How To Sell Your House Yourself

Save thousands of Dollars

Why The Real Estate Industry Will Change

by

aerial view of Neighborhood houses depicting coming changes in the real estate industry.
Disruption in the real estate industry.

There are a lot of industries being changed irrevocably by technology and entrepreneurs. It’s what they call disruption. So far the real estate industry has fought off outside intrusion and kept the status quo. Control of inventory and high commissions are the norm. But for how long? There are a number of reasons why the real estate industry will change and won’t last in its present form. One of those is you learning to sell your home yourself.

The Cost Of Doing Business Will Change

It’s expensive to sell a house. The biggest expense are the commissions but there’s also a host of taxes, fees, and other costs.

According to The Economist Americans paid out 75 billion dollars in real estate commissions in 2019. That’s with only about 7% of homes changing hands. It might not sound like a big number in the context of the entire country but when it’s $13,608 of your money it’s a different story. Zillow.com estimates the average cost of a house in the United States is $226, 800. Some states that cost will be much more, some states it will be less. The average price to hire a Realtor is 6% of the sale price.

Add to that cost the federal and state taxes, closing fees, title insurance, mortgage fees and the cost of moving it can add up to more than 10% of the cost of the house. That really eats into your profits.

The commissions are by far the largest expense. You can avoid those high commissions if you sell your home yourself.

The taxes are unavoidable. It’s the government. The title company that provides title insurance and in some states handles the closing has to be paid. A necessary cost. Depending on how much stuff you have determines how much it will cost you to move. That leaves the commissions. Are they necessary? Sellers are becoming more and more fed up.

Those commissions can strip away your profits. Many home sellers are realizing they can save commission costs by selling their homes themselves. The real estate industry will change from this fact alone.

The Disrupters Changing The industry

Technology has moved in on the taxi industry, run video stores out of business, changed the way we trade the stock market and done away with travel agencies.

So far real estate is still done the old fashion way. The middleman, or broker, brings buyers and sellers together and takes a significant part of the sellers’ proceeds. It’s not that there haven’t been attempts to overthrow the traditional real estate agent it’s just that nothing has stuck nationwide as of yet.

The main “threat” and most likely to succeed are the iBuyers.

iBuyers

One reason the real estate industry will change are iBuyers. iBuyers are companies, mostly investor funded startups, that buy a home directly from the homeowner. The attraction to iBuyers is no listing time, no real estate broker fees, no staging or marketing and no waiting.

They make money by buying a house and reselling it. The ibuyer uses local data and their own algorithms to determine a home’s value. Then the iBuyer will make a cash offer. If accepted the house can close whenever the seller wants to.

But…as good as all that sounds the iBuyer still needs to turn a profit. They do that by offering less than market value so they can make money on the sale. Or charging a commission. It still cost the seller money, sometimes even more. The attraction is the process is convenient and fast for the seller with none of the usual anxiety associated with selling a house the traditional way using a broker

Some of the more popular iBuyers are:

Opendoor

Opendoor has its own automated valuation model (AVM) system so it can make offers quickly. The allure to Opendoor as mentioned is speed and convenience. The downside is the 7% commission. Yes, the 7% commission which is even more than a traditional broker charges. Opendoor is starting to gain traction in several cities and has plans for expanding to more.

Knock

Knock helps people that are selling and buying. People that want to move. They do this by buying the new home for them so the client can move and then selling their old home for them once they’re settled in to the new place. Knock also charges a commission of 6%.

Offerpad

Offerpad represents the true ibuyer philosophy. They literally buy your home from you outright then sell it at a profit. You’ll be getting less than full value for your property because that’s how they make money. Buy low and sell high.

Redfin Now

Redfin is a real estate company that in the beginning was hostile to the real estate business. They bragged that they were going to change the way people did real estate by upending the traditional model. The ambitious plan didn’t work out quite as dramatically as they prophesized and in the end they were just another discount brokerage. Redfin Now is an extension of the original company that will make offers and buy homes outright for resell.

