SELLING YOUR HOUSE (Continued page #5):
If you have the time and the talent to do those home improvements yourself,
then the do-it-yourself route is most definitely the most cost-effective way to go.
When it comes to basic tasks such as painting, wallpapering, replacing cracked
trim and old plumbing fixtures — the difference between work done by a
competent amateur and work done by a professional is usually reflected in the
turnaround time and the final cost of the project. Just be sure not to tackle
something that you cannot handle. Fixing your home up to put it on the market is
not the time to experiment. If you are not experienced, it may be worth your while
to call in a professional who can complete the task in a manner that meets your
timeline and your budget.
Larger jobs involving mechanical systems (heating, electrical, plumbing,
etc.), or work that must meet local building codes, are another story. Even if you
know exactly what you are doing—or if you are working with someone who does,
it is not a good idea to take on big jobs like these unless you are licensed to do so.
Your attempts to save a few extra bucks by doing all of the work yourself could
end up costing you in the long run. You could find yourself being held liable if
something that you worked on goes wrong after you close the sale.
HIRE A REALTOR OR GO FSBO?
Once you have decided to sell your house, one of the biggest decisions that
you will make is whether to hire a realtor or to list your house “for sale by owner”.
There are pros and cons to both scenarios, and good reasons why you might choose
either one. So, should you try to sell your house yourself? Let's take a look at some of
the specific details.
Reasons why you may choose to sell your house “For Sale By Owner”
(FSBO):
• Equity—If you haven't owned the house that you're selling for a very long
time, then, you probably have not accumulated much equity. The lower the
equity, the more a realtor's commission will cut into any profit that you might
gain from the sale of the house. If the sale will not net you enough to have
much profit left over after the realtor's commission is paid, then selling without
a realtor is your best choice.
• Marketing Budget—You can afford to list your home yourself if you have the
cash on hand to pay for advertising and listing costs. When selling without a
realtor, all expenses and up front costs such as: newspaper ads, printing costs
for flyers, MLS (multiple listing service) listing costs with Internet FSBO web
sites and lawn signs are your responsibility. While these expenses typically
add up to hundreds of dollars or more, it is still a great deal less than the
commission that you would pay to a realtor.
• Time—You have a flexible schedule that allows you the time to manage your
own showings. When you handle your own showings, you will need to be
available to take calls from prospective buyers and to show your house
whenever it is convenient for potential buyers to see it. Be available at all hours
to take calls and to schedule showings at times that are the most convenient for
your prospective buyers - and not necessarily when it is convenient for you! A
flexible schedule and a laid back attitude will make it far easier to show your
house and get it sold quickly.
Typically, a homeowner who chooses to sell without a realtor will spend between
2% and 3% of the final selling price of the house on sales-related expenses.
Advantages to selling your house with a good Realtor:
• Expertise—Take advantage of a realtor's expert knowledge, training, and
years of experience.
• Convenience—If you work with a realtor, you do not need to adjust your
schedule to make time to show your house to potential buyers. Realtors are
available to show your home at the potential home buyer's convenience.
• Accuracy—A Realtor can help you to set the right price for your home.
You will not have to do the research and legwork.
• Negotiating— Realtors can make it easy to navigate through the tangle of
legalities and paperwork; and negotiate with buyers on your behalf.
• Advice—An experienced realtor can help point out needed repairs and
spruce-ups that will make your home more attractive to a buyer, and even
make decorating suggestions that will help to sell your house faster. In
return, they take between 6% and 7% of the selling price of your house as a
commission.
The advantages of selling your home without a realtor are obvious. In today's
realty market, the realtor's typical 6% to 7% commission can amount to a healthy
chunk of change. Suppose that you are selling a house valued at $185,000, on
which you still owe $135,000. Your projected equity calculation will look like this:
$185,000 – $135,000 = $50,000
Now deduct the realtor's commission, which is typically 6%. Keep in mind that
the commission is figured against the selling price, not the equity.
$185,000 * 0.06 = $11,100 commission. That comes off your equity, which is:
$50,000 - $11,100 = $38,900 equity. Compared to the costs incurred by working
with a realtor to sell your home, the savings that you gain as a result of selling your
house on your own are a very potent incentive. Even if you include a 2% to 3% fee
for listing your home with an internet listing service, based on a selling price of
$185,000, you would still save $5,000 to $8,000 over the cost of a realtor.
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