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How to Sell a House – Traditional, FSBO, Investor

By October 5, 2021No Comments
How to Sell a House - Traditional, FSBO, Investor

Selling a property can be a complex process. Many owners don’t know the various options they have when it comes to advertising and selling their house. When deciding the best way to move forward, sellers should carefully consider all their options. There are three main methods of selling a property, and each have their pros and cons.

Traditional Real Estate Market

The traditional method is what most will immediately think of when it comes to selling a house. The traditional method of selling a property includes the seller finding a real estate agent to represent their interests, selling the home on their behalf.

Here is a brief list of what realtors do for a seller:

  • Appraise the property and determine a property value that will generate interest
  • List the property on the Multiple Listing Service (MLS)
  • Network with other agents to try to find potential buyers
  • Draw up paperwork and negotiate the terms of the contract
  • Set up closing with the preferred title company

Hiring a realtor allows sellers to take a hands-off approach. The realtor primarily handles all communication with potential buyers. In return, the seller pays their agent a commission ranging from 3-6% depending on the terms of the contract. Commissions and fees are usually taken out of the total sales price, so while these fees aren’t necessarily out-of-pocket, they shave down the seller’s overall profit, sometimes by tens of thousands of dollars.

Sellers must be prepared for staging areas of the house as well as leaving the property for open houses and showings. If the house needs repairs, a seller may need to offer concessions. These can come in the form of the seller making repairs prior to closing or taking the cost directly off the top of the sales price. In the end, the costs of selling a property through the traditional market can quickly add up. 

This method works best for sellers who are too busy to invest too much time into the sale of their property and have wiggle room in how much profit they expect. If a seller has time to wait for the perfect buyer, the traditional market can be a good option.

For Sale By Owner (FSBO)

If a seller wishes to avoid commissions or working with a realtor, they may consider advertising the home as a For Sale By Owner (FSBO). In an FSBO situation, the owner takes over all of the duties that would otherwise be handled by an agent. This allows for complete control over the advertising and sale of the property, potentially saving thousands of dollars.

A word of caution for this method, however. Without representation by a brokerage, the seller is legally responsible for the sale. In other words, should a seller not provide the correct paperwork such as property disclosures, there could be financial and legal ramifications.

Overall, this method of sale is best for those who have experience in real estate and are prepared to navigate the paperwork involved in selling a house.

Selling to an Investor

Technically, a house can sell to an investor through the traditional market or by a FSBO listing. An investor could come across the listing and make an offer. However, a unique aspect of selling to an investor is that the seller can take an active role in seeking one out. Instead of taking a hands-off approach and waiting for buyers to take interest, a seller can reach out to investors in the area.

Typically, investors don’t require staging or repairs, saving the seller money. These sales avoid open houses and show times. The timelines for investor sales also tend to be shorter, as there aren’t as many moving parts as traditional sales. In most cases, a seller controls the timelines of the sale with this method.

When seeking out investors, sellers should be wary of out-of-state companies. Unfortunately, large out-of-state investors can tie up the sale of the property, over promising and under delivering. A seller must be careful to vet any investors they find, and local investors tend to have much more flexibility and, ultimately, shorter timelines.

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