For Sale By Owner re house?
 

Sooner or later we (wife and I) will have to sell the house we're living in. We're living with mum in her house and she's not getting any younger.
I had my first chat with a real estate agent a couple of days ago just to ask some questions; I've never had to sell a property before and I have no idea about selling a house.

I was somewhat surprised at the commission they charge. I didn't ask if the commission was negotiable but something irked me after the chat: I'm suggesting the work to be done is the same regardless if the house is on the market for $500,000 or $1,000,000 and yet given the fee is commission based the agent gets approximately twice as much for selling the more expensive house.

This lead me to For Sale By Owner. Sure, there is more work to be done but it would seem that it is possible to save tens of thousands of dollars. Of course an agent would say they can get a higher price but that is conjecture.

Can anyone give me some tips, thoughts, stories about selling a house?

Thanks.

@humfrz is a real estate guy in the US. which means that either he's still sleeping (HA!), or he's staying well away from this thread because you're in a different country...

according to google, australian real estate commissions are about the same as american commissions, so while it seems a little crazy, it is a relatively well established pricing scheme.

anyways, my parents did try to sell one of 2 of their rental properties through BuyOwner.com. it was in a less desirable area, and priced above most of the other houses nearby because it was the only one nearby that'd been fully remodeled. it never sold, they're back to renting it currently. cost too much to leave on the market vacant with minimal interest.

their experience with the service for the beginning part was mostly painless. they signed up, buy owner sent out a professional photographer that pictured every room with a 360 degree camera for a virtual walkthrough--i believe there's an option for you to upload your own shots as well to save the fee, but they were trying to show how much nicer the house was from the others.

it doesn't seem like most buy owner listings show up in the typical real estate listings, so it's less obvious to those that might be looking. for the most part, all the fees come out of your(sellers) pocket, so you'll likely still have to deal with a buying agent no matter what. also important is that you somewhat become the agent, so advertising and making sure people know its available falls on you, as well as fielding all the stupid realtor questions. basically, you need a half day free all the time to do it really well...

most buyers(myself included), use agents to sort through all the available listings, because the agents play games where most houses they list aren't publicly viewable on real estate sites until AFTER the first 15 days or something. in my area, offers are usually made and accepted within the first 24 hours a listing goes live to the other agents (but not public online), meaning even looking without an agent dramatically shrinks the available pool of listings to those already picked over and rejected by everyone else.

my parents did just successfully sell a different rental property they had in another town, but with an agent this time. took about a week to the first offer. the situation was very similar, nicely remodeled, less desirable part of town.. they got about half they wanted for it due to all those factors, but it did sell(it was costing more to attempt to rent, and among other factors, it was costing my dad stress with his diabetes as well).

i don't believe that particular agent 'sold' it any better, but getting access to the agent listings did make a huge difference in terms of getting people to see it. overall, i believe they had nearly nearly 20-30 parties walk through the house, where the buy owner house, i don't believe topped 10 parties that even called on it.

so my opinion is that yes, it sucks to pay the agent fees, but at least in the states, there are significant advantages in marketing and hassle, even if i admit that some of those factors are very thinly-veiled legal law manipulations.

Yaaaannnnnn…..OK, I'm awake.

Yes, it's Saturday so I slept in. - :)

As soundman98 eluded to, I'm reluctant to offer any specific advice because I know nothing of your market.

However, this is what I suggest. Interview at least three real estate agents from three different reputable agencies in your area.

Ask them to give you an estimate of what they feel your house would sell for and what the total commission would be.

Pick the agent that you feel most comfortable with.

Yes, I am advising you to sell through real estate company. I was a real estate broker for 10 years and I would NOT consider selling my own house as a FSBO (For Sale By Owner).

Why not? Because their are just too many damn things that can make a sale go sideways, that you are not aware of.

:popcorn:


humfrz

In the states, commission can be negotiated, sort of. We bought our current house in August 2019, the seller was a good friend of the family so we were considerably more trustworthy of the seller. His real-estate agent on the other hand, a little sketchy, but the owner knew her from somewhere (relative of a friend or something). The agent made a deal with the seller, if you can find a buyer (us) who is willing to come in without their own agent, she will only charge the standard 3% commission, since usually both buyer and sellers have agents, and they each get 3% (6% total).


