a current offer on them. In that case, he knows that someone is willing to pay that amount for the home, and that carries a lot of weight. Good appraisers also keep in close contact with local Realtors, so they are aware of increasing (or decreasing) home values based on the offers that are coming in on listed properties. A real estate purchase contract, at the very least, gives an appraiser somewhere to start.

True Market Value

The true market value of your home is, in the simplest sense, whatever someone is willing to pay for it. If you list your home for $350,000 and a buyer shows up with cash and buys it, it’s worth $350,000. However, if that buyer needs a mortgage, and the appraiser says the home is worth $250,000, the buyer must decide whether he’s willing to pay the extra $100,000 (out of his pocket). If he’s not, then your home is worth more like $250,000.

A comparative market analysis (CMA) from a Realtor is one of the best ways to get an accurate representation of the current value of your home. Realtors know what’s going on in your neighborhood, what homes are appraising for, and what’s selling. They use a similar formula as appraisers to determine your home’s worth-a combination of data from sold homes, your home’s square footage and features. They’ll also factor in currently listed homes, and any special features your home has that might be worth more money.

If you’re listing with a Realtor, it’s the first thing she’ll do, and she won’t charge you any money for it. You might consider contacting a Realtor to see if she will provide you with a market analysis. Both Realtors I spoke to told me that they are willing to help people with a CMA, even if those people are selling without a Realtor. Rhonda Taylor said, “I always offer this as a free service. I have specialized access to that information, and I’m happy to help when I can. I look at it as an opportunity to make another connection— that person may not need my help, but he may have friends that do.”

Laura Hyde

Laura Hyde, a Realtor with Thornton Walker Real Estate, had another good point, “I have no problem helping homeowners who are attempting to sell on their own. I know that the odds are good that they’ll decide they need a Realtor down the road. If so, I’ve already established that relationship. I love meeting new people, learning about them and seeing their beautiful homes.”

Whatever you do, don’t pretend that you’re going to list with a Realtor in order to get all the goodies, and then flake out. Not only are you taking up someone’s valuable time and resources, you’re earning yourself a bad reputation. Realtors talk to each other, and those who may have qualified buyers for your home might avoid you based on your bad behavior. Who wants to work through a real estate contract and home selling process with someone who has already proven to be deceptive?

Listing High

You might be inclined to inflate the value of your home when listing, figuring that it gives you room to negotiate. Good Realtors don’t do this, and you shouldn’t either. Savvy buyers quickly become aware of the market value of the homes they’re looking at. They spend lots of time walking through comparable homes, and they’re very good at comparing one to the other.

When an interested buyer calls about your home, the first question out of his mouth will be, “How much are you asking?” If that number is higher than he expects, he likely won’t even bother to deal with you. Listing at the actual market value isn’t detrimental to the negotiation process; if you have plenty of interest in your home, you shouldn’t need to accept less than the asking price.

What Needs to Be Done to Sell This House?

Your home is your castle, and you probably think it’s perfect. Who wouldn’t want to buy it? Well, to be honest… most homes need a little prep before listing.

Curb Appeal Matters.

I’ve had many a buyer refuse to enter a home based on the way it looked from the curb. Sometimes it’s something that isn’t the fault of the owner—the buyers don’t like fruit trees, for instance. But most of the time, it’s one of several common factors:

  • Unkempt lawn and landscaping
  • Dirty windows
  • Cluttered porch and driveway
  • Peeling paint
  • Obvious roof damage
  • Tacky or dated colors
  • Damaged or missing siding, trim or rain gutter
  • Broken concrete in the driveway, walk or porch

You’ve heard about the first impression rule, right? If you make a poor first impression, you probably won’t get the chance to make a better second one. Take care of all the items on the list above.

Help Potential Buyers Imagine Themselves Living in Your Home.

Ideally, your home will be as neutral as possible. Not everyone shares your taste for porcelain doll collections or taxidermy deer heads. Potential buyers aren’t there to admire your taste in decor or personal collections—they want to envision themselves living in the home. To help them do so, stage your home. First, tackle the items on this list:

Remove personal photos

Remove extra clutter, including your collectibles

Replace brightly colored carpet with neutral colors

Remove wallpaper and wallpaper borders and repaint in a neutral color

Meet or Beat the Competition

Buyers want to be able to move right in without having to spend a bunch of money. The extent to which your home should be updated and current depends on your competition. Do all the other homes in your price range have new kitchens? A deck? A finished basement? If so, you have two choices:

1) Update your home to match.

2) Lower your sales price so that the buyer can do it himself.

Be careful completing renovations before listing your home— you might not always be able to recoup the costs. Do the bare minimum to bring your home up to neighborhood standards; no more, no less.

Clean, Fix and Organize – How To Stage a Home

The biggest complaint from buyers who are looking at homes is that so many of them are dirty, smelly and cluttered. You absolutely must make your home an attractive, pleasant place to be, or you’ll have a very difficult time finding a willing buyer. Here’s a list of home staging tips and things to do, room-by-room.

First, clean out every closet and storage space throughout the house. Get rid of stuff you don’t use—host a yard sale, donate items to Goodwill or throw things away. Buyers love to open closets and cabinets, and they love the idea of having lots of storage. Your closets will look much larger if they’re almost empty. Do a thorough cleaning and reorganization of:

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