Author Topic: How to save on real estate transaction costs?  (Read 1537 times)

Morning Glory

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How to save on real estate transaction costs?
« on: April 04, 2021, 03:48:56 PM »
The time is approaching to sell our big property.  It is an 18 acre hobby farm with nice house, barn, and four other outbuildings. We are just two miles from the edge of a small but rapidly growing city. We are far enough north that the market is extremely seasonal.  FSBO listings don't seem to sell well in our area, and I don't want to lose a bunch of money to transaction costs with a regular real estate agent.   There are brokerages that specialize in farms, but I don't know if they are any cheaper than a regular one.  I was thinking of using an in-between option like Redfin or another discount firm. Does anyone have experience with these that you would like to share?

norajean

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Re: How to save on real estate transaction costs?
« Reply #1 on: April 04, 2021, 09:15:12 PM »
Redfin is full service at reduced price. We love them. Not sure if they serve your area, so contact them.

Why do you say FSBOs donít do well? I think it depends on how much effort the seller puts in and if you do enough leg work, it can pay off.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #2 on: April 04, 2021, 09:59:30 PM »
Redfin is full service at reduced price. We love them. Not sure if they serve your area, so contact them.

Why do you say FSBOs donít do well? I think it depends on how much effort the seller puts in and if you do enough leg work, it can pay off.

Thank you!!! I will definitely try Redfin. I'm glad you had a good experience with them. Not sure if I have the energy for leg work.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #3 on: April 05, 2021, 01:38:44 PM »
Update: I just scheduled a consultation with Redfin for Thursday morning!!!!

secondcor521

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Re: How to save on real estate transaction costs?
« Reply #4 on: April 05, 2021, 03:51:01 PM »
We did FSBO on our last property and it worked out fine in the end.  The only tricky things we faced were (a) we were divorcing at the time but didn't want the buyers to know that, so we had some logistical things to deal with there, and (b) we didn't do a perfect job on the asking price, so we just lowered the price a bit until we got offers, ended up in a bidding war, and believe we got fair market value as a result.

I should add that we used a low cost low service option that is called FSBO around here.  They have a website and a magazine and maybe list on MLS and maybe there was a yard sign involved, but you do everything else yourself.  IIRC our cost was $500 or $1000 for the package we picked.  Realtor fees alone would have been 20+ times that amount.  Plus the communication was easier because it was buyer <-> seller, not buyer <-> buyer's agent <-> seller <-> seller's agent <-> seller.  We had easygoing buyers, but we also finalized the deal in about 10 minutes because we just talked through everything and created a win/win in a coffee shop.
« Last Edit: April 05, 2021, 03:54:27 PM by secondcor521 »

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #5 on: April 05, 2021, 04:42:27 PM »
We did FSBO on our last property and it worked out fine in the end.  The only tricky things we faced were (a) we were divorcing at the time but didn't want the buyers to know that, so we had some logistical things to deal with there, and (b) we didn't do a perfect job on the asking price, so we just lowered the price a bit until we got offers, ended up in a bidding war, and believe we got fair market value as a result.

I should add that we used a low cost low service option that is called FSBO around here.  They have a website and a magazine and maybe list on MLS and maybe there was a yard sign involved, but you do everything else yourself.  IIRC our cost was $500 or $1000 for the package we picked.  Realtor fees alone would have been 20+ times that amount.  Plus the communication was easier because it was buyer <-> seller, not buyer <-> buyer's agent <-> seller <-> seller's agent <-> seller.  We had easygoing buyers, but we also finalized the deal in about 10 minutes because we just talked through everything and created a win/win in a coffee shop.

Thanks!!!!  You must have had a very amicable divorce ;) We are doing marriage counseling right now. Hoping to either patch things up or end it on friendly terms, but either way I want to live in a smaller and easier to maintain house.

EricEng

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Re: How to save on real estate transaction costs?
« Reply #6 on: April 05, 2021, 04:59:23 PM »
Fixed/Flat Fee Relators are the way to go.  Full service brokerages just don't do much in the modern internet age.  All people care about is seeing it on MLS & Zillow and a door locker to let them in.  All that marketing money relators spend is a waste.

