Private Property Sales are becoming increasingly common in today’s turbulent world of real estate. The American economy and housing market have been hit by hard times in recent years, and American citizens and homeowners are paying a price in the form of lost jobs, lost hours, lost equity, diminished home values and outright foreclosures. Home values in many major markets from coast to coast have plummeted to lows not seen in years — or decades. Terms like “foreclosure”, “forbearance”, and “short sale” are no longer periphery words used in real estate conversations but subjects of complete focus, attention and business.
While today’s low prices and low interest rates create attractive opportunities for real estate investors with capital, there’s no doubt that if you’re selling your house today you have some touch choices. You may not be in a position to sell the traditional way through your local realtor or broker.
The Traditional Realtor Sale
Let’s recap what a traditional realtor sale encompasses so we can then compare it to private property sales. First, you would ideally interview 3-5 realtor agents to make sure you are comfortable with one that understands both your individual needs (fast cash, minimum net, short sale, etc.) as well as your neighborhood. Then you sign your exclusive listing agreement and your realtor starts marketing your property through, ideally, all potential outlets to find a buyer. This includes listing the property on the local MLS (multiple listing service), posting a sign out front, advertising in the local paper and, of course, everywhere possible online: business page, social media sites (Facebook and Twitter), perhaps a YouTube video walkthrough and more.
Then if there is not immediate interest, they will hold a few open houses where stranger after stranger walk through your home with no guarantee of an offer or one that you’d consider. You might then lower your price incrementally week after week until you finally sell at market value (the market — buyers — are telling you what it’s worth via their purchase offers).
Then you pay 6% commission to your realtor (in most cases) and close in 30-45 days.
Private Property Sales
Now let’s compare this to selling your home privately. Also called a FSBO (for sale by owner), you control the entire sale process from the beginning. You decide how to market the property and who you open up your doors to. Now don’t kid yourself — this is going to be work. It’s up to YOU to get the word out about your house for sale. But you can use all the means that your realtor would. Create a nice video, put it on a YouTube channel and link to it from Facebook and Twitter. Put a sign out front that says “FSBO” and your phone number – you’ll get calls! Put an ad in the local classifieds or penny saver. Put some signs on telephone poles at busy intersections (if your county allows). Enter your data on some FSBO websites. If you hit all of these points and your house is priced reasonably, you’re sure to get some interest.
It’s completely up to you to spend however much or little money and time on your advertising. Bake some cookies and have a Sunday afternoon open house! People will come with their spouses and friends and they’ll tell their friends and so on. That’s called viral advertising! Pitch it as a “Choose your neighbor day” and invite your neighbors. They might have a friend or relative who’d love to move in next door.
When you finally have a buyer whose offer you approve of, you then you just need to arrange the closing. Talk to a local attorney or title & escrow company and they will walk you through the final stages to make the sale official and get all the proper documents recorded with the local government.
You’ll have some closing costs (unless your buyer agrees to cover them for you), but you just saved 6% and controlled the entire sale process!
Deciding How to Sell Your House
So there you have it. Option 1 is going with a realtor. It will cost you 6% and you’ll have to work with them to get the house sold — if they can sell it. Is it worth it? Well, what’s your time worth? If you have no time to spare or don’t want to put in the effort, then yes go find a quality realtor. A good one will be worth it and there are good ones out there. They might even get you more for the house than you could get yourself.
Option 2 – Private Property Sales. As stated above, you’re saving a lot of money and have complete freedom with regarding to marketing, showing the property, picking your offers and closing on your own terms. You’ll put in the hours and effort, but for the right seller it’s the way to go.
It’s a tradeoff and it’s up to you what to do.
A Third Option – Investors
There is one more option. You contact a professional real estate investor or local real estate investment company that buys houses professionally. Investors will almost always buy unrepresented, saving you realtor fees. They also have established relationships with escrow companies and can handle the closing process. And since they’re the actual buyer, they save you the time of marching strangers through your house. They will want to get a good deal on the house since they’re a business, but if you want to sell your house quickly or don’t want to sell via realtor or go through the FSBO process at all, it’s certainly worth contacting them to get an offer.
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