Do we need a real estate agent for a hot, hot, hot property?

July 6, 2007 2:01 PM

Why in the world should I sell Mom's old house through an agent?

Dad passed away a year and a half ago and Mom needs to get more liquid. She owns a house in about as desirable a market as you can get (Seattle) and about as desirable a neighborhood as you can get (Queen Anne). A trained monkey could sell this house. Since our family moved out of the house in 1972, every other house on the block has been torn down and had a bigger, better house rebuilt on the property. It is about 99% likely that any buyer of Mom's house is gonna tear it down. So we don't need advice on landscaping or remodeling or really even showing it.

Or do we?

Am I deluding myself into thinking that my sister and I can get all this done without paying the fee an agent demands? We're talking about 20 to 30 k for our trouble. Advise, please!

posted by vito90 to home & garden (20 comments total)

Do you think the agent could sell the house for considerably more than you could yourself?
posted by Eringatang at 2:06 PM on July 6, 2007

Not considerably more, and once you factor in fees it's conceivable we would net less.
posted by vito90 at 2:12 PM on July 6, 2007

It only costs about $20 to have a sign printed up and throw it in the front yard. Clean it up, make sure it doesn't look dangerous to the average buyer, put up the sign and see what happens. You and your sister could give yourself a set amount of time (say three months) and if it hasn't sold, then get an agent. IANAA but I've sold 2 houses FSBO and it's very simple. I say give it a go!! You've got nothing to lose.
posted by pearlybob at 2:19 PM on July 6, 2007

Isn't there a chapter in Freakonomics about how the conventional wisdom that it's better to sell through an agent is incorrect? Something to do with the fact that an agent experiences diminishing returns for letting a house stay on the market longer, or sticking to the asking price, commission-wise. I don't remember the specifics, but you may find it interesting.
posted by thehmsbeagle at 2:26 PM on July 6, 2007

People did this in Ann Arbor a lot in the past 2-3 years. But, that is changing now that it isn't a seller's market anymore. Be very, very careful with your pricing. You don't want it to sit out there too long, because then people will try to negotiate your price (thinking you are getting desperate), but you don't want to miss out on lost profits either. I think there was something in Freakonomics about this.
posted by Eringatang at 2:30 PM on July 6, 2007

As an alternative, you might go with something like Redfin, which will get it on the MLS listings. They charge a fixed fee, and will handle lots of the legal documents if you are not familiar with them.
posted by procrastination at 2:30 PM on July 6, 2007

You'll want to get on MLS. Also, I don't know about your market, but you usually have to pay a fee to the buyer's agent. (Half the usual commission you pay to your own agent.)
posted by acoutu at 2:39 PM on July 6, 2007

A house in Queen Anne will sell in approximately 15 minutes, at whatever price you choose. Get a pack of DIY FSBO forms from Office Depot and congratulations!
posted by tristeza at 2:41 PM on July 6, 2007

In my experience, a good agent is worth his/her weight in gold (well, cash). They deal with everything and give you (hopefully) a big check at the end. Preparing and selling house can be tricky business in any market. Let the professionals do their work, I say.
posted by MarshallPoe at 2:43 PM on July 6, 2007

If you can find a buyer yourself, flat-fee licensed realtors will assist you with all the paperwork, opening escrow, etc for about $4000 in a market like Seattle.

A chain called Help-U-Sell is an example of a flat-fee realtor, although I have never used them and thus cannot recommend them. They can both help list your home to find a buyer, and handle the paperwork.
posted by rajbot at 2:43 PM on July 6, 2007

If the houses that have recently sold and been torn down are being sold to investment firms, give them a call. Tell them your situation and have a price in mind prior to calling. When talking to these investors, know what the new homes that are being put up are going for. This will give you some bargaining power since you'll know about what your property is worth to them. (price new home sells for) - (approximate cost to build said home) - (cost of lot) = builders profit. Marketing to an investor and marketing to a residential buyer for their primary residence or rental income are two completely different beasts. There is a reason builders are buying houses like yours, tearing them down and building newer, more expensive homes.....use that to your advantage.

If time is not of the essence, take some pics, post it on craigslist and see who bites. Check out the flat-fee listing service as others have said. The dirty deeds that Realtors take care of when you list with them include, setting up an escrow account, finding and working with an attorney to write up the necessary contracts, listing on MLS, finding inspectors and possibly appraisers, and so on. Finding a good attorney is the most important.
posted by premortem at 3:00 PM on July 6, 2007

Getting an offer on the house is only half the battle. Our broker was very helpful figuring out what to do next when we got 7 offers on our house. He also knew about all the required paperwork - sesmic reports (this was California), flood reports, hazardous materials, title as well as working with the buyers on issues like inspections and negotiating any additional work they wanted done. If you get this wrong it can come back and bite you. He also made sure to coordinate the timing, calling up people to make sure each one got their paperwork done on time. I thought he was worth the money.