Sid Hoffman

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Re: How to save on real estate transaction costs?
« Reply #7 on: April 05, 2021, 05:35:04 PM »
Redin/Zillow can be totally fine when you're the buyer because you only pay what you agreed to, but as a seller, here's some gotchas:

1) First off, understand you are agreeing to effectively let the buyer's agent set all the rules. You are now going into this major financial transaction with no one on your side.
2) This is like "free shipping." You're paying the cost elsewhere. There's no way Zillow and Redfin (the companies) would be worth as much money as they are if they weren't immensely profitable.
3) If you sell your house to/through either service, be prepared to have them hit you with every kind of fee they can come up with, similar to Payday loans or other places which get their hooks in you with a headline rate that is effectively way worse when you factor in all the fees.
4) All those inspections you just paid for? They're going to demand you fix every last item on the list, no matter the cost. Things that human buyers may not even have inspected and agree to just deal with themselves apparently do not fly with any of these services. After all, why would they? Their job isn't to help you. Remember: they do NOT work for you! They exist to profit off you, so they just make you pay for everything and then profit by selling an A+ house to somebody else at top dollar.
5) Any of them with a guarantee to sell your home in a certain amount of time are going to make sure to meet that deadline by just lowering the price to whatever it takes or by having an up-front offer that says "We'll buy it at $X in Y days if nobody else has" and of course $X is going to be some amount that is almost certainly below market value. After all, they are for profit and known to be profitable. If they weren't low-balling, they wouldn't be profitable the way they are. Zillow Offers can only do the quick sales they promise by offering way below market value, but conveniently since Zillow tells you what they believe market value is you have no way of knowing.
6) As an anecdote (which I hate, but here we are) my aunt recently sold her home. Zillow had it at $389k so if she'd done Zillow Offers she'd have gotten maybe $370k, perhaps $400k from a Redfin/OpenDoor service. She closed at $535k with a qualified realtor who wrote up the deal with a 2.0/2.5% commission, meaning my aunt's net profit was dramatically higher than she'd have gotten from Zillow Offers. Further: She simply declined every repair request from the inspection in exchange for taking $15k less than the original $550k offer. Again: things that aren't allowed when selling through many of the flat fee options out there.

There's not a ton of horror stories out there yet because they're still relatively new players in the marketplace and most people still think they're getting something for nothing because the fees and real world costs are different for every home. Anecdotes aren't data but the moment people point out the genuine troubles with those services, somebody just jumps in and proclaims "Oh, but I had a great experience!" of course with no way for anyone else to know the details nor what the house would have sold for nor what inspection items would have been paid for by whom because there's no way to literally rewind time and know what any given real people would have agreed to.

The most important part to remember is the fact that they not only have no reason to help you get top dollar for the sale of your home, they will profit the most by making you take the least amount of money home because that can maximize their own profits. There's no free lunch in life. Low sale commissions just mean you're spending the money in fees and other ways.

secondcor521

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Re: How to save on real estate transaction costs?
« Reply #8 on: April 05, 2021, 07:36:22 PM »
Thanks!!!!  You must have had a very amicable divorce ;) We are doing marriage counseling right now. Hoping to either patch things up or end it on friendly terms, but either way I want to live in a smaller and easier to maintain house.

Eh.  She wanted out because reasons and I realized there was no changing her mind at that point.  Plus we had three kids and we were told that it was better for them if we were civil and courteous.  We both love the kids, so that was that.

It was just a matter of trying to keep our minor white lies consistent when either of us talked to the buyers.  They probably figured it out but pretended not to, which I appreciated.

I'm sorry for where you're at.  I didn't know.

norajean

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Re: How to save on real estate transaction costs?
« Reply #9 on: April 05, 2021, 07:47:04 PM »
Redin/Zillow can be totally fine when you're the buyer because you only pay what you agreed to, but as a seller, here's some gotchas:

1) First off, understand you are agreeing to effectively let the buyer's agent set all the rules. You are now going into this major financial transaction with no one on your side.
2) This is like "free shipping." You're paying the cost elsewhere. There's no way Zillow and Redfin (the companies) would be worth as much money as they are if they weren't immensely profitable.
3) If you sell your house to/through either service, be prepared to have them hit you with every kind of fee they can come up with, similar to Payday loans or other places which get their hooks in you with a headline rate that is effectively way worse when you factor in all the fees.
4) All those inspections you just paid for? They're going to demand you fix every last item on the list, no matter the cost. Things that human buyers may not even have inspected and agree to just deal with themselves apparently do not fly with any of these services. After all, why would they? Their job isn't to help you. Remember: they do NOT work for you! They exist to profit off you, so they just make you pay for everything and then profit by selling an A+ house to somebody else at top dollar.
5) Any of them with a guarantee to sell your home in a certain amount of time are going to make sure to meet that deadline by just lowering the price to whatever it takes or by having an up-front offer that says "We'll buy it at $X in Y days if nobody else has" and of course $X is going to be some amount that is almost certainly below market value. After all, they are for profit and known to be profitable. If they weren't low-balling, they wouldn't be profitable the way they are. Zillow Offers can only do the quick sales they promise by offering way below market value, but conveniently since Zillow tells you what they believe market value is you have no way of knowing.
6) As an anecdote (which I hate, but here we are) my aunt recently sold her home. Zillow had it at $389k so if she'd done Zillow Offers she'd have gotten maybe $370k, perhaps $400k from a Redfin/OpenDoor service. She closed at $535k with a qualified realtor who wrote up the deal with a 2.0/2.5% commission, meaning my aunt's net profit was dramatically higher than she'd have gotten from Zillow Offers. Further: She simply declined every repair request from the inspection in exchange for taking $15k less than the original $550k offer. Again: things that aren't allowed when selling through many of the flat fee options out there.

