SHOULD YOU SELL YOUR HOUSE THROUGH A REAL ESTATE AGENT, I-BUYER, OR LOCAL REAL ESTATE INVESTOR? OR SHOULD YOU DO A FSBO (FOR SALE BY OWNER)?
When it’s time to sell your property, or a property you’ve inherited, you have a few options you can consider. You can go the route most people choose, which is using a real estate agent and doing a traditional sale. IBuyers have become another popular option. Companies like Zillow have shut down their iBuyer departments but there are still companies like Opendoor, Offerpad and RedfinNow that you can use. An option that you may not have considered is selling to a local real estate investor. Selling For Sale By Owner – FSBO – can be a good option if you have the time and the know-how. Here is a list of some of the main pros and cons of each method.
Realtor – Pros
- Can list your property on the MLS (multiple listing service) which will reach the most buyers. According to NAR, National Association of Realtors, 97% of buyers start their search online.
- Has access to tools for accurately pricing your property. A Comparative Market Analysis will show you what your home is worth so you know what price you should list your property at.
- Will market your property for you. That means a comprehensive marketing plan targeted to your ideal buyers. (Not just taking a few lackluster photos of dark corners and planting a sign in your yard – yes, some agents still do it I’m afraid.)
- Can walk you through the selling process.
- Can help you properly prepare your home to sell. That means making repairs, possibly making some updates, cleaning, getting rid of or packing clutter and personal belongings, staging and photography.
Realtor – Cons
- You pay them a commission.
- In order to get top dollar, you need to prepare your home before you list it. This can be costly and time consuming, depending on the condition of your home.
- Inconvenience of showings and open houses.
- Inconvenience of keeping your home clean and ready to show.
- Setbacks such as a bad inspection, low appraisal, buyers financing falling through at the last minute.
IBuyer – Pros
- Can be quick. Possibly 7 to 14 days.
- No showings
- Cash offers
- Allows you to skip the appraisal and mortgage processes.
IBuyer – Cons
- Some have very specific criteria – usually preferring cookie cutter type homes in a specific price range and size.
- Homes must be in pretty good shape. They like to come in and do minor, cosmetic updates.
- Usually charge fees of around 5% of sales price.
- Closing fees.
- Repairs may be required before the sale.
- Lower sales price than a traditional sale.
- Non-interactive, done mostly through websites.
FSBO – Pros
- No commission, unless you agree to pay the buyer’s agent.
- You are in control. Of everything -preparing your home, staging and photography, pricing and marketing, contracts and disclosures, negotiations, showings.
FSBO – Cons
- You are in control. Of everything -preparing your home, staging and photography, pricing and marketing, contracts and disclosures, negotiations, showings.
- You may not know how to do any of the above.
- In order to get top dollar, you need to prepare your home before you list it. This can be costly and time consuming, depending on the condition of your home and how long you or your family have lived there.
- Inconvenience of showings and open houses.
- Inconvenience of keeping your home clean and ready to show.
- Setbacks such as a bad inspection, low appraisal, buyers financing falling through at the last minute.
- May take longer to sell your house.
- FSBOs have a reputation for being overpriced. Strong emotional attachments to houses can blur reality for some.
Local Real Estate Investor – Pros
- No Fees
- Flexibility. Can be quick – or slow. The time frame is completely up to you.
- Convenience. No showings. That means no cleaning, repairs, or staging needed.
- Sell your house “As-Is” – You can even leave stuff behind that you don’t want to take with you.
- Cash offers
- Investors many times will give a seller 3 different offers to choose from, depending on the situation.
- Costs of selling are much lower.
Local Real Estate Investor – Cons
- You typically will get lower offers. Cash offers will always be the investors lowest offer.
Choosing the right method for selling your property depends on many things. It may help to make a list of questions you need to ask yourself before making a decision.
- What is the condition of the house? If I need to make repairs, do I have the money needed to complete them?
- What is the location of the house? Is it in another state or is it my personal residence?
- How much time do I have to sell? ( Relocating for a job?) (Impending foreclosure?) (Another life event?)
- How much is my house worth? Can I afford to sell my house? What are the costs of selling a property?
- How much do I want for my house?
- What are my plans for after the house is sold?
- Will I be ready to move if it sells fast?
- Can I afford the holding costs associated with the property if it takes months to sell? What ARE my monthly expenses anyway?!
- What is the average DOM (days on market) in my area? Is it a slow time of year to sell?
- Am I in a hardship or distressed situation that may only get worse the longer I wait to sell? Am I close to missing a payment? Will we need to sell due to our divorce?
- What is my equity in the property? Will the proceeds of the sale cover my selling costs, moving costs and down payment on my next house?
You get the idea! As you can see, you have much to consider and a lot to gain (or lose)! Knowing your given circumstances and being aware of the available options to sell your house or property may help make it a less stressful decision.