We wanted to buy the house before it went to market. There were other people who out-bid us, but their offers fell through. The realtor got greedy because she thought the house could sell for a lot more, so she guilted the owner into listing the house, doing two open houses (Saturday and Sunday back-to-back). Bunch more offers, but all of them fell through. Owner finally kicked back and said "ROFL and his wife wanted my house from day one as-is, do whatever you have to do to sell it to them."


His realtor was a major PITA. She was always trying to push push push a quick sale. We signed a contract, but then she brought in another buyer in parallel "in case our offer fell through." These other people somehow had their bank assessor come to the house before our bank assessor came to inspect the house (real shady business). His realtor was urgently trying to sell his house to these other people! He was starting to sign the final papers, when he noticed that our names weren't anywhere in the final contract. Needless to say, our bank's lawyers straightened this realtor out real quick. She lost her license after our sale.


So, if you're going to use a realtor, do your homework first. Ad placement is where a realtor is helpful. If you have a beautiful house for sale, I doubt you will need a realtor's help selling it. You will just need real-estate lawyers. This is an unavoidable cost. The lawyers will order a survey of the land, basically making sure what you're selling is actually yours to sell.


Don't include any of the appliances in the listing, you can use these as bargaining chips if the buyer tries to counter-offer. Are you willing to make repairs if the buyer requests them, or are you willing to lower the selling price? All topics you'll have to think about. Realtor can do that for you... but, if you value 3% of (let's say $1M), are you worth 3%? That's like a brand new BRZ!

Realtors are good because they can have a handful of clients looking for your house, so they can make a sale fast for a reasonable amount of money. They can also help you stage your home correctly so you can get a little more money. They aren't going to try to get the absolute most money, because an extra $20k isn't much to them when they are only getting 3% or so.


Also see if you can find someone separate to give you an idea of your houses value, and if you can find a good home inspector to make sure there is nothing wrong with your house, so you know if someone says something needs fixing you know if they are truthful or lying assholes.


Humfrz has the correct idea. Check out realtors web pages to make sure they are selling houses similar to yours as well. You don't want someone selling starter homes or mansions trying to sell your house if it isn't one of those.

Problem is a lot of house buyers have a realtor helping them to find a house and no realtor will even mention your place since there is no commission in it for them. In a hot market it could be not that bad though.

They always get a commission. If you don't have a realtor but the buyer does than the buyer's realtor will get at minimum half the usual commission, but usually since the buyer is paying anyways they will take it all.

If you are selling and the buyer is using a bank loan, just go with a realtor for all the reasons @humfrz has mentioned. They know the in's and out's of the process.

We have bought a lot of investment properties without a realtor, but they have all been land sales contract, no bank involved. But you are opening up to quite a bit of liability doing that.

I've always been so curious about this. Let's simplify the equation as much as possible and pretend my house is fully paid for and I have the deed in hand. I have a buyer who wants the house and we agree on a price. We meet at my bank to facilitate the fund transfer and sign over the deed ( I don't actually know how the deed transfer works but guess I could hire a real estate attorney for an hour to handle that).

To me it seems so simple. What could go wrong?

How is the buyer paying in this scenario?

my experience with home inspectors is that all of them will always find something. some of those things are to justify their position.

if you know any general contractors, try asking them to come by to take a look at the house. they'll generally be more knowledgeable with the current codes and requirements

That would be a unusually straightforward real estate transaction.

So, you the seller, have the deed to the property. How is the buyer to be certain that the deed (the title) is free and clear (no encumbrances or liens on the property) without a title search by a title company?

Without an home inspection by a certified home inspector, how is the buyer to be certain that safety issues or code violations do not exist on the property?

If the buyer hasn't received a "property disclosure" form from the seller, there my be hidden material defects in the property that aren't readily apparent.

How can the buyer be sure that their are no back taxes due?

Who will handle the utilities transfers?

If earnest money is involved, who will hold the earnest money.

OK, now, you as the seller.

