Author Topic: Strategies to avoid realtor fees when selling a house?  (Read 6283 times)

Bearded Man

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Strategies to avoid realtor fees when selling a house?
« on: October 30, 2015, 11:50:50 AM »
I've read that you can pay a realtor a flat fee of a few hundred bucks to list the house on the MLS for you, nothing more.

I've also read that once you are on the MLS, there is really not much benefit to having a realtor. Getting on the MLS is key, and that you can do this for a small fee.

Furthermore, it appears that the best way to sell the house fast and get the best price is, according to studies, to price the house low, way below market and create a multiple bidder situation. This especially works well with Class A properties. This way, you ask each of them for their highest and best, and let them bid up the price.

Chances are they are singling out your house because it's a good deal so they KNOW that it's worth more than you are asking. In an effort to get the deal they keep outbidding each other and end up either just below, at, or above market value.

Or is there a better way? I certainly am NOT looking forward to paying 35K in transaction costs to sell just ONE of my houses...For the love of God, it's a sizeable chunk of net worth to sell them all after factoring in transaction costs...

undercover

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #1 on: October 30, 2015, 12:47:13 PM »
The only way to avoid agent fees is obviously for neither the buyer not seller to use an agent. Good luck with that. Not only is this rare, except for savvy investors, it requires a large amount of due diligence by both parties. Most of your non-agent represented buyers are probably cash buyers, thus investors. Since it's likely they will bid much lower than the typical buyer, you may come out, financially, exactly the same.

The mass majority of buyers are represented by agents. That means that you're excluding the mass majority of your market by trying to avoid commissions. Since most buyers use agents, the agent will get paid one way or the other. Either you will have to agree to pay (the amount is negotiable) or the buyer will have to pay which will adjust his offer proportionally. Also, a buyer's agent would prefer not to work with a seller that isn't represented as they end up having to do double the work for half the pay.

FSBO is a relatively small market, meaning trying to go that route renders your investment much more illiquid.

Axecleaver

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #2 on: October 30, 2015, 12:59:05 PM »
You can offer 3% to the buyer's agent. I recently did this for my house sale. I put up a price on Zillow, and had a buyer's agent in my driveway within 24 hours. Offered him 3% if the deal closed, and just like that, the buyer's agent was working for me. Sold for asking price, too.

lthenderson

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #3 on: October 30, 2015, 01:47:18 PM »
I tried selling my last house privately (ten years after we bought it privately). I had lots of people come look at it but the large majority were confused at how to buy it. They asked questions like who they just going to make payments to, etc. I tried telling them that they still had to get a loan from a bank just like going through a realtor but that I was pricing my house lower to avoid the realtors commission. Only a few seemed to understand and the rest I think suspected I was trying to scam them. Eventually after a couple months of this, I finally just hired a realtor and sold the house in a couple weeks, marked up to compensate for their fees.

The masses are just not savvy when it comes to buying houses unfortunately.

zephyr911

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #4 on: October 30, 2015, 02:08:45 PM »
I've read that you can pay a realtor a flat fee of a few hundred bucks to list the house on the MLS for you, nothing more.

I've also read that once you are on the MLS, there is really not much benefit to having a realtor. Getting on the MLS is key, and that you can do this for a small fee.

Furthermore, it appears that the best way to sell the house fast and get the best price is, according to studies, to price the house low, way below market and create a multiple bidder situation. This especially works well with Class A properties. This way, you ask each of them for their highest and best, and let them bid up the price.

Chances are they are singling out your house because it's a good deal so they KNOW that it's worth more than you are asking. In an effort to get the deal they keep outbidding each other and end up either just below, at, or above market value.

Or is there a better way? I certainly am NOT looking forward to paying 35K in transaction costs to sell just ONE of my houses...For the love of God, it's a sizeable chunk of net worth to sell them all after factoring in transaction costs...
My strategy was to get my real estate license so I earn commission when I buy (I get paid to shop, motherfuckers!) and can waive it when I sell. The first closing paid my startup and first-year costs, and the study/test time divides out to an exceedingly high hourly pay, serving the easiest and most enjoyable client ever (myself). Even one small deal per year covers the costs of keeping a license, and we are doing more than that already (and accelerating).

As an added bonus, I do occasional side deals for friends and family - again, ideal clients, minimally labor-intensive, good money.

Highly recommend it.

Bearded Man

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #5 on: October 30, 2015, 02:45:41 PM »
I've read that you can pay a realtor a flat fee of a few hundred bucks to list the house on the MLS for you, nothing more.

I've also read that once you are on the MLS, there is really not much benefit to having a realtor. Getting on the MLS is key, and that you can do this for a small fee.

Furthermore, it appears that the best way to sell the house fast and get the best price is, according to studies, to price the house low, way below market and create a multiple bidder situation. This especially works well with Class A properties. This way, you ask each of them for their highest and best, and let them bid up the price.

Chances are they are singling out your house because it's a good deal so they KNOW that it's worth more than you are asking. In an effort to get the deal they keep outbidding each other and end up either just below, at, or above market value.

Or is there a better way? I certainly am NOT looking forward to paying 35K in transaction costs to sell just ONE of my houses...For the love of God, it's a sizeable chunk of net worth to sell them all after factoring in transaction costs...
My strategy was to get my real estate license so I earn commission when I buy (I get paid to shop, motherfuckers!) and can waive it when I sell. The first closing paid my startup and first-year costs, and the study/test time divides out to an exceedingly high hourly pay, serving the easiest and most enjoyable client ever (myself). Even one small deal per year covers the costs of keeping a license, and we are doing more than that already (and accelerating).

