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Selling your house when nothing is selling

Thu Aug 24, 2006 02:08PM | By Tony

See more in Personal Finance | Permalink | Email | Comments (0)

If you have large debt, or your mortgage terms have changed and new monthly payments are driving you into more debt, or whatever the reason is, and you absolutely have to sell your house, don't list it below what others are asking in your neighborhood. According to the media, new home sales fell more than forecast, but you don't have to read or hear these news. You can simply look around your own backyard, and see that few homes are selling. The supply or inventory of unsold homes has steadily increased almost everywhere in the country. It will only get worse as builders continue to build.

So if you need some debt relief, and have to sell your house, consider upping the buyer agent commissions. You see, the standard cut for the real estate agent who brings you a buyer, is pretty much 2.5% of the sale price. That is, you sell your house for $100,000, the buyer agent gets $2,500. Some homeowners trying to save money, offer 2.0% or 2.25%. The problem with this approach is that the agents are less likely to show your house to the perspective buyers. Of course, your agent, who is the listing agent, has to get something too. It used to be that listing agent would take 3.5%, and this is still the case in many states. Some states however allow the listing agents heavily discount their commissions, so to get business, many real estate agents sell your house for as little as .5% or 1.0%. Some hope that you would buy your next house with them, some do it simply because of the stiff competition. Moreover, many agents will list your house on Multiple Listing Network or MLS for as little as $400 flat. Granted, they are not going to do anything else to market it. But your house is on MLS and by putting 3.0% commissions for a buyer agent, you significantly improve the odds that your house will stand out. Why, simply because a realtor wants to make more money, and will show your house to his or her buyer first and foremost. One percent or even half of a percent is significant amount of money at today's home prices.

So what you do is list your house with discount agent, or use numerous "by owner" websites that also put your property on MLS, up the price of your house somewhat to compensate higher commissions, and give those commissions to the buyer agent. Leave the rest to the agent. You can always drop the price if the home doesn't sell fast enough.

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