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When I Think of Selling My House

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A big beautiful white for sale by owner house for sale
for sale by owner real estate sign and beautiful house.

When I think of selling my house the first thing I think about is equity. Equity is defined by one of the many dictionaries out there as “The value of mortgaged property after deductions of charges against it”. In other words, how much money you walk away with when selling your house after it is paid off.

Equity can be built in a couple of ways. One way you build equity is by paying down your mortgage. That’s like a savings account.

Another way one can build equity is time based. Most real estate appreciates over time. So if you buy a house and live there for 15 years all the payments you have made paying down your mortgage is equity and if your homes value has increased, which it likely has, that’s even better.

For example if you have lived in your house forever, unlikely, and have paid off the mortgage you get to keep it all. Yay for you.

If you bought your house last year and are selling because you decide you bought the wrong house, or whatever reason, you might not get anything. In fact you might have to pay to sell your house if you hired a real estate agent because you have to pay the agent. There is not likely to be a lot of equity in your house depending on how much you put down when you bought it.

How Much Money Do I Get

I have lived in my house for 11 years now. I negotiated a good price when I bought it, put down 16% and paid all of my own closing costs. Only putting down 16% means I had to pay PMI, or private mortgage insurance, for a few years so that cut into my equity somewhat.

My wife and I plan on leaving the area when we retire in…not sure yet how many years but hopefully not long. So the other day I was pondering what it will be like when I sell my own home. My own, I’ve sold lots of homes for lots of people over the years, but what about when I sell my own home.

So I have been paying the mortgage down for 11 years. Add that to the 16 % I put down and the rise in market values. That’s a nice chunk of equity. That would be added to our retirement account so it’s also a very important chunk of equity.

That chunk is as of today, if I sold my house, $47,000. We’re not selling today but if we were that would be our profit minus any expenses. The selling expenses are cheap, about $620 for the closing fee and title insurance. Unless I have to pay a Real estate agent. If I was going to pay a real estate agent to list it on the internet at today’s value it would cost me another, ready for it, $8400. That is a nice payday for someone to do something I can easily do myself.

It’s also something you can easily do yourself.

Yes, I Am A Real Estate Agent

Yes, I am a real estate agent and I know how to do everything that needs to be done. But, there are many brand new agents that are winging it just as I did when I was a new agent.

Two points to the fact that I am a real estate agent.

The first point is I know how easy it is to sell a house, in any kind of market, be it a buyers market or a sellers market. For anyone. That’s the big “secret” in the real estate industry we don’t want you to know.

The second point is I will not list my house on the mls. Most agents don’t. I’ll go straight to the online real estate portals such as Zillow, Trulia, Homes.com ect. That is where I’ll try and pick up a buyer without an agent. That will keep my profits at $8400

If a buyer comes to me with an agent that they have a contract with I may consider but I am for sure going to negotiate with that agent. I may offer them 2%, or 1.5%. The buyer will always know what I am doing so everything is in the open and disclosed. If the agent does not accept my deal then the buyer may lose a great house, due to his agent.

Yes, when I think of selling my house I think of profits. I don’t mind paying someone to help but I’ll pay them something within reason.

You can sell your house yourself too, and keep more of your profits.

The Truth Behind the Success of FSBO’s

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Easily sell your home yourselfFor Sale By Owner, Try It

I am a licensed real estate agent in the state of Kansas. Personally I believe a homeowner can easily sell their home themselves, or sell their home FSBO (For Sale By Owner). What do you think? The real estate industry would have you believe it’s damn near impossible. The stats for successful for sale by owners according to the real industry are around 8%. That seems low. What is the truth behind the success of FSBO’s.

First, way back in 1981, before we had the internet in our homes, the percentage of successful FSBO’s was 21%. That’s very believable and I would expect that the number in 2018 would be even higher. But it’s lower? That doesn’t make any sense. It’s so much easier to sell a house these days. In fact, if priced right and properly prepared for market, homes are selling themselves. Literally!

What I mean by that is with all the real estate sites that are available for public use FSBO’s should be easier than ever to market, right? Well, they are, trust me on this one.

Consumers get online these days to look for homes themselves on sites like Zillow, Trulia, and homes.com just to name a few. Home sellers can go directly to these sites and market their homes themselves. In fact a lot of Realtors do just that trying to avoid paying commissions to other agents, go figure.

Home buyers are often shopping before they approach a real estate agent for assitance. Many of my clients prefer to look at homes themselves and then send them to me. Yes, I know it sounds backwards but it’s what’s happening. Consumers are shopping online for homes on their own. Real estate agents are useful for unlocking doors and filling out paperwork.

So where do these numbers about successful FSBO’s come from.

It’s actually a very slick play on semantics, and not dishonest. The industry grabs the numbers by only counting homes that have been sold by owners with absolutely no help or involvement from a real estate agent.

