Brokers are Ditched by Homeowners
Why Settle for Less? Homeowners Excel at DIY Real Estate Deals
In anticipation of saving thousands in commissions, many homeowners are selling their homes on their own, bolstered by the housing recovery.
Jon LaRosa sold his condo on his own because of the hot housing market in Cambridge, Mass. In late May, the 34-year-old freelancer listed the house on ForSaleByOwner.com for $429,000 and held an open house.
“I figured that even if I sold it for $5,000 less, I would still make a profit,” he said.
Over 100 people visited the place within the next week or so. By mid-July, LaRosa had received 7 offers and had sold for $450,000.
The buyer’s agent only charged LaRosa a 2% commission – of $9,000 – but LaRosa got much more than he asked for. The commission he would have paid if he had a broker would have been roughly $22,500.
A typical broker commission ranges from 5% to 6% of the sale price, or about $10,000 to $12,000 for a $200,000 sale.
A listing agent, also known as a seller’s agent, and a brokerage work together to split the commission. The agents are paid to list the home on the Multiple Listing Service so that agents representing buyers can see it and make an offer. Open houses are also hosted by them, and they assist with negotiations. It is the buyer’s agent’s and their brokerage’s responsibility to pay the other half of the commission.
It seems to me that the pay structure is out of whack,” LaRosa says. “I don’t think agents work as hard as $22,500.”
By providing sellers with information such as comparable sales and neighborhood data, these sites can help them price and market their homes more effectively. In addition to posting photos and descriptions online, home sellers can reach a much wider audience.
Homes have become more widely available, thanks to Zillow because it has become the consumer multiple listing service.
Katelyn Stanley listed her Indianapolis home for $149,900 on Craigslist and Zillow in early July. In a matter of days, she had shown the property to three prospective buyers, and on July 20, she accepted the full asking price from one of them. Sellers claim they prefer to handle the deal on their own as it gives them more control. Brent and Tara Anderson were not in a hurry to sell their $500K three-bedroom Dallas home. It is common for real estate agents to take a lower price for a quick sale, but that would be very expensive for me.
Home sales without real estate brokers on campus were 5.9% to 7.7% less than those with brokers. As a result, the National Association of Realtors maintains that homes usually sell for much more when they are sold through an agent.
The couple sold the house in a week despite not wanting to rush the deal, saving a little more than $14,000 in commissions.
We have no experience with selling, but we thought it would make sense. We could give the money away or pocket it.