There's not a ton of horror stories out there yet because they're still relatively new players in the marketplace and most people still think they're getting something for nothing because the fees and real world costs are different for every home. Anecdotes aren't data but the moment people point out the genuine troubles with those services, somebody just jumps in and proclaims "Oh, but I had a great experience!" of course with no way for anyone else to know the details nor what the house would have sold for nor what inspection items would have been paid for by whom because there's no way to literally rewind time and know what any given real people would have agreed to.

The most important part to remember is the fact that they not only have no reason to help you get top dollar for the sale of your home, they will profit the most by making you take the least amount of money home because that can maximize their own profits. There's no free lunch in life. Low sale commissions just mean you're spending the money in fees and other ways.

None of those things happened to us. We got a first rate full service agent for a massive discount on the fee.

Cassie

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Re: How to save on real estate transaction costs?
« Reply #10 on: April 05, 2021, 08:32:12 PM »
We have amicably divorced and sold our house using a full service agent. I am interested in how this turns out. It is a big chunk of money we are paying. We close on the 16th. MG, hope you get a quick sale.

MaybeBabyMustache

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Re: How to save on real estate transaction costs?
« Reply #11 on: April 05, 2021, 08:36:20 PM »
I'm also curious, so PTF. We just listed our vacation house (it's a 12 hour drive for us), so listing with an agent was a non-decision. We need someone to manage everything, handle the minor repairs, etc. We did negotiate slightly on the fees (5%), because the market is very hot.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #12 on: April 05, 2021, 08:58:18 PM »
Thanks!!!!  You must have had a very amicable divorce ;) We are doing marriage counseling right now. Hoping to either patch things up or end it on friendly terms, but either way I want to live in a smaller and easier to maintain house.

Eh.  She wanted out because reasons and I realized there was no changing her mind at that point.  Plus we had three kids and we were told that it was better for them if we were civil and courteous.  We both love the kids, so that was that.

It was just a matter of trying to keep our minor white lies consistent when either of us talked to the buyers.  They probably figured it out but pretended not to, which I appreciated.

I'm sorry for where you're at.  I didn't know.

It's ok. Where I'm at is better than where I was three months ago. I'm the one who wants the drastic change, be it divorce or otherwise.  I bought my first house from a divorcing couple who were buying it cfd from another divorcing couple, so the payment got split four ways.
« Last Edit: April 05, 2021, 09:01:04 PM by Morning Glory »

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #13 on: April 05, 2021, 09:00:16 PM »
Redin/Zillow can be totally fine when you're the buyer because you only pay what you agreed to, but as a seller, here's some gotchas:

1) First off, understand you are agreeing to effectively let the buyer's agent set all the rules. You are now going into this major financial transaction with no one on your side.
2) This is like "free shipping." You're paying the cost elsewhere. There's no way Zillow and Redfin (the companies) would be worth as much money as they are if they weren't immensely profitable.
3) If you sell your house to/through either service, be prepared to have them hit you with every kind of fee they can come up with, similar to Payday loans or other places which get their hooks in you with a headline rate that is effectively way worse when you factor in all the fees.
4) All those inspections you just paid for? They're going to demand you fix every last item on the list, no matter the cost. Things that human buyers may not even have inspected and agree to just deal with themselves apparently do not fly with any of these services. After all, why would they? Their job isn't to help you. Remember: they do NOT work for you! They exist to profit off you, so they just make you pay for everything and then profit by selling an A+ house to somebody else at top dollar.
5) Any of them with a guarantee to sell your home in a certain amount of time are going to make sure to meet that deadline by just lowering the price to whatever it takes or by having an up-front offer that says "We'll buy it at $X in Y days if nobody else has" and of course $X is going to be some amount that is almost certainly below market value. After all, they are for profit and known to be profitable. If they weren't low-balling, they wouldn't be profitable the way they are. Zillow Offers can only do the quick sales they promise by offering way below market value, but conveniently since Zillow tells you what they believe market value is you have no way of knowing.
6) As an anecdote (which I hate, but here we are) my aunt recently sold her home. Zillow had it at $389k so if she'd done Zillow Offers she'd have gotten maybe $370k, perhaps $400k from a Redfin/OpenDoor service. She closed at $535k with a qualified realtor who wrote up the deal with a 2.0/2.5% commission, meaning my aunt's net profit was dramatically higher than she'd have gotten from Zillow Offers. Further: She simply declined every repair request from the inspection in exchange for taking $15k less than the original $550k offer. Again: things that aren't allowed when selling through many of the flat fee options out there.