Second, getting on MLS is usually very important to get the widest exposure for your property. We bought a home that wasn't on the MLS listing, being sold by the heirs and it was underpriced - we were the only serious bidder and figure that we got it for about $25K less than it ws worth in the current market. If they had attracted more buyers, they might have gotten multiple offers and ended up with more money.
posted by metahawk at 3:05 PM on July 6, 2007

I watched my father-in-law sell his home at the height of a housing market in Silicon Valley. He had sold a house previously so he had some experience, and sold his San Jose home without incident.

He was, however, retired at the time, so he was able to run around and get all the paperwork and permits that were required to complete the transaction. I believe he had a real estate lawyer review the final paperwork before the deal got signed off on.

In short, he had to work it but it was entirely doable.
posted by shino-boy at 3:22 PM on July 6, 2007

According to yesterday's Wall Street Journal, Seattle is one of the worst markets in the country when you rank cities by how long houses are taking to sell.

A good real estate agent should be able to help you set a realistic price that will help you sell more quickly, and will do a fair amount of marketing to get your house in front of the right buyers, but in exchange you give up a lot of money on that commission. You also give up a lot of time, as someone will have to be available to show the house any time there's an interested buyer, since you won't have one of those real estate agent lock-boxes that allows the buyer's agent to let people through.

If you're willing to do the work, you can probably get by without a real estate agent, but you'll at least want a real estate lawyer to help you with the negotiations when anybody makes an offer. You'll want to pay Redfin or someone similar to get your house listed on the Seattle-area MLS, because this is the listing service where 95-plus percent of homes are found. You'll want to take out ads in one or both of the big local dailies, and you'll want to re-post the listing to craigslist weekly. You'll want to get a sign for the yard, and print up color flyers with the asking price, square feet, etc. for people to pick up when they stop to look at the sign in the yard.

When you set the home's price, you'll do best to look at what similar houses were selling for 2-3 years ago. Given that your family has had the property since 1972, you'll still be making a hefty profit even if it is several tens of thousands less than those dollar signs in your eyes had you dreaming of. Houses are not selling at their peak any more.

Too many people are trying to list homes at their peak values, and these homes just sit on the market for months and months and months. Once a home is on the market for too long, people start to wonder if something's wrong with it. Lowering the price at this point is too late, there's already that stigma attached. Instead, start with a reasonable price, maybe $5-$10,000 more than what people were selling homes for two years ago. It will save you anxiety, and will save you on classified ads, time away from work to let people tour, etc., if you can sell sooner rather than later.
posted by croutonsupafreak at 3:43 PM on July 6, 2007

If you are willing to put in a little work, I'm sure you can save yourself that realtor's fee. If the house is a tear-down, then just get the facts about the lot out there in any advertising media you can (and consider a flat fee MLS listing service). Put a big sign in the yard and other signs in the area (if you think you can get away with it). There are a lot of sell-your-house self-help books out there, so pick one up. If you have trouble deciding on a price get an appraiser to look at the property (or get a few, if you want to be more certain). Appraisals are dirt cheap compared to the realtor's commission. Do be aware that buyers will expect your property to be a little bit cheaper than one sold through a realtor.
posted by ssg at 4:00 PM on July 6, 2007

I'm a Realtor in Minnesota... just put it on Craigslist for awhile FSBO.
posted by thilmony at 4:01 PM on July 6, 2007

You're concerned about the high price of a commission. That's valid. But realize that you're never, ever locked into a commission fixed in stone by some omniscient higher power.

You can negotiate a lower commission. Go talk to real estate agents and ask them to lower their rates. If you truly think a trained monkey can sell the house, and you're not terribly concerned about timing or making it easy, see if you can find a real estate agent willing to go lower than normal. You might find one willing to knock a few points off in order to make a quick sale.
posted by Cool Papa Bell at 5:28 PM on July 6, 2007

Yeah, but a trained monkey is not trained to know what is legal/not legal.

At the very least have a real estate lawyer handy. If the buyer really is gonna have the house torn down it might not be a big deal but a lot can go wrong in a real estate deal.

And if someone gets sued you want it to be the agent and NOT you.
posted by konolia at 5:56 PM on July 6, 2007

Thanks to everyone who took the time to answer. Got some good ideas from the thread.
posted by vito90 at 6:21 PM on July 6, 2007

Vito90, have you considered leasing or a lease/purchase arrangement? When I moved to California years ago, I couldn't afford to buy, but I found a couple who'd been trying to sell a really nice house for about 9 months. It wasn't a seller's market then, either. So we and our respective lawyers wrote up a lease/purchase contract; after 6 months of living in my wonderful home, I was finally able to buy it. The sellers were delighted to have had the income from the house while I was leasing.

This is just something to consider if -- 6 or 9 or 12 months down the road -- the house still hasn't sold and Mom needs the income. And I agree with many of the other posters: Do hire a lawyer, unless you are a real estate lawyer yourself.
posted by Smalltown Girl at 9:53 PM on July 6, 2007