By Kailee Macatee
Seller: 6% commissions! That is ridiculous! I’ll just sell the home myself.
Listing Agent: While I understand that 6% on your sales price of $450,000 adds up to $27,000, half of that goes to a buyer’s agent who brings us a buyer and gets us to the closing table.
Seller: So you want me to pay $13,500 to you and $13,500 to a buyer’s agent – that is still a ridiculous number!
Listing Agent: Well, did you a pay an agent when you bought this house?
Seller: Well, no. The seller paid it.
LA: Okay, so you received a free service. It looks like you bought your house for $350,000 so your agent probably made around $10,500… that’s a $3,000 difference in commissions paid to your agent (that you didn’t have to pay) and what you will be passing onto a buyer’s agent. How about I give you a $3,000 concession to cover the difference?
Seller: $24,000 is still too much! I will just do it myself.
LA: Okay, how are you going to find a qualified buyer?
Seller: I will take pictures on my iPhone and post it online
LA: Pictures on your iPhone typically don’t showcase a home very well, I would pay a professional photographer. That typically costs around $300. I’d also do some staging on your house myself. I don’t charge extra but a stager can run from $500-$2,500.
Seller: $800 isn’t bad compared to the $24k I was going to pay agents!
LA: So what online sites were you thinking?
Seller: Probably like Zillow and Homes.com
LA: Do you think qualified buyers are searching Zillow? Normally their buyer’s agents set them up on an MLS search. And a buyer’s agent is going to check with a lender to make sure their buyers can afford your house. Zillow has a lot of scammers on it so be careful!
Seller: Well maybe your right… I’ll just get it on the MLS myself!
LA: Only agents can post on MLS. But you could get your license and do it yourself. It takes about 2-6 months to complete your classes (while working your day job). The classes cost around $1,000 and then you have to pay $200 to do an application, and $50 to take the state and national exam. Another $50 to get fingerprinted. Once you pass your test, you need to find a brokerage and pay their brokerage fees. Those range but I pay around $100 per month. Oh, and don’t forget your realtor board fees! Onboarding is around $650 and then you pay dues around $150.
Seller: That seems like a lot of time, energy, and money. It’s like $3,000 just to get MLS access?
LA: Yes, but once you get on MLS you will need to learn it. It’s pretty complicated to get a listing uploaded so you will probably want to take a few classes to learn. There are some “limited service” brokerages that will post your listing for 1% commission… so $4,500. But they only post it on the MLS. You do everything else.
Seller: That’s what I will do then! Pay $4,500 and save $18,700
LA: Well, not so fast. You may be saving money but how are you going to handle showings? Don’t you work pretty long hours at your job?
Seller: Well, I could do them in the evenings and on the weekends.
LA: Your neighborhood’s average days on market is 54 days… that’s a lot of weekends and evenings. Plus, don’t your kids have a lot of extracurriculars? You’d really be missing out on those.
Seller: hmmmm… that’s a good point. I’ll just get one of those lockboxes.
LA: Lockboxes will run you about $50 for a combo to $150 for a supra depending on how much security you want for your family. You also have to pay monthly for a supra. Oh and don’t forget a sign for your yard. I use a reflective sign with all of my contact information on it but I’m sure a “For Sale by owner” sign will do the trick for you.
Seller: Okay so I let buyer’s agents show their buyers themselves. Still saving $18,500!
LA: Well if buyer’s agents are showing their buyer and writing offers, who is going to pay them?
Seller: The buyer can pay them!
LA: A lot of buyers don’t have the cash to pay their agents their earned commissions. To offset this, they may have to offer less on your house or ask for a concession.
Seller: Fine… I’ll pay a buyer’s agent 2%. That’s $9,000 so I’m still saving $9,500 doing it myself!
LA: Okay, so you have an offer on your house from the buyer’s agent… what would you do next?
Seller: I guess read it and sign it?
LA: Being unrepresented, you may want to consult an attorney first to make sure you fully understand the contract. You also need to be aware of your obligations in the contract. Did you know that there are over 33 buyer “outs” in the Texas contract. I’d get to studying up on your real estate contract knowledge!
Seller: Okay, so a few hundred dollars or a few sleepless nights. I’d still be saving a lot of money!
LA: Well after the buyer’s inspection, they will probably ask for repairs. What do you do then?
Seller: Tell them no!
LA: They might terminate under their option period and then you have to go back on the market and start showings again.
Seller: uhhh, then maybe tell them yes?
LA: Having an agent who understands an inspection report, knows how much repairs cost, and can negotiate with a buyer’s agent goes a long way. I typically save my clients at least $1,500 during repair negotiations. I also have a list of vendors who give me their best pricing to complete the repairs. I give my vendors a lot of business, so they are able to discount pricing for my clients. Looking at your home, this would probably save you $3,000.
Seller: okay, so even if I lose like $4,500 on repairs. I would still be saving $4,500!
LA: Mhmm, unless in the contract you didn’t negotiate very well and now you have to buy a new survey for $500, title policy for $2,700, all of your HOA documents for $500, a buyer’s home warranty for $700… that leaves you with $100 in savings. Not to mention your time, energy, stress, and potentially setting yourself up for a lawsuit. This is your biggest financial investment that you have made… Why not use an expert?