Jeremy Magelky had three things going for him when he set out to sell his home.
Home values were rising, and there were few homes for sale in his neighborhood in North Dakota. On top of market conditions that favored sellers, the mechanical engineer also had the luxury of time – nearly a year to get his three-bedroom, two-bath house sold in time to close the deal on his next home.
All of that gave him the confidence to sell his home without the assistance – and expense – of a real estate agent. He sold it in eight months.
“If there’s low supply, the demand is going to be higher,” said Magelky, 31. “If it had been a tougher market, I don’t think I would have tried it.”
There can be compelling financial incentives for selling a home without an agent. The for-sale-by-owner approach can save sellers big money on agent sales commissions, which typically run 6 percent of the sale price. On a home that sells for $300,000, that’s $18,000 that would typically be split between a seller’s agent and the agent representing the buyer. Both are typically paid by the seller.
Magelky estimated that he saved $10,000 by not paying agent commissions. “It’s just cutting out the middleman,” he said.
Historically, for-sale-by-owner transactions accounted for 15 to 20 percent of the market, according to the National Association of Realtors. The figure tends to go up when the market is hot and it’s easier for sellers to go it alone. Those types of sales tend to decline during a down market because there’s a glut of unsold properties.
Since early 2012, steady job gains and low mortgage rates have fueled a rebound in housing, setting the market on a recovery path following the worst housing bust in decades. For-sale-by-owner home sales made up a record-low 9 percent of all sales last year, the NAR said.
But homeowners who sell their property on their own may not always be able to tap the pool of buyers that an agent can draw in the open market, and that could reduce the range of offers. And the process of selling a home can be painstaking and confusing, potentially more trouble than it’s worth – especially if the seller is on a time crunch to get a home sold.
Here are five tips for those who decide to sell without a sales agent:
1. Consider whether you are up to the task.
Selling a home on your own means handling a lot of things, including listing the home, reaching out to a network of buyers’ agents, preparing the home for viewing and dealing directly with prospective buyers.
In broader strokes, selling a home requires pricing the property, promoting it until you find a buyer who makes an offer and sealing the deal.
If you don’t have the time to stay on top of the process, it could take longer to sell the house and might result in a lower sales price.
2. Get help determining your asking price.
Experts suggest hiring a property appraiser to gauge the value of your home relative to comparable properties that have sold in your area. That typically runs a few hundred dollars.
If you skip the appraisal, you can glean some insights on real estate websites that help walk sellers through the pricing process. At Forsalebyowner.com/pricingguide/seller, the tool costs $40.
3. Attract buyers.
There are many websites that allow homeowners to post photos and descriptions of their home without a fee. Some cater specifically to for-sale-by-owner listings, including ForSaleByOwner.com, Owners.com and Fizber.com. Other options include popular real estate portals Zillow.com and Trulia.com.
Experts advise taking good photos – you can look at listings for homes represented by agents as a guide. That typically means making sure interiors are well-lit and exterior shots are taken on a sunny day with a good camera.
4. Manage showings.
Once you start receiving inquiries from potential buyers, it may be tempting to drop everything and have them come over. Experts suggest sellers resist that impulse and set up a small window of time every week for buyers to drop in. That will make it easier to manage the visits and create a sense of urgency among buyers when they run into others taking a look at the home.
5. Get help with paperwork.
Unless you’re comfortable drawing up agreements on payment and closing terms, consider bringing in an attorney to help put the finishing touches on the deal. Another option is offering a smaller percentage of the sale, say 1 percent, or a flat fee to a real estate agent for help in nailing down the last details of an agreement.
Of course, you can do it on your own. A basic agreement can be as simple as the price, how the buyer will pay (cash or a loan), and the closing date.
That’s what Magelky did.
“It wasn’t too complicated,” he said. “It’s intimidating, but once you get into it, it isn’t really that tough.”
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