WatchHi fellow Patrick.net users,
I recently was introduced to Patrick.net from a coworker. I'd like to get your advice or tips on selling my house -- preferably without using a realtor.
As far as some basic calculation, I totally agree with Patrick (the founder of this website).
- I realize I was foolish for not selling the house in 2006/2007, because otherwise I would have sit on some extra cash.
- I could have just rented a 2 bedroom apartment and saved a lot of money.
- After calculating the property taxes (about $7100 per year), maintenance of owning the house v.s. renting , I concluded that I would have come ahead renting as opposed to owning. Even counting in the tax deductions, it still dawned on me that renting is much better financially.
- I could have just easily put the money in conservative mutual fund (such as PPRFX - Permanent Portfolio) and get about 7% annual return and still come ahead.
- I don't care so much about pride of "home ownership" because financially it just don't make much sense. Unless of course, the house price continues to appreciate.
I am interested in selling my current house. I recently lost my job (laid off) as a software engineer in a small startup company while taking the Paid Family Leave for taking care of my child.
(I was there for less than one year, so not covered for job protection under FMLA -- it sucks)
After reading here, I am interested in selling my house without using a realtor (r) to save about 6 % commission (which is a LOT).
Some details about the house:
- House is located in town of South San Francisco, California (zip code 94080)
- This is my first home
- All mortgage has been paid, so I have no mortgage
- Bought the single family house in 1998 for $490,000
- Zillow.com now estimates the house price at $785,000
(In 2006, the peak graph at Zillow said it was worth $1.1 million)
- 2600 Sq feet ( 6 bedrooms, 3 Bathrooms, 3 car garage)
- House was built in 1998
- The house is in generally good condition (family of three), with the exception of some spots on carpet (kids's spill), cracking vinyl floor in bathroom, and some marks on the wall paint.
As I am currently out of job now, I have plenty of time . I figure that if I could save 3-6% of the selling price, that's easily thousands of dollars.
Does anyone have any advice on how to sell the house without a realtor?
(1). How to sell the house without a realtor
(2). Estimated net proceeds of the sale that I will receive (after any commissions, transfer tax, etc) - what are the fees involved
(3). Timeframe - How long it will take to sell the home (assuming it is in reasonably good condition) in this market.
(4). Any other tips/advise you may have
(5). Would it make sense to rent it out? I did some calculations and it seems to me that it is not worth it, as I could put the money in conservative mutual fund.
Thanks so much for reading to this point!
Any knowledge you like to share will be greatly appreciated.
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Option 1. Use a realtor. You are not familiar with the contracts and required disclosures. This could cost you plenty down the road.
Option 2. Become a realtor yourself. You have lots of time and the broker will help you with the paperwork.
Option 3. Pay a realtor $2,000 to help you with the paperwork. It is easy to find your own buyer, but you might get a better price through the MLS.
Raw
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Sunnyvale, CA
engineer77 says
I doubt you'll do that. Good marketing has most people believing that they need a selling agent aka "buyer's agent" to purchase, although employing a real-estate lawyer for $200 an hour and perhaps an appraiser would cost them much less money. Telling them that you'd rather give them the selling agent's commission and that a lawyer with 3 years of law school will do a better job looking after their interests than an agent with 40 hours of training doesn't change that. The only other (we bought one without) people I've met willing to buy without agents wanted a 20% discount on the property "I can't pay that much because I still need to make a profit after paying my agent" so they could flip it and turn a profit.
Assuming your area has natural traffic (agents do not like to deal with FSBOs, but can be dragged kicking and screaming into the deal by the buyers they are chauffeuring around) you can (my wife did that on two properties) save much of the 3% you'd pay a listing agent. I think it was most of $1000 each time to put it on the MLS with a lock box. Some real estate lawyers will give you a flat rate deal, $400 for up to 3 contracts or whatever. You can hire an appraiser if you're not comfortable with pricing or too emotional (the REO which sold next door does affect price).
How long this takes is entirely dependent on specifics you have not enumerated like how you'll price it, slap lipstick on that pig, and stage it . What you paid for it does not matter. What Zillow says it's worth does not matter. Only what a buyer is willing to pay matters. Generally that's close to what other buyers have paid for very similar properties. People also like to feel they're getting a bargain; so a slight discount from a comparable property that is inconsequential when you actually consider the math can be useful.
