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As it turns out, realtors are perfectly willing to involve themselves with property sales that result in cash transactions. It’s something that ends up serving the realtor—it’s like the icing on the cake, cash-only sales. Now that said, these aren’t the only means by which a property can be moved, but just because this isn’t traditional doesn’t mean it isn’t possible.
It may have some level of traditionalism to it; it’s just not a way of selling that’s well-known by modern millennial buyers. The bottom line is if you can work a cash transaction, do so. However, even if you can’t, working with a realtor can certainly help you maximize your profit—but you’ve got to be savvy.
First, understand how realtors work. When you’ve got a house for sale, the average realtor will collect a commission that’s between 3% and 6% of the total property value. So if a home were worth $200k, the realtor would collect between $6k and $12k when the property sold. It’s going to more likely be a commission closer to the 5% or 6% figure.
Realtors who only take a 3% commission are going to try and flog your property off as quickly and cheaply as possible; their business model functions by moving as many properties as possible, as fast as possible. Traditional realtors take longer, and that’s one reason they’ll charge a higher commission: they’ve got to go longer without a paycheck.
So one house being sold a month at 5% commission, with an average home value of $100k, will bring a realtor $60k a year if they only sell 12 houses. But since they’re taking a low percentage, that means they’re less likely to hold out for properties where a buyer knows the home value and wants to get more money.
Imagine you knew your home’s value was worth $250k, but the realtor wants to sell it at $200k. It doesn’t make sense, right? Shouldn’t they want the larger commission? Well, it depends on how long it takes for that commission to come in. So at the $250k rate, the realtor is looking at $12.5k. At the $200k rate, they’re looking at about $10k (at the 5% rate).
If it takes three months for you to sell at a higher rate, you make more money, but the realtor has to tread water during that time, so they get antsy. If they sold at the lower price, they would be able to pull in their commission quicker, and they’d be able to more totally focus on other properties.
So though they make more money by waiting longer directly, they may lose money indirectly. Here’s the thing: if you lose their services, it could take you more than three months to move a given property. It may take a year or more—and do you have that kind of time?
If you’re moving owing to the attainment of a new job, and you don’t go with a realtor, you could be paying the maintenance or mortgage costs for your old property while you’re paying for the new one. That’s a recipe for stress. Also, what does it cost simply to maintain a property? It could be as much as a thousand a month.
So if you’re trying to sell a house without a realtor, and you don’t know what you’re doing, the prospect is likely going to be a difficult one, and there’s a high likelihood it will be more expensive. There’s a tradeoff. Going with a realtor will get your property sold much more quickly than from your efforts. However, this might require a lower listing price.
In that scenario, you’re making less money directly, but there’s a possibility you’re saving more indirectly. So the question becomes: how do you find the balance in terms of property value, swift sale, and the utilization of realtor services that put your home in front of the right buyer from the outset?
Get the property independently appraised. Get all the “Honey-Do’s” done. Add a new coat of paint. Refurbish the attic and finish the basement. Replace doors or windows or locks as appropriate. Sand, clean, and refinish the wooden floors with new coats of polyurethane and stain, as appropriate. Switch out the carpet for Liquid Vinyl Plank (LVP). Landscape carefully.
When you maximize the property you have a prior listing, include its most positive features in the listing, get good photographic coverage, and find the right realtor from the outset, you’ll be able to list the property at a higher cost and get it sold quicker. Some remodeling, upgrade, or other refurbishments can also increase property value.
A kitchen remodels prior sale can do much to expand the price you can command for your property—only seek consultation first to assure you don’t spend the remodeling money in vain. Working with a realtor can help you maximize property value potential, but you’ll need to carefully research beforehand for best results.
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