Zillow

Zillow is the original real estate disrupter. In the beginning Zillow sold advertising and leads to real estate agents to make money and that’s still the brunt of their business. What Zillow did was insert itself in between the real estate agent and the consumer. They offered an easy way for buyers to browse real estate listings without the need of an agent and then “sold” those buyer leads to agents when they needed help. Zillow made real estate agents nervous because they attracted a lot of attention but swore up and down that agents had nothing to worry about. Zillow was agent friendly and needed real estate agents to be profitable.

Recently Zillow has ventured into the ibuyer space positioning itself for whatever happens in the future. Zillow is basically playing both sides of the fence, a very good and safe move. Again Zillow swears they are only testing the iBuyer path and agents have nothing to worry about but whichever way the business shifts Zillow will be ready. Zillow is truly the 800 pound gorilla in the new real estate paradigm.

Discount Brokerages

Discount brokers are just what they sound like. Some discount brokerages use a flat fee model. They presumably offer real estate services cheaper than mainstream brokerages. They’ve been around forever but recently have been trying to differentiate themselves into something unique and new with complicated pricing structures.

Purple Bricks

Purple bricks makes money by charging a flat upfront fee and then the remainder being paid after the house sells. If the house doesn’t sell the upfront fee is non refundable. It still cost between $8,000 and $10,000 to sell a home through purple bricks but can be less expensive than using a traditional brokerage. The problem with this model is the nonrefundable upfront fee. Purple Bricks is a UK company that tried and failed in the US and Australia.

Simple Showing

Simple Showing is yet another investor funded startup that offers low commission fees, 1% listing fee and 3% buyer agency fee with an up to $5000 buyer rebate. The seller pays a 4% fee in total.

Redfin

Redfin offers a 1% listing fee when you sell and buy through them. That 1% listing fee doesn’t include the buyers agent commission which is generally 3%. Your overall cost will be closer to 4%.

_______________________________________

This is certainly not an exhaustive list of iBuyers or discount brokerages but enough to give you an idea of what’s coming for the traditional real estate business.

The success of these types of brokerages rests on lower commissions and flat fees which means less money for the agents doing the work. What makes a career in real estate attractive is the amount of money that can be made. If that money is reduced substantially the field of experienced agents will dwindle. This in turn runs the risk of reducing an agents true fiduciary towards the client which is somewhat of a problem in real estate now.

After the investor money runs out time will tell if these types of new real estate brokerages will last and be profitable. We’ll have to wait and see if these companies are what will make the real estate industry change.

The Law Is After Real Estate

Courts and government are starting to take a hard look at what some think are anti-competitive practices. The real estate industry will change drastically if the Government wants change despite the millions spent on lobbying efforts to keep the status quo.

The Trump administration DOJ is investigating the real estate industry. If that course of action is pursued the real estate industry will change but no one can really predict how just yet.

Some sellers question why they have to pay a buyer’s realtor. Sellers are forced to pay for both their own agent and the buyer agent. A commission is charged to the seller and that commission is split between the sellers’ agent and the buyers’ agent. There have actually been class action lawsuits by sellers against their agents claiming anti-competitive behavior.

________________________________________

No one knows and no one can be sure what will take hold and what will not but change is inevitable. Antiquated real estate practices are being challenged from all sides. The problem with iBuyers is cost. They offer convenience but don’t address the expense of selling a house. The discount brokerages are offering savings but so are many real estate agents due to competition among themselves. Even so, it’s still a lot of money to sell your house. Money that should be profits for you, the home seller.

What I think will come to pass is more people will realize that with a little education it’s really not that difficult to sell a house. Many thousands of brand new untrained agents do it every day. 10 years ago when I sold my first house I hadn’t a clue what I was doing and just sort of stumbled through it. Since then I have sold hundreds of homes and figured it all out. I know how to sell a house fast and for the most money. And people still pay me a lot of money to do that.

Whatever happens in the long run for the real estate industry happens but what needs to happen for home sellers is profit. They say real estate is the best investment you can make…and it can be.

Sell your house yourself.

Let me show you how you can save thousands of dollars of your own money. Click here!

Joel

What Is A For Sale By Owner

by

For sale by owner real estate sign and beautiful house
Sell Your House Yourself

It sounds obvious and I guess it really is. What is a for sale by owner? It’s something being sold by the person or entity that owns it.

