The traditional route of selling your house is to find a realtor, or real estate agent, who helps you through the process. They will guide you on what to fix up, how to make your house look good, any repairs you should make, and what your house is worth. They’ll take pictures of your house to make it look the best that it can. Once that’s all set, they will list your house on the MLS, or Multiple Listing Service, which is where other realtors, websites and buyers can see your house. Of course, your mileage may vary. As with any profession, there are better realtors and not as good ones, but let’s hope you found a good one.
Of course, this isn’t a free service. Many realtors will do a lot of work to sell your house and will guide you through the process. Most of us only do this a few times in our lives and having expertise in our corner can really help. Your average realtor will charge you a 3-6% commission on helping you sell your house. The good news is that they should be incentivized to help you sell it for more because they make more money. This is a sizable chunk of money though. If you’re selling your house for $200,000 for example, that means your house is actually selling for $6-12,000 less than that, before any other fees. Unfortunately, some would rather sell your house more quickly than for a better price, so make sure to ask the tough questions.
Before the offer
This process takes time. The average time to sell your house in North Carolina is 92 days. That often measures the time from when the house goes on the market to when it closes or sells. Before that time, you may be repainting your house, cleaning it up, doing some repairs, getting inspections.
During that time you’re also paying the mortgage (interest), utility bills, taxes, etc. These are called carrying costs, or your costs to pay for the property that you’re “carrying” while you wait to sell it. This is especially painful when you have already moved, for example, because of your job, already bought your new house, or any number of reasons.
After the Offer
Once you have the offer, there are some more costs to consider. Time can stretch here too. Often your buyer will need to work with their bank to get approved. This means that the bank will have to appraise your house to make sure that they aren’t making a loan that’s too risky. You’ll probably have to wait for the buyer to get an inspection and for the inspection to come back. Your buyer will probably request an inspection contingency and a financial contingency. This means that if the bank doesn’t approve your loan or the inspection isn’t what they hoped for, they won’t buy your house. So, you’re thinking that you have sold your house and then the deal falls apart.
Sometimes, the buyer will use this as an opportunity to negotiate even though you have an offer. They may use the loan approval process as a chance to say that their bank won’t approve the offer amount and they want to buy it for less. Perhaps they want you to make repairs or give them a credit because of the inspection. Of course, you can turn this down but if you don’t have any other offers, you’re back to where you started. It’s also very possible that new buyers will find the same things and make the same demands. For each buyer, the process can take several weeks. During that time, while you wait to sell your house, you are still paying those carrying costs. Money that you don’t really get back when you sell.
Often a realtor is a great choice, especially if you have a good house in a high demand area in good condition. However, if you’re trying to get out of your house quickly, or you need to sell your house quickly, the extra costs of using a realtor can make the difficult task of selling your house even more challenging. This is why many sellers will jump at a cash offer and they will often jump at offers through other ways like investors, family members, friends, etc who can buy the house without an inspection, or without the commissions or even cash offer and taking the house as-is, which is what many investors will offer.
When selling your house, the highest offer isn’t always the best offer. You need to look at the total cost of the sale and take it from there. Things you want to consider
- Real Estate Commissions – A good realtor can bring a lot of expertise to the sale and may even be able to get you a better offer, sometimes, but you do pay for it.
- Carrying Costs – Make sure to include all the costs you continue to pay for your house that you wouldn’t have to pay with a faster sale. For some sales, this won’t be any because you might be paying a mortgage, utilities, trash service, etc regardless. However, if you bought your new house or moved first, this can get very costly, very quickly and you don’t recoup much of this in the sale. This can also be true of an inherited home.
- Why You’re Selling – Consider why you’re selling and if the wait is a burden. Are you selling your house because it’s a rental and you jut can’t deal with it? Maybe you’re trying to avoid a big investment, or you inherited it and can’t afford the extra property costs. This needs to factor in when you’re looking at your options for a sale or whether to take an offer.
- Repair Costs – It doesn’t make sense to spend $10,000 to get an offer that’s $3000 higher, regardless of what your realtor tells you. If they suggest repairs or other investments in your home, ask what you’re getting for it. Even if it’s legally required, you might be better off selling to an investor for a lower price that works for them and you. You often won’t have to clean out the house in that case.
Selling your house is a difficult time and a difficult process. There are experts to help you and many are very good, but make sure that you first consider all the costs and the difficulties before you follow any advice or accept any offer. Sometimes, it’s better to wait, and sometimes a fast, easy offer is better.