There's not a ton of horror stories out there yet because they're still relatively new players in the marketplace and most people still think they're getting something for nothing because the fees and real world costs are different for every home. Anecdotes aren't data but the moment people point out the genuine troubles with those services, somebody just jumps in and proclaims "Oh, but I had a great experience!" of course with no way for anyone else to know the details nor what the house would have sold for nor what inspection items would have been paid for by whom because there's no way to literally rewind time and know what any given real people would have agreed to.

The most important part to remember is the fact that they not only have no reason to help you get top dollar for the sale of your home, they will profit the most by making you take the least amount of money home because that can maximize their own profits. There's no free lunch in life. Low sale commissions just mean you're spending the money in fees and other ways.

Thanks for the perspective. Wouldn't I still have the right to negotiate with the buyer and refuse inspection items?

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #14 on: April 05, 2021, 09:04:56 PM »
Fixed/Flat Fee Relators are the way to go.  Full service brokerages just don't do much in the modern internet age.  All people care about is seeing it on MLS & Zillow and a door locker to let them in.  All that marketing money relators spend is a waste.
I've heard of these but the ones I could find were very diy-oriented. Can you recommend some?

Zamboni

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Re: How to save on real estate transaction costs?
« Reply #15 on: April 05, 2021, 09:17:02 PM »
Here is some anecdata: Last two home sales I did were 1. FSBO and 2. to OpenDoor.

FSBO was kind of a pain because, after they looked at the home, the buyers brought in their "agent" who was also their aunt. We agreed to pay her a flat fee commission and for this she was supposed to handle all of the paperwork, lockbox it after we moved out to set up the inspections, etc. She was technically licensed but was very, very unskilled at her job. She didn't even have a lockbox, for example, and then she bought one online and had it mailed to the home address where no one was living. She also didn't seem to know how to fill out the boilerplate forms, so we ended up correcting all of that based upon our own experiences with it previously. They were unrealistic first time home buyers, and it was a small, older home, not a brand new home, and that's a dangerous combination for a drawn out process and unrealistic requests. In the end, between our own contract and business experience and a good closing lawyer, the deal got done fine, but the agent was worse than worthless. If I had to do FSBO again, I would not agree to work with a Buyer's agent unless they were very experienced with a lot of transactions under their belt.

OpenDoor was a breeze. I had a very thorough knowledge of the home prices in my area since looking at houses is a bit of a hobby of mine, and I wanted a quick sale since I was using the proceeds to buy another home. No time for flaky buyers or things falling through! OpenDoor did an inspection and measured the spaces, but they did not ask me to repair a single thing, which I think this is their new model. They even raised the offer a little bit after I responded with information about new roofing and siding. OpenDoor closed with me in less than 3 weeks, turned it around in a couple months and made about $15K (minus minor repairs) on my 300K home. There were no surprises.

Zillow, on the other hand, gave me an initially higher purchase quote, but then they came up with a crazy list of repairs, so I laughed in their face and sold to OpenDoor. Then they called me over and over. Thumbs down to Zillow. There was a third "we'll pay cash your home" company in my area that was really just realtors trying to get you to list with them; they never managed to come up with an offer other than offering to list it for me.

Good luck with your sale!

EricEng

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Re: How to save on real estate transaction costs?
« Reply #16 on: April 06, 2021, 04:12:08 PM »
Fixed/Flat Fee Relators are the way to go.  Full service brokerages just don't do much in the modern internet age.  All people care about is seeing it on MLS & Zillow and a door locker to let them in.  All that marketing money relators spend is a waste.
I've heard of these but the ones I could find were very diy-oriented. Can you recommend some?
Like other posters said, at best you can remove the traditional 3% seller agent fee.  You'll still have to pay whatever amount the buyer's agent is working for, 1-3% depending on location.

I've seen good things about Redfin and would have used them myself for my last sale, but work reimbursed both agent fees if I used theirs so I just didn't care.
Rex is an option I've seen in the Denver area: https://www.rexhomes.com/sell-with-rex#savings-calc
Washington option https://www.verraterra.com/4-benefits-of-fixed-fee-real-estate-agents-every-homeowner-should-know/

There are a lot of folks out there that will stick your house on MLS for about $500.  Then it is up to you to get some good photos up on sites like zillow and realtor.com.