IF ….. ?? ... the buyer is going to pay cash, do you have "proof of funds" that the buyer actually has the cash?

When do you actually "sign over" the title and give it to the buyer, during the funding/funds verification process?

The property won't transfer until the title is filed with the county (in most places in the US), who and when will that be done?

Now, mr seller, IF the buyer is going to finance the property, THAT opens up a whole new set of things that could go wrong with your example of a simplified transaction.

Too many for me to go into here. - :eyebulge:

Oh yes, I could tell real estate transfer horror stories all night long - :iono:

Wanna hear about the time this kid pulled a gun on me, when I was representing FHLMC, repossessing a property he was using as a meth lab?

Oh, I will always recommend the services of a real estate attorney or a licensed real estate broker/agent to represent you in buying or selling properties.


humfrz - retired

TLDR: could it be done?

yes.

are all of us retired and have way too much time on our hands to deal with it?

no.

My thoughts so far.

A solicitor is mandatory.

In the state where I live if one is selling a house then it is a requirement that Building, Pest and Energy Rating inspection is carried out.

A Real Estate Agency can not legally give a valuation. They can only give appraisals. One has to used a certified valuer to get a valuation.

I have been given a name who is a one person real estate agent whose fees are supposedly march less than big names in town. I am yet to have a chat.

This website is the largest FSBO site in Australia. I am yet to have a chat with them.
https://www.forsalebyowner.com.au/
From their website 1174 for sale, 672 sold over the preceding 12 months.

And yeah, I will have plenty of time on my hands.

I am still pondering the situation. I suspect I will not be able to make a completely rational decision. The thing that irks me the most is the real estate agent getting more money for selling more expensive houses when the work they do is the same regardless of sell price.

Both can be useful. And no they won't always find something if nothing is wrong. And they would be liable if they missed something huge. It depends on the location. Where I live, many houses have massive foundation issues, because basements are not common and the ground can easily be shift and crack the foundation and the house. Sometimes these issues cannot be seen by normal people. No one in their right mind would buy a house in this market without paying someone to make sure the house is sound.




The work they do is not the same. Just like anything else, the more something is worth the more little extras are needed to get people to be interested. Someone selling million dollar plus mansions is going to treat everyone far differently than someone selling starter homes. Open houses are going to be totally different. The staging and presentation of your house will be totally different. The realtor's clientele will be totally different.


It's the exact same thing as if you were going to buy a Bentley compared to walking into a Toyota dealership. Totally different experience in most ways.

We bought our first house from my uncle (who recently inherited it), no realtors on either side. We were both going in blind, so 100% of the sale went to him. Still need real-estate lawyers to make it official. Good lawyers will walk you through the process, just know that they charge their fees every second they talk to you.

If you can swing it, family/friends/friends of friends are easy potential customers. Free advertising.

Thanks again for taking the time to respond. It's an interesting topic to me but you don't have to respond to all of my notes... This is all just a curiosity for me.

You presume a lot of things. Say the buyer doesn't transfer utilities and you have unpaid bills now and debt collectors calling. Things like issues/defects you assume are buyers responsibility, maybe they are maybe they aren't. They could claim that by not giving them a property disclosure you knowingly withheld critical issues. There are many legal unknowns to people who don't specialize in things and even if you are correct that doesn't mean people can't try and sue you for it. Having a licensed professional helps limit liability imo.

As Finch said!
Most (if not all) of your "that is their problem" notes could very, very quickly turn into your problem if they find an issue and you haven't covered your ass appropriately.
It isn't like you are selling a used X box!

A lot of the detail that @humfrz pointed out are usually required for the bank to loan the money to the buyer. So if you accept the offer it does become your problem.

It is not how they do their work, it is the amount of time it takes. Does it take twice as long to sell a property worth twice as much?
How many hours time does it take for an agent to sell a house? I have no idea. 10 hours? 20 hours? 50?

I have only been told the commission from one agency. Their commission for a 1 million dollar sale is $30,975. For a 2 million dollar sale it is $57,975.
I don't understand the justification for the huge difference in commission.

Sure, that's the way it is, maybe has always been but I look at those numbers and it hurts my eyes.