Mostly though when someone hears or thinks about a For sale By Owner it means a house for sale. A house for sale by the person that owns it or more specifically without the help of a real estate broker.

Why would someone want to go through that pain?

Why A For Sale By Owner?

The number one reason a person sells their house by themselves is to save money. You could consider it making money since your essentially paying yourself rather than an agent.

What’s The Cost

Selling your home yourself without an agent saves you money but costs you work, and time. In economics there is a term called opportunity cost. Opportunity cost is defined as “the loss of potential gain from other alternatives when one alternative is chosen”.

In the case of selling your house yourself the question is what is your time worth? is there something you could be doing that is more valuable than the time it will involve to sell your home? That will depend on the price of your house, what kind of deal you could make with a real estate agent and how much money you make, or your net worth.

The price of hiring a real estate agent like myself is very expensive and it amazes me when people don’t blink at the price. For instance if I “list” your $300,000 home and charge the what consumers consider normal rate you’ll pay me $18,000. Did you catch that? $18,000. You can do the math or I can tell you that’s 6% of the sale price.

Think for a minute what you could do with $18,000.

In a sellers market like the we’re in now, 2019 going into 2020, a house sells really fast as long as it’s priced right. Often the next day or sometimes even the same day. When you factor in that most home buyers are finding the homes they want to see online themselves you have to ask yourself if you really need an agent. Home buyers are searching real estate themselves on sites like Zillow and Trulia. It’s free to advertise your for sale by owner on many online real estate portals like Zillow.

As far as the monetary aspect it can cost nothing at all for the actual marketing. You may need to spend some money getting ready to sell but the sale itself is not that difficult.

How To For Sale By Owner

There are a million and one sites and blog posts on the internet that will give you the basic steps to sell a house. If you want or need more detail I can help you with that by teaching you the same thing I teach other agents. The best practices to squeeze the most money possible out of a home sale.

There is enough information on my site here to get you through it for free.

Whatever you decide to do I know for a fact that in the end, when it’s all said and done, you will be very pleased with yourself.

Now just to figure out what to do with all that money.

Joel

How To Price Your FSBO Using Zillow

by

When real estate agents help you find a price for your home they use the Multiple Listing Service (MLS). Agents do a Comparative Market Analysis or simply CMA. Basically they see what similar homes have sold for recently in the area. These sold homes are referred to as comparables. I’m going to show you how to price your FSBO using Zillow doing the same thing.

Watch the video to see how I price a home on my listings. This is one more thing you will soon realize you can easily do yourself when it comes to selling your home.

Why Price On Your FSBO Matters

Not all homes are created equal. That’s why I like the price per square foot method.

You may have two homes side by side that are the same model and size. One has been updated with expensive top of the line components while the other needs help so of course the updated home is going to be worth more.

In any given suburban neighborhood many homes may look the same. On closer inspection you’ll notice they are mostly of different sizes. That makes a difference. The bigger the home, the more square footage, the more expensive.

Sometimes when I’m at a listing appointment the seller will compare his house to one that sold down the street. He knows nothing about that house. It sold for this much and that’s what I should price his house at. That’s when I have to break it down. Explain, and show, what the real difference is between his house and the “one down the street”. The house down the street is 600 sq ft larger. They just recently upgraded their kitchen. It has 3 car garage ect. ect. ect.

Listing agent showing how to price a house
real estate agent at a listing appointment showing buyers the price.

That’s how to price your FSBO using Zillow. First find the average price per square foot of homes sold in the area over the last 6 months. Multiply that by the square footage of your house. That’s the average. Now adjust up or down depending on the features, upgrades and overall condition of your home. Be Honest with yourself.

Now What?

Once you have that price and your home has been made ready put it on the market to test your price. You’ll know if you got it right fairly quickly. If it’s a sellers market you should get attention right away. A sellers market happens when there are more buyers than there are homes for sale.

If you don’t get requests for showings it means your overpriced. Probably by a lot. If you can’t get potential buyers to come look at your hose it means they aren’t willing to pay that price for it. Personally in a strong sellers market I suggest my clients give it a week. If we haven’t received sufficient attention I recommend we lower the price.