As an added bonus, I do occasional side deals for friends and family - again, ideal clients, minimally labor-intensive, good money.

Highly recommend it.

I've considered doing this and looked into the requirements. I think I will do this as I get closer to actually retiring as I like the idea of doing RE sales part time and also doing property management as a business (requires a RE license in WA). Just right now I have too many other things going on.

Bearded Man

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #6 on: October 30, 2015, 02:47:32 PM »
Wait, wouldn't it be still better NOT to have to pay the fee, even if it goes to yourself? Saving the money incurs no tax. By transferring it from savings back to you via earned income, you get taxed on it and are still coming out a little change short. If only there was a way to just get rid of these fees. Auctions seem promising maybe?

undercover

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #7 on: October 30, 2015, 05:21:00 PM »
Wait, wouldn't it be still better NOT to have to pay the fee, even if it goes to yourself? Saving the money incurs no tax. By transferring it from savings back to you via earned income, you get taxed on it and are still coming out a little change short. If only there was a way to just get rid of these fees. Auctions seem promising maybe?

Which is why he said he doesn't charge himself a commission when he sells.

Meowmalade

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #8 on: October 30, 2015, 11:38:01 PM »
Wait, wouldn't it be still better NOT to have to pay the fee, even if it goes to yourself? Saving the money incurs no tax. By transferring it from savings back to you via earned income, you get taxed on it and are still coming out a little change short. If only there was a way to just get rid of these fees. Auctions seem promising maybe?

I suspect that auctions are full of investors trying to get the best deal.  Also, would you have to enter into a contract with the highest bidder?

powskier

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #9 on: October 31, 2015, 08:30:52 PM »
Sold our condo FSBO. Expect it take a little longer. Price fairly, have everything fixed and in great shape, express clearly up front that you will only take pre approved or cash buyers.
Unlike with a traditional  written offer - counter offer scenario, our experience was that folks tried to make a verbal agreement low ball offer, we declined.
The 2nd party and I had a weeks worth of email exchanges after which we came to an agreement, met and signed a contract provided to me by the title company, done deal.
People know that if you are FSBO you are trying to save money so they will try and negotiate down  i.e" lets do 6% less than listing price since you are not paying agents fees". It is important IMO that you have the place fixed, ready to go, correctly priced and comps already prepared and for distribution to buyers. FSBO gets a bad rep by rookie sellers who have no idea what they are doing. By respectful of your buyers, treat it as an honest business transaction, don't take buyers opinions personally, don't get emotional about the process. Total time spent was about 5 hours over 3 months and I saved 12k. Decent hourly IMO.

zephyr911

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #10 on: November 02, 2015, 11:01:23 AM »
Wait, wouldn't it be still better NOT to have to pay the fee, even if it goes to yourself? Saving the money incurs no tax. By transferring it from savings back to you via earned income, you get taxed on it and are still coming out a little change short. If only there was a way to just get rid of these fees. Auctions seem promising maybe?
Which is why he said he doesn't charge himself a commission when he sells.
That, and I don't plan on selling anything in the next couple of decades. If/when I do, waiving commission makes the most sense. I still gain an advantage over the competition via reduced transactional costs.

BM, I gather you're busy as hell, but there are some pretty decent self-paced online options.

MgoSam

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #11 on: November 02, 2015, 11:59:27 AM »
A good friend of mine bought a house in a private sale. They paid like $1000 to a Realtor to do the due diligence and paperwork and I believe he split it with the seller. He did, of course, get a sweet deal on the house. I believe he found out about it through a friend from college.

andyp2010

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #12 on: November 02, 2015, 09:41:39 PM »
From more of an economics perspective, the idea is that through the agents knowledge, sales ability and the trust in their collective brand that they'll be able to secure you a higher price, even after their fees. It seems to play out this way in real life. Except when I'm buying haha.

Landslave

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #13 on: November 03, 2015, 09:27:41 AM »
You can offer 3% to the buyer's agent. I recently did this for my house sale. I put up a price on Zillow, and had a buyer's agent in my driveway within 24 hours. Offered him 3% if the deal closed, and just like that, the buyer's agent was working for me. Sold for asking price, too.

  This is NOT true.  2 solutions.....if you buy title insurance the title company will not let a mistake happen!  secondly, a real estate attorney will cost about $400-$2000 for the whole transaction.  Don't be duped by the real estate industry.  homeowners and home sellers can do this without a real estate agent.  ALSO-- even giving the commission to the buyer's agent will save you 3%.  I would NEVER list a house unless I really needed to unload it quickly.


Axecleaver

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #14 on: November 03, 2015, 11:24:13 AM »
I agree with you that it isn't NECESSARY to pay a buyer's agent commission, but it's definitely harder to find buyers willing to work without one. So, I was comfortable handling my side of the transaction (with attorney help, cost $750) and I was also happy to pay someone to bring a buyer to the table.

Bearded Man

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Re: Strategies to avoid realtor fees when selling a house?
« Reply #15 on: November 04, 2015, 10:10:35 AM »
OK, so it sounds like realistically, since most buyers will want to work with their agent (because they have no experience) I will likely only save 3%. That's still about 10K per transaction. Still a huge savings. I guess I can try the FSBO route and see if I can find a buyer without an agent, but don't want to have the house sit on the MLS too long so will likely end up accepting offers from people with buyers agents.

Sigh, one more point in favor of stocks. I can't believe that it will have cost me 45K to buy and sell a single house compared to the $10 I pay for stocks. All to taxes, and people who unlock a door and fill out a cookie cutter contract. Sigh...