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Profit from Real Estate

Lower Costs Mean More Money for You

(A continuation of How to Sell a House)

By - 2006

It should be obvious that having lower costs for selling a home means making more money, but this is often overlooked when sellers focus on how to get a higher price. Here are some ways to save money when selling your house.

Sell It Yourself

You might save the commission when you sell on your own. However, let me repeat a paragraph from earlier in the book:

Buying documents, and possibly paying a lawyer to review offers will be your expense. Newspaper advertising, signs for the yard, mailing out information packets to prospective buyers - it's all your expense when you sell it yourself. Then after your hard work, you may get low offers and perhaps even negotiate poorly. Honestly, sellers often net less money from the sale when they try to save the commission.

Okay, having said that, I can also say that there are exceptions to this. In a hot market, if you are very certain about the value of your home, you might sell it quickly and for top dollar on your own. Calculate your savings before you try, though, to see if it's worth the time and trouble. To lower costs in ways that result in a lower sale price can be counterproductive.

Remember that if the commission would be $8,000, you don't save $8,000 by selling on your own. If you get the same price as you would have with an agent, you save whatever is left over from $8,000 once you deduct all your marketing and other expenses that the broker would have paid.

Sort Of Sell It Yourself

Some brokerages are offering cheaper alternatives now. These plans let you do most of the work, yet still get your home listed in the MLS. This is a big help, because this is where most buyers go to look for a home.

Some may still assist you in closing, others may not even help with that. Some will charge a reduced percentage, sometimes as low as 1% to 3% of the sales price. Others charge a flat fee, as low as $299 here in Tucson. Ask around and be sure you understand what you are getting for your money.

You can also sell it on your own while offering a commission to any agent that can sell your home. Let them know that if they have a buyer, you'll let them show your home and you'll pay a commission if they bring you an acceptable offer. They'll do what is called a "one party listing" when they have a potential buyer. If you accept an offer from this one buyer, you pay a commission. Otherwise, you are again on your own.

Cheaper Brokers

Some real estate brokers are coming to recognize the windfall that higher home prices are providing them, and are dropping rates to get a larger chunk of this market. These are full service brokers which may do everything that others do, but charge perhaps 3% instead of 6%. On a $300,000 home, that would save you $9,000 in commission. Again, be sure you know what you are getting for your money.

Sell It Faster

If you are not in your home, you have carrying costs to think about. The faster you sell, the more money you save. Keep that in mind. Do a big advertising campaign early on. Then, before you reject an offer over a $3,000 difference, consider whether you're likely to spend that much hanging onto the property until your ideal offer comes in.

Take It Easy

Suppose you know what your home is worth, and you want to sell, but you don't need to hurry. In that case you can try a couple things to save money or make more money. You can try the cheapest or even whatever free advertising is available. If it doesn't work out, you can always resort to the more expensive options later.

You could also stop worrying about the real estate brokers commission and just list your home at a higher price. As I point out at the start of this book, overpricing is usually a bad idea. In this case, though, if you are in the home and in no hurry, this is a relatively safe way to lower costs. You either get your high price or you make new sales plans at some point in the future. Don't expect a rush of interested buyers, but you never know...

The book continues here: Negotiating a Sale - What you need to learn and apply.

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