Maybe you have had several showings but no offer. It still means your overpriced for some reason. Buyers are not willing to pay that price or even attempt an offer. If the price is attracting buyers but not offers it could mean something needs to be done to the house. It may need updating or sometimes just a good decluttering and cleaning. In that case you can elect to do the work or simply lower the price.

The only reason a house doesn’t sell is because of price and everything is relative to price.

Joel

Why Real Estate Agents Are So Expensive?

by

Happy real estate agent about to get paid.
Expensive real estate agent about to get paid

You have to wonder why real estate agents are so expensive. Why it cost you so much money when you hire one to sell your house. Why do people still hire real estate agents to sell a house when there are so many other less expensive ways. The real estate industry says it’s relationships. Many people don’t realize there are options. Some sellers just don’t want to deal with the “hassle”.

Let’s take a look at why real estate agents are so expensive.

Listing Agent

First let’s break down what an agent does on the listing side, that is, when they sell your house for you. A listing agent.

  • A real estate agent helps you determine the right price for your house. The most important factor in selling your house. If a house doesn’t sell it’s overpriced and everything is relative to price including location, condition and features.
  • An agent will most of the time show you what can be done to your home to get it ready for market. Good agents will wait until your home is ready before they list it. Desperate agents want to get a sign in the yard ASAP because they need money. Hire a good agent. Get more money.
  • When a house is ready the listing agent puts it on the market. The agent lists the house in the multiple listing service. This is where other real estate agents can see it. That also means putting the property on the internet where everyone else can see it. Smart agents feature your property on sites like Zillow and Trulia which you can easily do yourself.
  • When you get an offer on your house the agent is there to act as the middleman. They’ll pass information back and forth between you and your buyer or what they call “negotiating”. Having an agent to help you negotiate is handy. Especially if you don’t want to meet your buyer or talk to them directly…for whatever reason.
  • Where agents are most useful is facilitating all of the transnational details such as inspections, appraisals and paperwork.
  • At closing your agent will sometimes give you a cheap gift to show their appreciation for all the money you just gave them.

The advice new agents always get is to concentrate on being a “listing agent”. Being a listing agent involves a lot less actual work than a buyers, or selling, agent. The listing agent has a 1-2 hour meeting with a client then puts the house on the market and waits for an offer.

Selling Agent

The selling agent, often referred to as the buyers agent, helps buyers find a home. Let’s go over what a buyers agent does.

  • The buyers agent helps a buyer find a home. Considering most buyers find their home themselves online buyers agents mostly just open doors. Sometimes that can be a lot of doors. The average buyer looks at 10 homes according to realtor.com. Sometimes it’s less and sometimes it’s considerably more.
  • When a buyer finds a home the agent helps formulate an offer. By looking at past sales the agent can determine fair value. An offer takes into consideration the condition of the property and any updating that’s been done to the house..
  • The buyers agent submits the offer. The sellers agent then shows the offer to their client.
  • When the offer finally gets accepted the agent then guides the client through the remainder of the process. That includes any inspections the buyer wants to do. There are transactional details and paperwork on the buyers side too.

Where Does All The Money Go?

Expense to sell a house

The money or commission in a real estate transaction all goes to the listing agents broker. The listing broker then pays the listing agent and the selling agents broker who then pays the selling agent. You are actually paying for your buyers agent. It would be like paying for your opponents lawyer in court. It’s done this way because this is the way it’s always been done. A buyer would likely not pay for an agent on their own.

But it’s not just the real estate brokerages and their agents anymore.

With the internet a crop of entrepreneurs have sprung that have figured out a way to put themselves between the broker/agent and the client. They do this by running ads on the internet offering real estate services. When a consumer responds to an ad the company puts them in touch with an agent. That agent then gets charged a referral fee of 25% – 40% of the commission.

So that’s a middle man to the middleman and yet another expense.

It’s not just the middlemen either. Competition in real estate is fierce. For instance in my area of close to 600,000 inhabitants there are about 2500 real estate agents and only 1800 homes for sale. All those agents have to hunt up business. There are a multitude of companies, some reputable but not many, that offer real estate agents easy ways to get business…for a substantial fee.

As I can attest to real estate association fees have risen dramatically over the past several years. Association fees are paid at the local level, the state level and the national level.

Real estate is a huge business with a lot of hands being held out that need to be paid.