What I mean is…

  • Some FSBO’s end up using a buyers agent because the buyer had a contract or “agency agreement” with a brokerage. (More on that in a future post, and it’s not nice) Those sellers still sold the house themselves. They attracted a buyer, the buyer viewed the property, liked it and wrote an offer. Those sellers still saved thousands of dollars in commissions but in fact ended up having someone to do all the contract and closing work for half the price.
  • Sellers sometimes want to get their listing on the Multiple Listing Service (MLS) and there are services now that will do that for a few hundred dollars. Yes, the same thing you may pay another agent several thousand dollars for. The industry does not consider those FSBO’s. But who cares about semantics right? We care about saving money and putting it to better use.
  • What if you used a Realtor to help you price your house? You know, interview a Realtor, or two,  with the assumption that you might list with them so they give you a price analysis? Or what if you called up a Realtor and got some free advice? Would that be considered a true FSBO?  Again, who cares. It’s still a For Sale By Owner and you still saved thousands of dollars.

Those low numbers are thrown out there without an explanation for a reason. To scare you. To make you think twice. To stop you.

Don’t be fooled. It’s really not that difficult to sell a house once you know how.

Joel

p.s. If you have questions about the process you can join the discussion at  fb DIY Real Estate group

p.p.s.  For an in depth complete guide to learning how to sell your home yourself and get the most possible money click here!

How Disruption Will Happen in Real Estate

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How disruption will happen in real estate and how it will save you money. Disruption is the catchphrase of the times.  The word itself has almost run it’s course and is hardly relevant anymore.

The world is changing so fast that’s it’s not so much disruption as simply massive inevitable  change. Change in the ride share business-Uber replacing taxis. Change in where we sleep when vacationing-AirB&B replacing hotels. Change in how we watch movies-Netflix replacing the video store. Change in real estate business-Artificial intelligence  replacing real estate agents.

Disruption in real estate -Uber

It’s going to happen. The real estate business is going to change radically. No one knows yet what that change is going to be but it is happening now. Investors are investing hundreds of millions of dollars in startups trying to do just that. To disrupt the real estate business.

Agents are becoming irrelevant. The general public hasn’t caught on yet in masse. But they will. Homeowners are starting to wonder what they get for their money. Those huge commissions they pay when buyers are finding homes online on their own.

The problem with the startups trying to dislodge real estate agents is they still cost consumers money. Still quite bit of money. Some are trying to make it “easier” to sell  home but still relatively expensive. Others have adopted the buy low sell high technique but that doesn’t make much sense for consumers. What does make sense is for someone selling their home keeping their money and actually making a profit.

An agents marketing these days consist of putting homes online, where consumers are looking. A task that can easily be performed by just about anyone . Seriously, it’s not rocket science.

While all these slick expensive startups are searching for the magic bullet I believe disruption will come from the source, the consumer. The guy selling his house figuring out he can do it himself and save thousands of dollars. I believe that’s how disruption in the real estate industry will occur. When the general public figures out how they can easily sell their homes themselves.

Find out how you can easily sell your home yourself.

Joel

 

 

Why I Teach People to Sell Their Home Themselves and Avoid Paying Commissions

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People ask me all the time why I teach people to sell their home themselves. One reason is I work with a lot of military families helping them to find and purchase real estate. The first thing I want to know is does this make sense for you at this time. How long are you planning to be here? Can afford to pay real estate commissions if you have to move?

Military families move a lot. I know because I grew up in a military family and we were always moving, or so it seemed. We never spent more than a few years in any one place.

Moving
family moving house

If someone is only going to be in a place for two years it doesn’t make sense to buy a house. They will likely have to pay to sell their home when the time comes to move. Yes, pay…to sell their home. Literally have to bring money to closing instead of leaving the closing table with a check. Imagine you just 2 years before bought your first home, paid your own closing costs of $4200, put in new floors for $3500 as soon as you moved in and now you have to sell.

You barely have built up any equity in the house and certainly not enough to pay $18,000 in real estate commissions. You have to make up the difference in real estate fees out of pocket.

Let me explain how that happens when you don’t or can’t live in one place long enough.

When you buy a house there is very little cost involved in the real estate transaction itself. When you go to sell your home that’s where the transaction fees (real estate commissions) get paid by the seller, you. It’s not legal to fix those transaction fees where I live but they are generally 6% of the contract price. That can get expensive. If one doesn’t have enough equity built up they will have to bring money to closing to sell their house.

So my client tells me the Air Force says they are keeping him here for 7 years. Great, that’s plenty of time to buy a house, make it a home and if the economy stays intact probably come out a little ahead when it’s time to sell. A year and a half later the same client calls me and says the Air Force changed its mind and they have orders to ship out. Can I please help them sell the house. One and half years is not enough time to build equity to pay those outrageous transaction fees. Especially with government backed loans like FHA or VA that require little or no down payment. Little or down payment equals little or no equity.

Please notice I call them transaction fees rather than what they are. Real estate commissions. Transaction fees comes off a lot softer. And yes, I get paid those outrageous fees when someone doesn’t know how or is scared to sell there house for sale by owner.

And it’s not just Military either. Sometimes bad things happen to good people and they get jammed up. People lose jobs, get sick, get job transfers or just are forced for whatever reason to give up their home through no fault of their own. If this family owns a $300,000 house the fees are going to be in excess of $18,000. That’s a lot of money. 

