Do you know what it means to sell your house directly vs. listing your house with an agent? Most people are familiar with the process of listing their house, but they are less familiar with FSBO or selling to an investor. There are pros and cons to each one, and this article will explore just that!
In this article, we will break down the advantages and disadvantages of each so you can make a smart and well-informed decision about how you wish to sell!
Pros of Selling Your House Directly:
A direct sale offers many benefits people will often look over. This option saves so much time, as opposed to listing or selling by yourself. It eliminates the need to market your home to multiple buyers and cuts out the time required for the buyer to secure financing. Most investors are ready to buy with cash, which means they can close very quickly, sometimes as fast as a week!
If you are in any kind of financial bind, which many people are during this Covid season, selling quickly would help ease that burden much sooner. All the insurance, utilities, and taxes due for your house would no longer be your responsibility and you can move along with your life in peace. You will not have to wait several months to market your house, and hope that the buyer’s financing doesn’t fall through.
If your house is in a unique situation, you might not even be able to list your house on the market. There are many landlords right now struggling with undesirable tenants during this time, and listing their property wouldn’t really do any good. If your house needs a lot of repairs and you can’t or don’t want to spend the thousands of dollars and months of rehabbing everything back to market condition, then selling to an investor is an easy way to take the burden away and walk away with some easy cash without all the headaches that come with it.
Lastly, if you sell without using an agent, you will save thousands of dollars by not having to pay commissions, fees, or listing costs. After taking all this into consideration, a cash offer can be a very desirable exit strategy as thousands of Californians are realizing every day. As selling directly becomes more popular, people are realizing how beneficial it can truly be for them in any situation.
Cons of Direct Sale a House:
The final sale price on a direct sale is often lower than retail. This is because you will not have to do any repairs or updates to the property, so the investor must take that into account for when they do the work. There are no commissions or closing costs owed by you, as the investor will typically handle everything. And as we all know, there is always a risk in holding property for any period of time, so that must be factored in for an investor.
While a cash offer isn’t usually ridiculously lower than the retail value, the biggest value of selling to an investor is in the convenience and peace of mind that comes with it. You have one decision instead of hundreds when listing or selling yourself. You only have to deal with one person or company and they handle everything else for you instead of dealing with agents, sellers, title companies, contractors, marketers, appraisers, inspectors, etc. You get the picture.
Pros of Selling Your House Yourself:
You are in control of everything. You will have all the power and be able to decide your best course of action. Once you sell, you won’t have to deal with paying an agent’s high commission. This is a great option for people who like to do everything themselves. If you have the time and money to work on your house and think you have what it takes to market your house effectively, then this might be the option for you!
Cons of Selling Your House By Yourself:
You are in control of everything. You have to do all the work! You are in charge of advertising, dealing with potential buyers and their agents, reviewing contracts, handling negotiations, and dealing with title companies. It can be a huge headache if you aren’t familiar with the process. And because it is your house, you might not be all business, and will instead operate with emotion. You cannot become offended by low offers, or overprice the house when you know it isn’t worth what you are asking.
Pros of Working With an Agent:
A good agent will take care of the sale on your behalf. A GREAT agent will go above and beyond, helping you transition into a new home. An agent should have connections and be able to offer resources to get you settled. Take advantage of the services at their disposals such as photographers and professional stagers. This is why you are paying them such a high commission!
Cons of Working With An Agent:
If you sell with an agent, you will be responsible to pay 100% of the commission owed to them. This is typically about 5-6% of your final sale price. In addition, you will be paying about 2% of the final sale price, toward closing costs. You will also have to pay up front to get the house ready for listing. This includes a professional cleaning, making repairs and cleaning done on a constant basis. There are also no guarantees on when it will sell. You will not know how much you are getting or when you are closing until the very end!
This means that you will automatically be giving up about 10% off the top to commissions and fees before you have to pay taxes and everything else. While this could be a good option if your house is already in perfect condition and you have time and patience to wait, these are some drawbacks to keep in mind before you make your final decision.
Further, many realtors will tell you whatever you want to hear in regards to the listing price. They will say whatever they need to say in order to get you to sign a listing contract with them and when the house doesn’t sell for that sky high price, they will convince you to lower the price that they knew from the beginning. If you want to be sure that your agent is being honest with you, have them put their money where their mouth is. If they tell you the house will fly off the shelves at a price, ask them to reduce their commission to 1% if the house doesn’t sell within a month, then see what they say the real price is.
For example. You might think your house is worth $300,000, but the realtor knows it is only worth $250,000. He might tell you he will list it at $300k to get you excited and sign the contract, but he knows after a month, there won’t be many offers. After that month, he will come back and tell you to lower the price to a more realistic number. That means he wasted your time by not advising you with his experience of the market, just so he could get the listing under contract. To avoid this problem, if you ask them to lower their commission if their advice is wrong, they will be sure to give you the best advice they can possibly give you, which is in everyone’s best interest.
There are many ways to sell your Bakersfield house. Before you do anything else, make sure you fully research the options available to you. Don’t settle for one option until you learn what other selling methods will mean for you!