Quote
1) First off, understand you are agreeing to effectively let the buyer's agent set all the rules. You are now going into this major financial transaction with no one on your side.
2) This is like "free shipping." You're paying the cost elsewhere. There's no way Zillow and Redfin (the companies) would be worth as much money as they are if they weren't immensely profitable.
3) If you sell your house to/through either service, be prepared to have them hit you with every kind of fee they can come up with, similar to Payday loans or other places which get their hooks in you with a headline rate that is effectively way worse when you factor in all the fees.
4) All those inspections you just paid for? They're going to demand you fix every last item on the list, no matter the cost. Things that human buyers may not even have inspected and agree to just deal with themselves apparently do not fly with any of these services. After all, why would they? Their job isn't to help you. Remember: they do NOT work for you! They exist to profit off you, so they just make you pay for everything and then profit by selling an A+ house to somebody else at top dollar.
5) Any of them with a guarantee to sell your home in a certain amount of time are going to make sure to meet that deadline by just lowering the price to whatever it takes or by having an up-front offer that says "We'll buy it at $X in Y days if nobody else has" and of course $X is going to be some amount that is almost certainly below market value. After all, they are for profit and known to be profitable. If they weren't low-balling, they wouldn't be profitable the way they are. Zillow Offers can only do the quick sales they promise by offering way below market value, but conveniently since Zillow tells you what they believe market value is you have no way of knowing.
6) As an anecdote (which I hate, but here we are) my aunt recently sold her home. Zillow had it at $389k so if she'd done Zillow Offers she'd have gotten maybe $370k, perhaps $400k from a Redfin/OpenDoor service. She closed at $535k with a qualified realtor who wrote up the deal with a 2.0/2.5% commission, meaning my aunt's net profit was dramatically higher than she'd have gotten from Zillow Offers. Further: She simply declined every repair request from the inspection in exchange for taking $15k less than the original $550k offer. Again: things that aren't allowed when selling through many of the flat fee options out there.
1. Not really.  Most of those sites have someone to guide you through the paperwork.  My full price (paid by work move) realators I've gone into buys and sells (3 of each) with have been largely useless in negotiations.
2. Google makes its money off traffic and ads.  These sites get their cuts too, but that doesn't mean they are taking you to the cleaner.
3. The best use of Zillow isn't selling your house to them (or even through them).  It is like a LinkedIn profile for your house so people can see.  I've found all homes by browsing Zillow for potentials.  The MLS system is a horrible pain from the 90s to browse in.  I've never given the slightest consideration to any other house marketing that traditional realtors waste money on (mail ads, real estate magazines with 1 front picture, internet ads, etc).
4. You are still totally allowed to negotiate what you will and will not fix or offer money in leiu of.
5. No one is advocating you uses these instant sale services.  Those are a rip off.  We are saying avoid full price realators that take 3-3.5% on the selling side.
6. Zillow's price estimate is just one opinion.  You need to know approximately what your house is actually work.  Most realators will give you free assessments of what they would list at.  My last sale we interviewed 5 and got 5 way different prices because they were just using automated computer models.  Some above mine and some below. The above ones were $200-300k off from reality because our housing complex was adjacent to another with similar square footages.  However, that other complex were built and sold at double the price of ours.  None in our complex had ever nor ever will sell at those same prices due to differences in finishes and build quality.  My point being those full price realtors usually aren't very good either.  Anyone can be a genious in a hot market.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #17 on: April 06, 2021, 05:43:37 PM »
Thanks @EricEng for the detailed response!!!! . I think I will go with Redfin. We had a traditional realtor before who really wasn't that great. My property is fairly unique so it's hard to guess a good price, and the Zestimate changes by about 100k depending on if it's summer or winter. The algorithm really doesn't know what to do with acreage.  I have enough time to start high and then drop it if it doesn't move.

robartsd

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Re: How to save on real estate transaction costs?
« Reply #18 on: April 06, 2021, 06:17:48 PM »
3. The best use of Zillow isn't selling your house to them (or even through them).  It is like a LinkedIn profile for your house so people can see.  I've found all homes by browsing Zillow for potentials.  The MLS system is a horrible pain from the 90s to browse in.  I've never given the slightest consideration to any other house marketing that traditional realtors waste money on (mail ads, real estate magazines with 1 front picture, internet ads, etc).
While I agree that marketing on Zillow is useful because there are plenty of people who do look there for listings, I much prefer browsing on RedFin because it provide better up-to-date MLS listings.

uniwelder

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Re: How to save on real estate transaction costs?
« Reply #19 on: April 08, 2021, 06:06:15 AM »
We're currently selling our house ourselves and its going surprisingly well.  Our area isn't particularly popular, though we have a booming university town just 25 minutes away, so there seems to be a bunch of overflow into the surrounding area.  Our initial thoughts were that we'd try it ourselves for at least two weeks and reevaluate whether to use an agent. 