That’s one reason why real estate agents are so expensive. While the job of selling real estate may have become easier the money involved is spread around more than ever. Many people and organizations want, and get, a piece of that action.

Selling Real Estate Got Easier

A long time ago, in an age before the internet, if you wanted to sell or buy a house you had to have a real estate agent. The real estate industry owned all the information about the housing markets. They held it close. These days all that valuable information is online, free and available to all.

Marketing a home was not so easy. Homes for sale were put in books the real estate brokerages owned. Consumers had to hire an agent in order to see those books full of listings. If you wanted to see a house you needed an agent to set up a showing for you.

Now an agent sells homes through the internet. A house is listed on sites like Zillow and home shoppers find them. many of the online real estate portals don’t charge anything to advertise a house. List it and forget it until an offer comes in.

There was a time whenever a signature was needed the agent and client had to meet together. get in a car and drive to a meeting place. it was time consuming. Companies like docusign and authentisign have put a stop to all that driving around. Now signatures can be obtained never leaving your desk. Another way agents save a lot of time.

Everything that an agent does has become easier and less time consuming.

So why are real estate agents so expensive? It seems they have less work to do with all the technology available now. Consumers are finding homes themselves online. Information is free. Listing a home is incredibly easy when compared to 30 years ago.

Real estate agents are still able to make so much money because people are willing to pay it. When people think about selling a house the first thing they think of is hiring an agent. it’s just natural. The $18,000 fee to sell a $300,000 house doesn’t, in most cases, even raise an eyebrow.

Sell Your House Yourself

When more home sellers start figuring how easy it really is to sell a house the real estate industry will have to take notice and start making some changes. Fees will have to become more realistic if brokers want to stay in business.

Until that time home sellers will continue to pay agents a good portion of their profits and agents will continue to take it.

Except the savvy home sellers who figure out how to do it on their own.

Why You Can’t Afford to Sell Your House

by

Can't afford to sell their house. Homes for sale on percentage basis. There is a banner across the picture of townhomes that reads %% Sale%%.

Photo by Benedikt Geyer on Unsplash

Well, it’s happened again. A past client can’t afford to sell their house and they can’t afford to keep it. At least they don’t think they can but I will show them how to sell it on their own and save money.

To many times I run into or hear of people whom for whatever reason have to sell a house shortly after they bought it. By shortly I mean anytime within a year or two maybe three.

Theoretically the longer you live in a house the better the investment it is. Time gives the real estate time to appreciate and you to build equity by paying down, or paying off, the mortgage.

When someone has to move after only owning it a short time they really can’t afford to sell their house. Sometimes they can’t afford to keep it either. It can put families in a bad place.

Can’t Afford to Keep Their House

In this situation a young family wanted to live in a neighborhood for the schools. The area also held a certain prestige. They found a house they loved, went through the loan process, closed on the property and moved in.

A little over a year later they contacted me and indicated that they had bitten off a little more than they could chew. The house was eating up to much of their money. Once the mortgage and bills were paid they were left with very little disposable income.

They came to me for help selling the place. We went over the numbers and what it would cost to list the house with me. Even with charging the very minimum and having to pay a buyers agent they would have had to bring money to closing. They would have been in the red which means that the real estate commissions would have to be paid out of pocket. Thousands of dollars they didn’t have.

I asked them what I ask everyone that asks me about listing their house. “Have you ever thought about selling your house yourself?” And I got the same answer I usually get, no. Even if a home seller isn’t “in the red” it still makes since to save thousands of dollars selling themselves. Sell the house without hiring a real estate agent.

They didn’t make a decision at that meeting. I offered to help by giving them our free home selling guide. They took it and said they would think it over.

This particular story is to be continued…

You Can Do This

It’s really not that difficult to sell your house yourself. Real estate agents don’t have to put forth much effort once they have the business. If a house is in good condition, properly made ready for market and priced right it will sell. I can tell you how to sell a house. You can find that information easily.

What excites me is teaching people how to squeeze every last dime out of their For Sale By Owner. How to create multiple offers and get thousands more dollars. How to get buyers really excited about buying your house. Literally fighting over it. Making more money for you. That’s what excites me. Because I know it’s possible.