There are probably other nearby properties for similar prices. Most buyers will prefer them if they are in _move in condition_. A $5K paint allowance, $15K for floors (or whatever the current local labor and materials costs run for appropriate competitive grades of materials and workmanship), etc. will not get them past that. We've had good luck (shortest time on market, highest sales price in the development (that's _not_ the same as highest listing price. Priced right you'll sell soon while they languish for months)) fixing 3 homes up so they were just a tiny bit nicer than other comparable properties. If the place next door for about the same price has obvious rental grade carpet and a few cracked electrical wall plates, we go up just one notch and make sure more details are covered like new electrical outlet wall plates. We ignore high-priced outliers where the finish costs are out of line with the comparable prices. Hire handy-people for small things that stand out (sagging particle board cabinet bottom beneath a sink drain, unlevel flagstone walkway, etc.). He/she/they may do jobs for 1/4 what a contractor gets and do it better.
That's not move-in condition. You probably need to replace the carpet (no spots, pile not permanently flat), new vinyl in the bathroom, and new paint (no marks, looks fresh) if you want to sell soon at 'market value.' (a 25% discount for an as-is sale will also move it about as fast but you don't want to do that when you can restore for a fraction of that). There's a lot of latitude on cost there - you use neutral close-outs for flooring if you can get enough and might hire a college kid who sprays houses in the summer instead of a brush and roller crew - or do it yourself since you have time. If similar homes have laminate floors there you might go half a notch better with an inexpensive engineered product. If other bathrooms are close you might do them at the same time.
You also need to get rid of your junk. You need just enough (staying neutral) to suggest how potential buyers can live in an area but nothing occupying the space they're looking to put their junk. Obviously that is easier if you're not living there.
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Would it make sense to rent it out? I did some calculations and it seems to me that it is not worth it, as I could put the money in conservative mutual fund.
What kind of return did you forecast for the mutual fund? I own PREIX, a fund similar to yours, and it still hasn't returned to the price I paid for it in 2008. (It's getting close, though.) Give me the safe return of renting out RE any time.
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Menlo Park, CA
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engineer77 says
Did you try my calculator?
http://patrick.net/housing/calculator.php
It's not super-accurate, but it gives you a good idea.
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Sunnyvale, CA
Raw says
A real estate lawyer is. He needed 3 years of training to start not 40 hours. He may want $200/hour but take a $400 flat fee for up to 3 contracts both of which are _much_ less expensive than what the realtor will take.
A lawyer will handle your paper work for 1/5 of that (In Seattle, WA and Boulder, CO circa 2005-2007. Bay area prices today may be a bit higher.)
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Saint George, UT
elliemae's website
If the market is as great as "they" say, you'll sell just fine without paying a realtor a helluva lot of money to place an ad and sit back & wait.
I sold by owner - and at least in NV & Ut, you sign the contract (as is) which you can download online and bring it to a title company that actually does all the work - they even told me the disclosures I needed. If calif is more complicated, hire an attorney.
I placed an ad in my newspaper - it was a "special" with one month fairly cheap. I ran at the beginning of the month, and then right before the special deal expired. I also put fliers at the end of my driveway in a waterproof envelope, made 'em up myself. I sold quickly and saved the $$$ and hassel of dealing with realtors. My sale went with few hitches - and they were hitches that I'd have had with or without a realtor.
My buyer's had a realtor for their place they were selling and he called me right before closing - tried to get me to add a commission to him. He even told me he had a large house payment and that I should consider that in my answer. I mentioned that I'd never met him before nor had I ever spoken with him - and that he should never f'in call me again. The realtor is now (not) selling cars. Lives in an apartment.
Realtors are completely useless.
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elliemae says
Typical asshole. Probably a criminal solicitation. Within the statute of limitations to make a criminal referral? Scum like this need to be behind bars, providing entertainment to neonazi serial killers or in hell with their satanic majesty.
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You get rid of the morally corrupt middle men you'll make a lot more money. We did not sell ourselves, but we bought from the owner directly, because dealing with realtors or whatever they called themselves was just annoyance and a hassle... it's a lot of bull**** to sieve through.
Put your listing up on a public MLS and you'll do fine in advertising it, that's free. Back in the days there weren't places like Redfin or Trulia, Patrick.net... you had to go through a realtor or rely on street signs to market your property. And since realtors were always middle men who got the first look, they got the good deals for themselves, and left the rest for the public.
Today just submit your listing online. I think folks don't really want to deal with realtors, we certainly didn't. These middle men are just an annoying bunch.
