When it comes time to sell you house you have options. Some more expensive than others and an actual free option. There are actually 4 ways to sell your house. I’m going to discuss those different ways here and the cons and pros of each.
Using A Real Estate Agent/Realtor To Sell Your House
Hiring a real estate broker and using one of their agents is by far the most popular and well known way to sell your house. Often the first thing that comes to a potential home sellers mind is hiring a Realtor. Hiring a Realtor is effective and will get a home sold but it’s also one of the most expensive.
If one does go the Realtor route make sure you shop around. With all of the real estate market and listing information free to the public, experience isn’t as important as it used to be. Commissions are important because that’s what eats up your profits. You can find agents that will list your house for less than the usual 6%. Keep in mind when interviewing agents that we are trained to convince you that we are worth it.
Whether or not you hire a real estate agent or not has to do with your personal opportunity cost. According to Zillow the average home price in the U.S. in August of 2021 is $304,000. Assuming you have an average priced home a 6% commission will cost you $18,240. Is the time it will take you to sell your house worth more than $18,240? If so then you should consider hiring someone to sell your house for you.
The pros to hiring a real estate agent are an agent will do most of the paperwork for you. An agent will help you to price your house and let you know what you should do to get your house ready to sell. Realtors guide you through the process and help to schedule inspections, appraisals and closings.
The cons to hiring a real estate agent are, of course, the huge expense.
While not so much a con, but a realization, you should know an agent will let you know what you need to do to get your home ready to sell but it’s still up to you to do it. That means repairs, updates, cleaning and anything else that needs to be done is still on you.
An Ibuyer Will Buy Your House
An Ibuyer will buy your house directly from you outright avoiding the anxiety of listing. With an Ibuyer you avoid opening your home to strangers for showings, unknown repairs during the inspection process, waiting for the home appraisal and fretting over your buyers financing. No need to sell your house on the open market when using an Ibuyer
Don’t mistake these for the many flippers that are working the real estate market. Ibuyers are not flippers. You see those signs on the side of the road that say we buy houses. It’s not those people. An Ibuyer will give you close to market value for your house, maybe a little less than you could sell on the open market. There is a service fee that averages around 5%.
An Ibuyer will make you an offer. If you accept there will be an inspection of the property and then a final offer including any repairs that the Ibuyer deems necessary. Sometimes Ibuyer’s can be a little more expensive than a real estate agent after repairs and everything is said and done but there’s no doubt they are super convenient.
Ibuyers are starting to gain traction in major US cities. Home sellers are attracted to the stress free aspect of selling a home using an Ibuyer.
The pros to using an Ibuyer are the convenience, speed and the assurance of the final price without the anxiety of waiting for offers as you sell your house.
The cons to using Ibuyers, again, is the cost. Ibuyers can be expensive and you may get less money for your house.
Wholesalers Will Buy Your House (We Buy Houses)
Wholesalers are another group that will buy your house outright. The difference between wholesalers and Ibuyers is wholesalers want to buy your house for a lot less than what it is worth. Their goal is to buy a house as cheap as they can get it and resale it, or “flip” it at a significantly higher price.
Wholesalers mostly look for homeowners that are in distress such as being close to foreclosure or underwater. Sometimes the more unscrupulous sort will prey on older people, new widows or widowers or folks that are in desperate financial stress.
When dealing with wholesalers make sure you fully understand the contract you’re signing and the implications it can have on you in the future. Many times the homes are “bought” and the house is still in your name but sold or rented to someone else. Wholesalers make your mortgage payment while collecting the difference as profit. The clause in the contract can be left open so the wholesaler has no deadline to get the mortgage paid off and taken out of your name. It’s like a free ride for them but ties up your credit.
If you can’t sell your house because your underwater consider renting it out and using the rent to pay down the mortgage until you can pay it off.
Using a wholesaler will get your home sold fast. If your underwater or in financial stress a wholesaler can really be a big help.
Some wholesalers can be unscrupulous and not fully explain the implications of the process. Getting involved with this type of home sale can tie up your credit for years. It is highly recommended that you hire an attorney to look over your contract and explain it to you.
The wholesalers goal is to buy your house as cheaply as possible. Make sure you know what your house is actually worth.
Sell Your House Yourself
By far the best option when it come time to sell your house is to do it yourself. That’s where you’ll make the most money with the least expense generating the most profit. When it comes to disrupting the real estate industry that is what’ll do it. When regular people figure out how easy it is to sell a house.
Real estate agents know how easy it is. That’s why there are so many of us. Easy money.
New agents aren’t taught how to sell a house. Selling a house is easy. Mostly what we learn in real estate school is real estate law. Real estate coaches and brokers teach us how to fill out paperwork and to convince you that it’s difficult to sell a house and why you need us.
Some home sellers think that the MLS is the way to go. By hiring a real estate agent you can get your house on the MLS but there is also a less expensive way. Hire a flat fee service. A flat fee service will list your home on the mls for a fraction of the cost that a listing agent will charge you. Keep in mind that using a flat fee service means you are willing to pay a buyers agent, usually 3% of the contract price unless you can negotiate a better deal.
When you sell your house yourself you get to keep all your money. It’s the most profitable way.
When you sell your house yourself you have to do all the work. While it’s not hard to sell a house it can be time consuming.