The how also makes a difference. Normally open house costs are out of their own pocket. Maybe you need hor dourves and champagne for a house of that nature. And the amount of time could vary. You never know when the right buyer is there.

Probably partially a flat fee + % since it doesn't exactly double but is really close. And similar to what US real estate agents would charge.

If you are selling a $2million house then odds are a $57K commission isn't going to hurt much. It is how commission works. They are not on an hourly rate so how long they work means nothing.


It took our poor broker almost a year to sell our last house. It was a low value home in a down market and just nobody was interested at all. She probably spent a couple of hundred hours showing it just have to cut her commission in half to get us to take a low offer.

$57k is $57k. Sure, as a percentage it isn't much but the way I see it is still a lot of money. Is it good value? Well, that's a different kettle of herrings.


This is all new to me.

It costs money to sit on a house. We lost around 35% by the time we sold out last house. It sold for <1% less than our purchase price. The losses weren't the agent fees... Though yes, that could have been only 30% loss... Market changes and the weird spot out house ended up for prospective buyers ("too small" despite also being lower price per square than other options)

the biggest reason to have a home inspection is the liability. but i didn't say what i said without some experience. i work with a few realtors fixing what the home inspectors 'find'. usually, 1 item out of every list is something that doesn't need to be addressed. the most common, they state that the entire panel needs to be changed because "it's overloaded". they come to this conclusion by adding up all of the breaker ampacities and checking that it is less than the main breaker. it's not how breakers work at all...


reminds me of a good story that wasn't more than a year ago!

so my sister and her husband finally bought a house. the previous owners were quite sloppy, and used the 2 car garage for trash collection. the day before closing, they moved the entire pile of garbage to the alley for the town to pick up.

so after they closed, we all went over and looked at what it was they got themselves into. i mentioned that they needed to call the town to verify that they would need to schedule a special trash pickup for the massive pile of crap in the alley.

my sister immediately said "i'm not doing anything, it's not our crap!" to which my dad and i both started laughing, and said, "you bought the whole house! it's your name on the paperwork! like it or not, it's now YOUR pile of crap!"

Good points, there Tcoat.

There is an old saying in real estate:

"it's not a problem until it becomes a problem".

(chew on that fer ah spell)

You can write a real estate contract on the back of an envelop and have both parties sign it, on the hood of a car, at night, under a street light.

When I worked for 10 years as a real estate broker, I was quite conservative and worked under a conservative company (Coldwell Banker). Having successfully completed hundreds of real estate deals, I never once wound up in court nor brought before the real estate commission.

Only once did the manager/broker/owner have to "call me aside", and that was because I was acting a little too chummy with her cute little receptionist - :sigh:


humfrz

How long does it take a broker to sell a property?

That all depends upon the situation. I've listed and sold property within an hour and had it close in 10 days. Other properties have taken months.

A word about real estate commissions (back in the day in Washington state).

First off the commission is usually negotiable. The total commission is broken into two parts, the listing commission (which goes to the listing broker and their office) and the SOC (Selling Office Commission) which goes to the buyers agent and office. It is possible for one entity to get both commissions (by being a dual agent).

The commission split doesn't have to be equal. Nor does the commission have to be a set percent of the sale price. For example the SOC could be 3% on the first $100,000 of sale price and a different percent of the sale price over $100,000. In other words, commissions can be all over the place.


humfrz

I really can't see how that would be a problem unless management doesn't like fishing. So to speak.


Attachment 184930

something something fishing in someone else's pond...

Well, that's a shame, some properties in some markets are just a tough sell.

Maybe you outta shudda got rid of some of those old Mopar cars in your front yard, before you put it on the market - :iono:

:D


humfrz

Oh, like half the neighborhood being foreclosed? Or the next door house selling for a song because the entire second floor and basement both flooded horribly after the "owners" just walked away? Comps aren't always valid...
Our first offer would have been an 80% loss... Took a year.

On inspections... Our front stoop really was rotted out badly. But evidently changing lightbulbs is hard. And the roof, we'd have had to call in a roofer since it was too high for the inspector (sorta wish we had, as it was installed wrong and we had to replace it after it kept having sections tear off in the wind)