This was originally published on Monday, March 16, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
The process of selling your home is not an easy one. There are many steps, documents and local agencies that you will have to work with. Not to mention local laws that you will have to follow. As a seller you can either hire a real estate professional to represent you or you can sell it as “for sale by owner.” There are pros and cons for selling through a real estate professional and selling the home yourself.
Cost — The cost is probably the number one reason most “for sale by owners” decide to sell their home on their own. When using a real estate professional, a commission will be paid on the money from the sale. Generally it is the seller who pays the commission. The commission is usually shared between the seller’s and buyer’s representative. For example, if the commission is 5 percent, the seller’s and buyer’s representative each get 2.5 percent. The percentage of the commission is generally negotiable.
Manpower — It takes a lot of work to go from getting a house ready to be sold to closing the deal. A real estate professional’s sole job is getting your house sold. If you choose not to use a professional, be prepared to take a good amount of time out of your day to run around getting documents, preparing your home, showing your home and other tasks that a real estate professional does. On the other hand, if you have that time on your side it certainly will be worth it when you don’t have to share a portion of the sale.
Knowledge — Real estate professionals must attend a certain amount of classroom hours and pass an exam. This puts them in a position of understanding the market, buyers, and the law. There is more to selling than just advertising and showing your home. Your real estate professional knows what the market is looking for, how to price your home, how to make your home appealing to buyers, and so much more. There are legal and financial risks involved in selling a home. If they are not followed properly, you may end up losing the money you saved by selling it on your own. Unless you really understand the process, having a real estate professional represent you and guide you through the process may be worth the money.
Networking — Another advantage of a real estate professional is that they are well connected with many other real estate professionals. They represent customers who are looking to purchase a home. These professionals have access to an online database called the Multiple Listing Service, MLS. This website is the number one marketing tool that will get your home noticed. As a “for sale by owner” you may have to hire a real estate professional to get your house put on the website. If you do choose to sell your house on your own, study the market and price your house accordingly. Get your house appraised so you know how much to ask for. Hire a certified appraiser who will give you an objective price. Having your home appraised will justify the price you are asking for. Under pricing your home could cost you by losing money. Think about your personal safety when showing a home. Remember it is your home and numerous strangers will be walking through it. Understand what local laws must be followed when selling a home. Not following the laws could result in hefty fines. Don’t be afraid to negotiate your price and other terms and conditions when dealing with a buyer.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.