September 22, 2013

Cutting out the middleman in home sales

It's possible to skip the agent – and his fees – when you're selling a home, but know when to ask for help.

By ALEX VEIGA The Associated Press

Jeremy Magelky had three things going for him when he set out to sell his home.

click image to enlarge

This house in Cleveland Heights, Ohio, is for sale by owner. Historically, for-sale-by-owner sales accounted for 15 to 20 percent of sales, according to the National Association of Realtors. But for-sale-by-owner home sales made up a record-low 9 percent of sales in 2012.

The Associated Press

Home values were rising in Fargo, N.D., and there were few homes for sale in the area. 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. That gave him the confidence to sell his home without the assistance -- and expense -- of a real estate agent.

"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 to go 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," said Magelky. His home took eight months to sell.

Historically, for-sale-by-owner transactions accounted for between 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, and declines 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 in the open market, which 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 how to tackle a home sale without enlisting a sales agent:

CONSIDER IF YOU'RE UP FOR THE TASK

Selling a home on your own means handling a lot of tasks that an experienced real estate agent would normally take on, including listing the home, reaching out to a network of buyers' agents, preparing the home for viewing and dealing directly with prospective buyers.

In broad 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 devote to stay on top of the process, it could take you longer to sell the house and maybe result in a lower sales price.

GET HELP DETERMINING YOUR ASKING PRICE

Figuring out the best price to list your home requires knowledge of the local market trends. It's the type of information that agents have at their fingertips, but it's not exclusive to them.

"You have to take an honest look at what you're selling, and establishing price can sometimes be the most difficult thing," said Paul Jarvis, a certified financial planner based in Fargo, N.D.

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, but it will help provide reassurance that you're pricing your property realistically.

(Continued on page 2)

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors




Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)