Selling a home has traditionally involved the use of a real estate agent who has been tasked with the responsibility of marketing and selling the home. For their time and effort they are paid a commission on the sale proceeds. Whilst many view this as a necessary part of the sale process, the question needs to be asked, can I sell this house without an agent?
The good news is that it is actually possible to take control and sell your house privately and for the sake of some time and energy, thousands of dollars can be put back into your pocket.
Before I go through the pros and cons, I feel it is a good idea to explain how the commission process for real estate agents works. In this sense, real estate agents don’t always have your best interests at heart.
Real Estate Agent Commission Structures
You will employ an agent who works for a particular firm; that firm will have a set commission structure. As an example a NZ firm will charge the following, 4% on the first $250,000 ($10,000) and then 2% thereafter. Some agents even charge the 4% through to $350,000. They will also generally charge you an administration fee of $500. This fee covers a basic marketing package but you will generally be expected to pay for media advertising outside your set package.
So say you sell your home for $400,000. You would expect to pay out $13,500 in commission. Of this half goes to the firm and half to the agent. If another agent introduces customers to the property then the 50% that is set aside for the agent is split between the selling agent and the listing agent. For this scenario we will assume that the listing agent is also the selling agent. They will receive $6,750 for the sale as their share of the commission.
If your home was sold for $420,000 the commission to the agent would increase to $6,950 or an extra $200, whilst you would get an additional $19,600. As we can see the additional income is hardly enough to motivate the agent. The incentive for the agent to get the best possible price for your home is not really reflected in their commission, a speedy sale and fast turnover of listings is more important.
The agent does have access to buyers and a thorough knowledge of the property market (hopefully), but most of the agents in the market today have elementary training due to widely accessible entry requirements within the industry.
Sell your House Online
With the internet being used as a major marketing tool for real estate sales, it is easy for people looking to sell to do their own market research. The internet is also a great tool to use when attempting to market your property on your own or even sell your house online. Sites such as eBay and TradeMe are cheap to use and easy to set up. It’s possible for you to have your property advertised in a matter of minutes. The number of real estate agents that use these sites to market properties or for online house selling is testament to its marketing power.
Can You Sell a House Without an Agent?
Short answer: Of course you can! Real estate agents do not hold any special powers that enable them to deal with property that the average person does not have. If you feel you are capable of selling your property then chances are, with a little help from some associates, you probably can sell your own house.
With the widely accepted use online house selling now, it is possible to market your own property yourself for a fraction of the costs it would cost you to employ an agent. You know your home better than anybody and can use this information to your advantage. You can set up open homes at times that suit you and can deal directly with the people who are looking at your property. You are sheltered from the real estate banter that so many people hate.
On the flip side, there are people out there that do not want the hassle of dealing with people, spending time answering questions and have to sit around and watch strangers walk through your home commenting on your favourite holiday snaps that hang on the wall. For these people, employing a real estate agent is probably the better idea.
How to Sell your House Privately
A good property solicitor is worth their weight in gold. They can draw up sale and purchase agreements, offer advice on what clauses to put in the contract and also help answer any questions that you may be unsure of. If selling a home for the first time, employing the services of a trusted solicitor is recommended. Generally speaking, most people will employ a solicitor to help out with the sales process even if it is just to control the discharge of mortgage security.
The financial implications of selling a house privately as well as sell tips and advice and more information on how to sell your house privately will be addressed in future articles.