We moved out recently to another home nearby, got an appraisal (as the house is a bit unique and difficult to price) for $450, and asked a friend to take some wide angle photos with her fancy iPhone.  The ad went up on Zillow, Craigslist, and Facebook just a week ago.  Not much happened initially, probably because of Easter holiday, but this week we're at three offers over asking, and will probably sign a contract in the next day.  All the buyers have an experienced agent, but at least we'll be saving 3% on our end. 

Its too early to tell, will need to wait until closing, but I'm liking the experience so far.  I talk directly with the buyer and agent, explain all the work we've done to the house and walk them through, and get a feel for what the person/couple is looking for.  The agents and I have been able to speak very plainly about what terms would be in their offer.

Redfin isn't available my area, so I have no advice there.  An appraisal could be well worth the money to determine accurate pricing and will give the buyer and lender some assurance the sales price is justified for a loan.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #20 on: April 08, 2021, 06:09:21 AM »
Thanks!!! We got an appraisal last year for a refi so I have a ballpark idea. The market has gone up a lot since then so we are hoping for more.

uniwelder

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Re: How to save on real estate transaction costs?
« Reply #21 on: April 08, 2021, 06:23:31 AM »
Thanks!!! We got an appraisal last year for a refi so I have a ballpark idea. The market has gone up a lot since then so we are hoping for more.

I'm realizing how biased appraisals are, depending on their purpose.  When we got a HELOC, the bank's appraiser really lowballed the number for the bank and I argued the value up slightly.  When buying a home, it seems to appraise exactly at the sales price.  When the appraiser knows you plan to sell, I'd like to think that's the most accurate market value.  Our most recent appraisal is 2x what it was when we got the HELOC 2 years ago, and home values in our area have increased since then, but definitely not nearly that much.

robartsd

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Re: How to save on real estate transaction costs?
« Reply #22 on: April 08, 2021, 09:21:06 AM »
When buying a home, it seems to appraise exactly at the sales price.
I had this experience on the first home I ordered an appraisal for. If I remember correctly the appraiser even cited the offer price as part of the justification for the appraised value. Of course there were adjusted comps that also justified the price to within 3% of the offer.

Dicey

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Re: How to save on real estate transaction costs?
« Reply #23 on: April 08, 2021, 10:56:36 AM »
Redin/Zillow can be totally fine when you're the buyer because you only pay what you agreed to, but as a seller, here's some gotchas:

1) First off, understand you are agreeing to effectively let the buyer's agent set all the rules. You are now going into this major financial transaction with no one on your side.
2) This is like "free shipping." You're paying the cost elsewhere. There's no way Zillow and Redfin (the companies) would be worth as much money as they are if they weren't immensely profitable.
3) If you sell your house to/through either service, be prepared to have them hit you with every kind of fee they can come up with, similar to Payday loans or other places which get their hooks in you with a headline rate that is effectively way worse when you factor in all the fees.
4) All those inspections you just paid for? They're going to demand you fix every last item on the list, no matter the cost. Things that human buyers may not even have inspected and agree to just deal with themselves apparently do not fly with any of these services. After all, why would they? Their job isn't to help you. Remember: they do NOT work for you! They exist to profit off you, so they just make you pay for everything and then profit by selling an A+ house to somebody else at top dollar.
5) Any of them with a guarantee to sell your home in a certain amount of time are going to make sure to meet that deadline by just lowering the price to whatever it takes or by having an up-front offer that says "We'll buy it at $X in Y days if nobody else has" and of course $X is going to be some amount that is almost certainly below market value. After all, they are for profit and known to be profitable. If they weren't low-balling, they wouldn't be profitable the way they are. Zillow Offers can only do the quick sales they promise by offering way below market value, but conveniently since Zillow tells you what they believe market value is you have no way of knowing.
6) As an anecdote (which I hate, but here we are) my aunt recently sold her home. Zillow had it at $389k so if she'd done Zillow Offers she'd have gotten maybe $370k, perhaps $400k from a Redfin/OpenDoor service. She closed at $535k with a qualified realtor who wrote up the deal with a 2.0/2.5% commission, meaning my aunt's net profit was dramatically higher than she'd have gotten from Zillow Offers. Further: She simply declined every repair request from the inspection in exchange for taking $15k less than the original $550k offer. Again: things that aren't allowed when selling through many of the flat fee options out there.

