money Archives - Sell Your House Yourself

How To Not Lose Money Selling Your House

Man sitting on lawn with hands on face very sad and frustrated.
For sale by owner having problem with selling their house — For sale by owner having problem with selling their house

How do you not lose money when selling your house? It’s all about the price. Seriously, more people selling their homes themselves lose money because of price. They overprice it and the house doesn’t sell.

It’s a well known fact among real estate agents that overpricing a house and letting it sit to long on the market loses money. Many For Sale By Owners don’t get this. They put the house up for sale at what they need to get or what they think it’s worth.

What they need to get means they need the money for something. Either a downpayment on the next house or sometimes just to break even. Whatever the reason it’s not the right way to price a house.

What they think it’s worth has nothing to do with what the house is actually worth. Even if you finished the basement yourself and did a $15000 remodel job on the kitchen the market is still what determines price. Not the homeowner.

When a home doesn’t sell potential buyers start to wonder why. As a result they automatically think something is wrong with the property. The only reason it isn’t selling is because of price. The only reason any house doesn’t sell is because of price and everything is relative to price. For instance location, condition, features and updating are all relative to price.

You may have a really nice and updated house in a neighborhood that does not support your price.

How To Tell When Your House Is Overpriced

I’ve seen many times homeowners selling their house themselves let it sit for months and months at the price they think it should be. Only the market knows what the price should be. The way to not lose money selling your house is to do the research, be objective and price it right.

Most of the time buyers won’t even bother with an offer. They see a house that is way overpriced and they bypass it. Sometimes they’ll call their real estate agent about it but the agent will convince them not to even bother. For instance a client may call me about an overpriced house and say maybe we can talk them down. My response is if they are willing to take less money they would have priced it right to begin with.

The way to tell your house is overpriced is simple. It’s not getting showings and it’s not selling. When I’m working with a homeowner and they insist on overpricing the house I have a prepared speech. It goes something like this:

“It’s ultimately your decision what we price your house at. I am here to advice you. I’ll put it on the market at this price but we need to agree that after 7 days if it hasn’t had at least _____ showings or has had _____ showings with no offers than we lower the price to what will sell it. The price I recommended.”

I put spaces where the numbers go because different situations such as location, market conditions, condition of property ect. determine how many days we wait or how many showings before an offer is not made..

We almost always end up lowering price. (or taking a lower offer if it one is made) The trick is to not let it sit to long. Even worse if it happens to be a strong sellers market. People will expect it to sell fast.

If Your Just Not Sure

If your just not sure and you don’t want to risk leaving money on the table it’s OK to go a little high but only for a very limited amount of time. Make a plan and stick to the plan. You’ll know if your overpriced. Make sure you don’t sit on the market to long. If no one is coming to look at your For Sale By Owner you’re probably priced to high.

That’s how to not lose money when selling your house. Even better the way to make the most money selling your house is to do it right the first time. Price your house right!

Joel

When I Think of Selling My House

by Joel Weihe

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.

Bringing Money To The Table When Selling Your House

by Joel Weihe

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!