That’s why I teach people to sell their home themselves.

You can easily sell your home yourself and keep your money.

Bringing Money To The Table When Selling Your House

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Your selling your house and you have to bring money to the table. The listing agent gets $13,500 and you have to bring another $4327 to close the deal. That’s what it’s going to take to pay off the house. The buyer is using a special program that takes care of his downpayment. He doesn’t have any money. Because he doesn’t have any money your agent thought it would be a good idea if you paid his closing costs for him, another $5,600. Something about getting the deal done.

Suitcase full of $100 bills
Bringing money to the table

So here you are sitting at the closing table handing over money, another $4327. That’s after already shelling out $19,100 in commissions and buyer paid closing costs. Ridiculous. All because someone convinced you it couldn’t be done on your own.

This happens all the time. Someone buys a house, makes it a home and then something happens. They get a job transfer, lose a job, gets a divorce or just simply wants to move. The point is they are moving and haven’t lived in the house long enough to break even.  Money has to brought to the closing table.

For the first several years owning a home the majority of the mortgage payment goes to interest.  It depends on the lender how much that is exactly but it’s a lot. Very little actually gets paid on the note.

You’re in this position of selling your house after only living there a few years. By selling it yourself you can save thousands of dollars. Many thousands of dollars and it’s really not that difficult. Granted it does take some work. While getting everything ready and than during the process you’ll be busy but when it’s all over you’ll be that much richer too. There will be that much more money in your bank account.

Sell your house yourself. Stay in control, watch out for your own best interest and keep your money!

What A Real Estate Agent Does For You

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I know what a real estate agent does for you, because I am one. New agents are taught all the right things to say, all the reasons you ought to have an agent to sell your house. Some are legit, but most you can easily do yourself. And be happy about the money you save.

House For Sale By owner savings

I could go through all the reasons one by one and break it down but let’s come at it from a more entertaining angle. An argument. This post is being written on this day because I came across an article titled “Homes for Sale By Owners: 5 reasons Why FSBO Sales Fail“. You can guess who wrote the article.  I had to read it since I know you can easily sell your house yourself.

The reason you would want to sell your home yourself is to keep the thousands of dollars you’ll be giving someone else to do it for you. The reason the real estate industry wants you to believe you can’t sell For Sale By Owner is because they want your thousands of dollars. They’ll do anything to convince you. They’ll say anything to get it.

-The biggest argument always is you’ll pocket more money using a real estate agent. I just think that’s absurd. Examples used in this case are the average FSBO price was $185,000. The average home price when represented by an agent was $245,000. That’s the average overall. They never compare homes, or properties. Those figures may very well be true but don’t mean anything. That tells me more people selling $245,000 homes used agents. There’s no way there’s going to be a $60,000 difference in 2 comparable homes in the same market in the same location.

-Next is marketing. Real estate agents offer widespread exposure for your home using the internet. So can you, and in most places

For Sale By Owner

absolutely free of charge or at a very nominal cost. The article goes on to say what a real estate agent does for you is share your home with other agents and their own clients. Your home is shared with other real estate agents via the multiple listing service or mls. And that’s true, but in most cases these days consumers are searching themselves on sites like Zillow and Trulia. When they find homes they want to see they call the number or call an agent.

Real Estate agents don’t spend nearly as much time looking for homes for clients as it used to be. Consumers are finding their homes themselves. If you really feel the need to get your For Sale By Owner on the mls there are companies that will do it for a few hundred bucks.

-For Sale By owner homes might be priced wrong. True, but so may homes priced by a real estate agent, especially an inexperienced one. Don’t price your home wrong. It’s really not that difficult. If you feel you can’t do it hire an appraiser, or interview a real estate agent. Interviewing an agent doesn’t mean you have to hire one.

You could underestimate or overestimate on how much to spend on getting your house ready. True, but so could an agent. This is just math. Once you know what your house could be worth get it in order. You won’t get your money back out of a full kitchen remodel but there are things you do to spruce it up. Painting, doing any obvious repairs and cleaning are all basic things that need to be done.  Your house should look nice, it’s as simple as that. If it needs updating, update it or price accordingly.

-Showings are a drag? Really? Is that really the best argument to hire a real estate agent? Your agent isn’t the only one that shows your house. If your willing to work with  buyers agents they’ll be showing your house. And if you work with a buyer’s agent they’ll do all the paperwork. If you don’t want to work with buyers agents then you show your house. Yes, it’s a little bit of work but so is anything worth doing.

-Finally the favorite of the industry to try and convince you For Sale By Owner is a bad idea,  paperwork. Again you may have to do a little research, make a few phone calls and spend a little money on contracts. A lot more paperwork is involved when using a real estate agent because a lot of that paperwork is designed to protect the real estate agent. All you really need is a contract and any disclosures your state requires. Or you can simply use a quit claim deed.

What a real estate agent does for you is substantial. The question, is it worth the thousands of dollars it cost to use an agent. You can easily sell your home yourself. keep your money.

 

 

 

 

 

 

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