There's not a ton of horror stories out there yet because they're still relatively new players in the marketplace and most people still think they're getting something for nothing because the fees and real world costs are different for every home. Anecdotes aren't data but the moment people point out the genuine troubles with those services, somebody just jumps in and proclaims "Oh, but I had a great experience!" of course with no way for anyone else to know the details nor what the house would have sold for nor what inspection items would have been paid for by whom because there's no way to literally rewind time and know what any given real people would have agreed to.

The most important part to remember is the fact that they not only have no reason to help you get top dollar for the sale of your home, they will profit the most by making you take the least amount of money home because that can maximize their own profits. There's no free lunch in life. Low sale commissions just mean you're spending the money in fees and other ways.

Thanks for the perspective. Wouldn't I still have the right to negotiate with the buyer and refuse inspection items?
Hmmm, I think perhaps Sid is conflating selling TO Zillow or Redfin with using a Redfin agent to sell your house on the open market. Huge difference. I will definitely use Redfin next time I sell a property, unless something better comes along by then.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #24 on: April 08, 2021, 11:57:25 AM »
Thanks Dicey!!! I met with the Redfin agent today and haven't signed anything yet but set a tentative date to list in three weeks!!! They have only been operating in my area for 18 months, and their service seems a lot better than what I got with a traditional realtor the last time around.  He said the house looked pretty good and would sell quickly.  He didn't recommend doing any work to it besides more decluttering and a good deep clean. 

 I am waiting to hear back on whether my employment contract gets extended to decide if I want to buy another house or just rent an apartment.  I'm not sure if I want to stay with my husband either.  If we buy I will make sure it's something that I can manage on my own if I need to.  The whole thing is a bit nerve-wracking.

Zamboni

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Re: How to save on real estate transaction costs?
« Reply #25 on: April 08, 2021, 07:28:05 PM »
^Wow, yes, that is a lot going on. You are quite wise to think about solo sustainability in your next home.

Good luck with everything!

Dicey

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Re: How to save on real estate transaction costs?
« Reply #26 on: April 08, 2021, 09:49:16 PM »
Thanks Dicey!!! I met with the Redfin agent today and haven't signed anything yet but set a tentative date to list in three weeks!!! They have only been operating in my area for 18 months, and their service seems a lot better than what I got with a traditional realtor the last time around.  He said the house looked pretty good and would sell quickly.  He didn't recommend doing any work to it besides more decluttering and a good deep clean. 

 I am waiting to hear back on whether my employment contract gets extended to decide if I want to buy another house or just rent an apartment.  I'm not sure if I want to stay with my husband either.  If we buy I will make sure it's something that I can manage on my own if I need to.  The whole thing is a bit nerve-wracking.
So exciting! Please keep us posted.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #27 on: April 29, 2021, 05:04:11 PM »
Update: house has a "coming soon" listing and officially goes on the market Saturday. Redfin has been great so far. Their pictures are much better than the ones my realtor had for the old house, and everyone has been very professional and easy to work with. We haven't had to do much so far besides fill out paperwork and schedule a well water test and septic inspection. (And work on getting rid of stuff).

EricEng

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Re: How to save on real estate transaction costs?
« Reply #28 on: April 30, 2021, 09:03:34 PM »
Update: house has a "coming soon" listing and officially goes on the market Saturday. Redfin has been great so far. Their pictures are much better than the ones my realtor had for the old house, and everyone has been very professional and easy to work with. We haven't had to do much so far besides fill out paperwork and schedule a well water test and septic inspection. (And work on getting rid of stuff).
That's wonderful!  Wish you luck.  This is a great time to be a seller.  Such a shortage on wood to build new homes atm.  Home prices have jumped 20% around us in just a year.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #29 on: April 30, 2021, 09:26:23 PM »
Oh yes, we sold a pile of wood that was sitting in the barn from an unfinished project for twice what we paid for it. I priced it at 25% less than the big box stores and someone showed up with cash the next day and didn't even haggle. Made our money back on some PVC and other stuff, and even benefited from high scrap metal prices as we clean out.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #30 on: May 04, 2021, 02:58:23 PM »
We accepted an offer yesterday, after two days on the market.  Asking price in cash, contingent on inspection.  It ends up being about $3000 less than asking price after a couple of things they wanted that I could have quibbled over but didn't (buyer's agent commission and a warranty). We have the home inspection on Monday and the septic on Friday.  We have to pay for the well testing ($54 through the county) and septic inspection (cost is ???) because there is a state law that requires a certificate before selling the house.  The buyer is paying for the regular inspection. I'm pretty sure the septic will pass because it's newer. We fixed all the broken things before putting the house on the market so there shouldn't be too many inspection items, unless they find some mold I don't know about or something.   I added up what we spent on getting the house ready before we put it on the market and it was like $1100 altogether (new linoleum for the bathroom, fireplace repair, paint, etc.). 

