Though the bubble has burst, our homes are still almost always going to be our single greatest asset. And when we sell those assets, our eyes get as big as saucers when looking at all the apprecation our lovely four walls have accumulated. However, there are some things that can significantly reduce the amount you will realize from that appreciation. Taxes aside, real estate agent fees are the biggest chunk. With a little extra work and/or creativity on your part, the agent fees can largely be avoided.
A typical home sale incurs agency fees of 6-7%, with half going to the selling agent and half to the buying agent. Selling and buying a home involves a lot a paperwork and is a total pain in the ass… but 7% is a steep tax to pay (on a $500,000 home sale, you’ll be paying $30,000 in agent fees). How can you avoid paying it?
To avoid the buyer agent fees, you could sell only to unrepresented buyers. That will limit your pool of available buyers, but it can save you some money. Essentially, though, I think paying the buyer agent fees is nigh unavoidable, which leaves the selling agent.
Traditionally, there’s the for sale by owner route. There are a number of websites that will let you list your house FSBO for a flat fee (as little as $399).
I think a great middle ground (and fast-rising option) is Redfin. They have a flat $2,000 fee like the FSBO sites, but also have experienced sales agents who will show your home and take care of all that onerous paperwork. That $30,000 in agent fees for your $500,000 home just became $17,000 ($15,000 for buyer agent + $2,000 for Redfin). You could potentially save yourself $28,000 if you find a buyer not using an agent.
And that, as my mom would say, is better than a kick in the pants.
I have no association or relationship with Redfin… but I’ll be using them when I put my house up for sale in the near future.