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Monterey, CA
drew_eckhardt says
I second something like this or using a flat fee realtor. You'll usually end up paying about 3-4% total, and you get listed on the MLS.
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46 male
Menlo Park, CA
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Feel free to list your house here on the forum. Just start a new thread.
It's free, but the catch is that people could comment on your house and say something you don't like.
If you don't want comments, you could become a Patrick.net Premium member and be able to moderate comments on your own threads.
http://www.patrick.net/subscribe.php
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engineer77 says
2 options : FSBO.com or RE lawyer - http://mikehoganlaw.com/owner_assistance.html.
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Mountain View, CA
Thanks everyone for the advice.
FortWayne, I thought listing on MLS is not free. Could you please clarify here?
FortWayne says
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Mountain View, CA
Thanks for pointing this out. This seems like a good option.
Let me know if you have any recommendation on where to look. Could we negotiate this with any realtor?
ptiemann says
joshuatrio says
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Mountain View, CA
Thanks, I got the idea.
I think I need to work on:
* Replace with new carpet
* Replace the cracked vinyl in the bathroom
* Fresh paint job
You're correct -- I've just been too complacent; it is quite tough to get work done on the house and get rid of the junk - especially since I have a little baby (5 months old).
ptiemann says
drew_eckhardt says
drew_eckhardt says
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Mountain View, CA
ptiemann, thanks for the info. Now, if I use an attorney, what are the ways that I can market the house?
I think the following ideas are thrown in this thread:
* Pay for posting in MLS database
* Post an ad in local newspaper
* Put some flyers outside the house
* Put in Craigslist, Patrick.net, etc
Now if the buyer is using a realtor, I still need to fork 3% for the buyer's agent, correct?
This is the first time I am selling a house, so I am quite clueless.
ptiemann says
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Mountain View, CA
I also heard from a friend that closing costs can surprisingly be very expensive and can add up to a whole lot of cash.
- Could anyone tell me is there a standardized closing cost?
- Is there a way to negotiate or reduce the closing costs associated with selling a house?
- Is there something I need to be aware of so I could avoid being scammed in the closing costs or other transaction fees?
Closing costs include:
* Broker/Realtor commissions (buyer agent & seller agent commission)
* Recorded fee to release mortgage
* Courier fee
* title insurance fee
* Transfer tax
* Attorney's fee
* Home inspection fee
* Etc...
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Mountain View, CA
I think getting a return of 7% - 10%, while maintaining the principal amount ( no volatility), is good already. I lost money on stocks and realize that the traditional advice of stocks and bonds are not safe enough.
This maybe the subject of another thread, but recently a friend introduced me to this concept (introduced by Harry Browne) and I find it very interesting. Like Patrick.net, it is a bit contrarian.
It is detailed here in this guy's blog:
http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/
Michinaga says
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Mountain View, CA
Thanks David. How much should I pay for discount brokerage? Is it roughly going to be 1% ?
David Losh says
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Monterey, CA
engineer77 says
You can try: http://www.creekviewrealty.com/ - it looks scammy, but it's not. We used these guys in Texas.... They may only serve Texas, but they have a ton of other resources for other states if you just give them a call.
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Suggestion. Talk to an independant mortgage broker--many will assist in prequalifying and hooking you up with a network of folks in the the industry, i.e., title company, good appraiser and inspectors--the folks you MUST HAVE to complete a sucessful transaction.
Keep in mind: if you do show the house, DON'T TELL THE HOME LOOKERS that you are the owner. Say you work for the owner, or are helping the owner. Buyers get wierd, uptight for some reason.
This is totally doable. Do it!
You do not need MLS--that is BS they tell you to make you doubt yourself. I have done FSBO several times personally, and will again in the future.
That said, call a independent mortgage broker.
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Saint George, UT
elliemae's website
8675309 Jenny says
Or you can speak to a title company directly. you need a mortgage broker if you are buying, not selling. The title company can tell you the associated fees - and what is customary for the seller to pay. Some areas, the buyer pays the appraisal, others it's the seller.
I did use a mortgage broker to break down sales costs for potential buyers - amounts paid with 5% down, 10% down, 20% down... put this info on the back of my flyer.
I had no problem telling prospective buyers that I was the owner.
Remember that the mls is one of the tools that realtor (tools themselves) use to find houses. Another tool they use is to look in the paper and call fsbo's constantly until they cave in & sign with them to get them to shut the hell up.
There are so many places to list your home, the mls is one of them. Don't let 'em tell you any different.