Now we need to work on selling more of our stuff and finding a place to rent.  I don't want to buy another house here because I would really like to move someplace warmer after my employment contract ends in December.  I was relieved rather than disappointed when it did not get extended, since I am tired of the cold winters and close enough to FI that I don't have to work full time any more. I might even benefit by waiting until the market cools off before buying again, but that feels like market timing.

Thank you to all of you for your advice and encouragement!!! I've been dithering about whether or not to sell this house for the last four years. I'm looking forward to having something easier to take care of (and possibly FIRE-ing soon). I will keep you all updated on the exact costs of everything up until closing.

@uniwelder you were right about the appraisal. We are getting over 100K more for the house than the appraised value from a year ago.

uniwelder

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Re: How to save on real estate transaction costs?
« Reply #31 on: May 04, 2021, 08:42:58 PM »
Morning Glory--- Glad this has been going well for you!

norajean

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Re: How to save on real estate transaction costs?
« Reply #32 on: May 04, 2021, 09:44:59 PM »
Fabulous. Well done. Keep us posted.

I used Redfin on a sale last year, as noted, and was delighted. I hired a very experienced realtor for a more complicated sale this year but used Redfin to negotiate his commission down. He saved my bacon when the first and second buyers presented quite a few problems.

Sid Hoffman

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Re: How to save on real estate transaction costs?
« Reply #33 on: May 06, 2021, 06:54:45 PM »
I added up what we spent on getting the house ready before we put it on the market and it was like $1100 altogether (new linoleum for the bathroom, fireplace repair, paint, etc.).

That's great news, I'm glad everything has worked out for you so far. Maybe more of the horror stories I'd been hearing were during prior years that were not a sellers market like the current market. It would certainly be nice if more things in this world simply work out better (lower cost) all around. Glad to hear it's been good for you so far and look forward to seeing your bottom line post when it's all over. Then maybe you could rate the whole experience, both in terms of expectations/ease and cost. Up to you, of course.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #34 on: May 14, 2021, 07:54:14 AM »
Inspection is complete and they didn't ask for a single thing. Their only stipulation was that we take our washer and dryer with us because they don't want them. I'm extremely surprised because in my last two houses they wanted all kinds of stuff. I'm guessing it's a market thing right now??? We repaired everything we knew about before we put it on the market, but I still thought they would find something. The realtor even said this is one of the smoothest transactions he's ever experienced.

Need to work on selling more stuff now. We've made over 10k so far between FB Marketplace, Decluttr, Mercari, and the scrap metal place.

Dicey

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Re: How to save on real estate transaction costs?
« Reply #35 on: May 14, 2021, 08:18:35 AM »
Great news!

RWD

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Re: How to save on real estate transaction costs?
« Reply #36 on: May 14, 2021, 08:26:21 AM »
Inspection is complete and they didn't ask for a single thing. Their only stipulation was that we take our washer and dryer with us because they don't want them. I'm extremely surprised because in my last two houses they wanted all kinds of stuff.
The previous owners of our house left their washer/dryer which we didn't want. But I wasn't going to complain, sold them off quick and easy on Craigslist. Don't know why your buyer wouldn't want an extra hundred bucks or so for minimal effort.

Morning Glory

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Re: How to save on real estate transaction costs?
« Reply #37 on: May 14, 2021, 08:44:34 AM »
Inspection is complete and they didn't ask for a single thing. Their only stipulation was that we take our washer and dryer with us because they don't want them. I'm extremely surprised because in my last two houses they wanted all kinds of stuff.
The previous owners of our house left their washer/dryer which we didn't want. But I wasn't going to complain, sold them off quick and easy on Craigslist. Don't know why your buyer wouldn't want an extra hundred bucks or so for minimal effort.

No idea. I guess I wasted my time hooking up the dryer and checking to see if it worked before the inspection. I have a friend who can use them so nbd.

I wanted to get rid of the dryer ages ago and put a big sink in that spot but my husband talked me into keeping it because we would need one to sell the house.
« Last Edit: May 14, 2021, 08:46:54 AM by Morning Glory »

robartsd

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Re: How to save on real estate transaction costs?
« Reply #38 on: May 14, 2021, 01:57:41 PM »
I wanted to get rid of the dryer ages ago and put a big sink in that spot but my husband talked me into keeping it because we would need one to sell the house.
If you had done this, the lack of an obvious place to put the dryer could have been a problem. They didn't want YOUR washer and dryer, but that does not mean they don't want a washer and dryer in that location.