Save an Average of $5,000 by Selling Your Home Yourself (and spend it on a financial plan)
The average American pays $12,000 in commissions every time they sell a home. The median home value in the US is around $200,000. The typical real estate fee a seller pays to sell a home is 6% of the sales price. This seems crazy to me. I have some client’s who are adamant about selling their house themselves and we decided on using a flat fee MLS service to save at least the listing commission.
Here’s are the steps we took if you are interested in pursuing this avenue.
Step 1. Get an Appraisal
Get an appraisal from an independent appraisal company (usually around $400) so that you have the information you need to complete the listing paperwork (room measurements etc) and perhaps more importantly get an estimate of price. The bank is going to require one anyway if your buyer is relying on any kind of financing and most people buy real estate with a mortgage. Appraisals, specifically if a house doesn’t appraise for the agreed upon sales price, many times will derail a sale so the appraised value is good to know up front.
If you are not a maintenance freak, get a home inspection and address the major items that come up in the inspectors report. The inspection is typically a couple of hundred dollars and repairs can be just about anything depending on the level of deferred maintenance on your home. This will make the sale process go more smoothly and you can hand the home inspection report over to the potential buyer and explain what has recently been done as a marketing tool.
Step 3. Choose a Flat Fee Listing Company
Sadly the flat fee MLS listing space seems to be populated by organizations that provide a very poor level of service to those that may actually be committing fraud by taking consumer’s money and not completing the listing process. It works like this. When you Google “Flat Fee MLS Listing” or similar you get a barrage of very similar sounding websites via ads and otherwise. Real estate is a local thing, so these websites take your information and your money and they refer you to a flat-fee local broker who you will work with to actually get your property listed.
Some things you will want to pay particular attention to include:
Cost. The main reason you list on your own is to save money. Be aware that costs to list can range from $100-$400 for the exact same listing on the MLS. Pay attention to fine print that may require an additional fee at closing. Make sure you are able to make changes to the listing after it has been posted for free or a nominal fee.
Number of Photos on MLS. Make sure you can upload at least a dozen photos. Some services offer a great price, but it's only for 1 photo - which is not useful for most properties.
Length of Listing. Get at least a six month listing and be sure that there is no charge for cancellation.
Syndication To Other Sites. The Realtor’s marketing plan includes syndication to additional sites besides the MLS often including Zillow, Trulia and the other major names. These will help with exposure.
Make Sure Your Property Is Put On the Correct MLS. A great surprise to me in this process was that there are many MLS services depending on your area. Make sure your property makes it on the relevant local MLS service or services or you are wasting your money.
Understand How Long It Will Take Until Listed. Get some sense of how long your property will take to hit the MLS after all required paperwork has been submitted.
Retain Your Right To Sell By Owner. If you end up finding a buyer, do you still have to pay a buyer’s commission? Make sure your service allows you to retain the right to sell by owner and forego any additional commission if you find the buyer.
Understand How Showing Requests Will Be Processed. When a buyer’s agent would like to setup a showing, who are they going to call? Some services will act as an intermediary to set appointments for you while others will list the owner’s contact information right on the MLS. This one is a matter of preference in a tradeoff between efficiency and privacy.
Understand the Level of Real Estate Agent Support and Extras. Some services allow you to call and consult with the flat fee listing agent on basic real estate questions while others will actually help negotiate with buyers and draw up required contracts. Some listings come with a lockbox to facilitate easy showings and yard signs to let passer’s by know your house is on the market. The important thing is to understand what level of support you require and purchase accordingly.
From my limited research, here are some places to start
The original and highly recommended service from Mike Thomson’s Blog (see link below). This is the one we chose based largely on his first hand input.
No More Agent
A highly reviewed service from readers of Mike’s Blog
Jamie Mattingly’s site. She seems to be lambasting the comment section on Mike’s Blog site, but her story is compelling and she doesn’t refer to local agents so you cut out some of the uncertainty by not having the lottery of local referrals to worry about.
Flat Fee MLS
One of the few services that didn’t generate an overwhelming number of negative reviews.
The internet is inherently slanted when it comes to negative feedback. Consumers who have had a negative experience are far more likely to take to the keyboard to tell everyone about it. So while this has to be taken with a grain of salt, more often than not, where there is smoke, there is fire. I chose to avoid the following based on the feeback.
MLS My Home.com
Ironically this was actually the service we listed with back in 2010 when attempting to sell our condo. We were pleased with the service, but it looks like not too many people have been since based on the BBB and Zillow site.
There are a multitude of disclosures that are required when listing any property for sale that include things like a statement of condition, lead paint disclosure not to mention the photos you will want to use to represent your home to potential buyers and their agents.
The three most important things when listing a home on a Flat Fee MLS Service:
1. Price – The appraisal should provide what you need. Use sites like Zillow and Realtor.com for additional comparables in your area.
2. High Quality Photos – make sure the pictures adequately represent your home and would incent buyers to take the next step which is to come out and see the place. It is probably best to spend a couple of hundred dollars and have a professional take these. However avoid those fisheye type shots that make a room look huge because if a buyer comes out expecting a spacious room and they are claustrophobic basically nobody wins.
3. Offer a comparable commission (basically a finder’s fee) on the MLS (typically 2 - 3% to be comparable to other full service listings). In a market short on supply, a buyer’s agent making 2% by selling your home is better off than making 0% selling no homes.
Times When a Full Service Realtor May Make Sense
There are times when it makes senses to call in an agent to get the job done like:
You have to leave town and can’t physically be there to coordinate showings. This would be a typical agent capacity (someone acting in your stead).
Your company is paying to relocate you in which case it is not your money being wasted on a commission and the extra effort of DIY saves you nothing.
You have more money than time and don’t want to be hassled with more calls and appointments. Hey, this is just some people’s situation. Not a bad place to be.
You are uncomfortable with technology and don’t have someone to help you with the listing process. As I said, the information submittal process is onerous.
Mike Thomson’s fantastic blog post was one of the few first hand third party accounts of this process I was able to find. https://mike-thomson.com/blog/?p=1657
Flat Fee Reviews is a site that allows people to provide feedback on services they have used. If you end up going this route, please review your provider.