Selling a home and moving to a new one can be exciting but it’s usually not a walk in the park. Aside from the stress of moving, the process can be expensive, both in terms of time and money. As a seller, there are real estate commissions to pay on both sides and closing costs. In addition, a buyer may see something they don’t like: costly repairs also add to the cost of selling a home. If overpriced or improperly marketed, the home may take time to sell and you may have to settle for a lower sales price. But are there cheaper options? Yes. This article will show you the cheapest way to sell a house.
Related: 15 Tips for Selling Your Home in 2021
Is It Cheaper to Sell a House Without a Realtor?
The biggest expense for most home sellers is the realtor’s commission – 5 to 6% of your listing price. For example, if your home sells for $350,000, you might pay at least $17,500 in commissions.
This commission is split between the seller’s agent and the buyer’s agent, but usually, the seller bears all the costs. In some cases, it is possible to negotiate a lower commission. For example, in a strong market where prices tend to rise and homes move quickly, real estate agents may be willing to take a commission that is less than 5% of the sales price.
Homeowners can waive the agent’s commission entirely by deciding to sell their homes for sale by owner (FSBO). It is then up to the homeowner to perform the duties of the agent, including listing the property, staging, interviewing and negotiating with prospects, drafting the contract, and processing the transfer of title. These responsibilities are not a cakewalk and this is why only 8% of homes sold in America are for sale by owner.
The real estate agent’s commission is the major expense associated with selling a home but it’s far from being the only one. Other expenses include:
Costs of repairs and renovations: Repairs can range from minor cosmetic issues such as peeling paint and broken roof tiles to major structural defects and plumbing issues.
Generally, if you’re knocking down walls or adding square footage, the renovation project gets expensive fast. Structural or mechanical changes are more expensive than cosmetic ones.
Inspection fees: A pre-sale home inspection allows you to find out any potential problems before the seller’s inspector comes around to check. It generally costs about $400 or more but may be well worth the investment. An inspection report can also help with attracting prospective buyers.
Staging costs: Staging increases your home’s appeal and, according to a profile by the National Association of Realtors, staging can increase the value of your property and help you get better offers. If you need help sprucing up your house, you may want to hire a professional stager. Usually, their rates are determined by the size and number of rooms in the house and the amount of work involved, which results in costs that range in the thousands. In the event you’re not willing to spend much on staging, a fresh coat of paint, brand-new flooring, and flower pots strategically placed will suffice.
Closing costs: Closing costs for a real estate transaction include homeowner’s association fees, attorney’s fees, escrow fees, brokerage fees, title insurance, and property taxes. It is important to note that, in a buyer’s market, you may also be responsible for some of your buyer’s closing costs. Closing costs typically range from 2 to 4 percent of the sales price.
What Are Alternative Ways to Sell Your House?
Flat fee agents: As the name implies, flat fee real estate agents charge a specified flat rate for selling your home, rather than the usual percentage commission. Working with a flat fee agent can save you a lot of money, especially if your home is on the expensive side.
While listing with a flat fee agent is probably the cheapest way to sell a house, it has its own drawbacks. Usually, they won’t perform all the functions of a full-service real estate agent. However, it may be possible to find flat fee companies offering competitive prices without trading off major services.
For sale by owner: Listing your home as FSBO means that you will be responsible for marketing, showing, and negotiating. FSBO sellers have two options: selling alone or with partial assistance.
Selling alone involves using online platforms like Craigslist, Zillow, Facebook, militarybyowner.com, and a host of other sites to assist you in selling the home yourself. With partial assistance, you employ the services of a flat fee listing agency to put your home on the Multiple Listing Service (MLS), where it is accessible by agents across the state and country. You then pay a commission to the buyer’s agent when she brings you a buyer, paying much less than you otherwise would have.
Sell to an investor: Selling to an investor is one of the fastest, if not the fastest way to sell a house. You can close the deal in two weeks or less. It allows you to save on renovation costs and can be a quick way to make fast cash but it comes with the drawback of a steep discount on the sale price.
You should ideally only consider selling to an investor if your home is in a critical state of disrepair, you just inherited it, or to avoid foreclosure. And if you must sell to an investor, make sure all your bases are covered by hiring a realtor and an attorney before closing the deal.
Owner financing: With owner financing, you sell your home to a buyer by providing a loan that the buyer then has to pay back in monthly mortgage payments. Instead of your buyer using a traditional mortgage provider, you provide the loan.
The house serves as collateral in case of default. To provide owner financing, the house must be yours completely, free and clear (that is, no mortgage left to be cleared). This option has the advantage of getting you a larger down payment and a relatively high interest rate.
It is well suited for homes priced less than $40,000, since banks don’t give loans below that figure. Just like with any other type of loan, it is important to check the creditworthiness of the buyer before closing any deal. A mortgage loan originator can do that, as well as help smoothen the process.
The Mashvisor Property Marketplace: Mashvisor offers one of the most affordable and convenient ways to sell a property. By listing your home on the marketplace, you will have quick and immediate access to a large base of potential buyers. Not only is listing on the property marketplace completely free of charge, but sellers will also be able to communicate with potential buyers through the platform and narrow their options down to the most serious buyer.
Related: Mashvisor Property Marketplace: A Guide for Real Estate Investors
The Cheapest Way to Sell Your House
Foregoing a realtor might save you money but the truly cheapest way to sell your home is the one that takes your experience and your property’s specifics into consideration. If you’re a savvy seller with a high-value home, you might be able to forego a realtor entirely and sell your home without a lot of assistance. If you’re just starting out or your property is in a slow market, then you want to work with a realtor, even if it is a flat-fee agent.
In a buyer’s market, pricing your property competitively can be the cheapest way to sell a home – as you can sell both on time and still make a decent profit. With the number of options available to buyers in an oversaturated market, your only option, short of patiently waiting for a downturn, is to offer a lower price than other homes on the market. This will probably hurt your bottom line but may encourage buyers to close the deal, even if the home needs some repairs.
Related: How to Sell a Home During COVID-19 Lockdown
Conclusion
Some of these ways to sell a house may not be right for you. A full-service realtor may not be crucial to selling your real estate property, depending on your level of experience, the type of market your home is in, and the time and effort you’re willing to put in. But you may find it hard to replace the expertise, experience, and negotiation skills of a professional realtor. Your best bet when looking for the cheapest way to sell a house is to go with a flat-fee agent, allowing you to pay less without foregoing a realtor entirely. Ready to list a home for sale? Check out this checklist for home sellers.
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