Like never before, you have more options when selling your home. I’m sure your Facebook page is crowded with ads of different ways to sell your home. If you still listen to the radio and don’t mentally tune out the ads, you’ll notice every other ad seems to be some sort of real estate service. I am a true believer that it’s good for a seller to have options, but how do you decide which option is best for you? We are going to break down the pros and cons of some of the services offered by real estate agents.
This would be your OpenDoor, OfferPad, and I will throw in the “We Buy Ugly Houses” people. I call this group the “Pawn Shop” companies, not in a derogatory way, but if you look at their business model it is similar. These companies are direct buyers/investors. They offer what they call a “Fair Market Value” for your home. Along with what they think is a “Fair Market Value for your home are the fees they charge for their service. If you look at their own websites, the fees they are quoted as high as 12% of the sales price.
Pros- You get to pick the closing date. No hassle of finding a buyer or preparing for showings. Zero days on market
Cons- You are leaving money on the table. You are not getting top dollar for your home and you are paying excess fees.
If you in a pinch and you need to sell fast, or maybe you are dealing with an out-of-state probate situation that you just don’t have time to deal with, this option may be the best for you.
The A La Carte Services
This is the true “You Get What You Pay For” real estate service when selling your home because their model is built on charging you for services you select. Most of these companies will have packages – for so many $$ you get these services. For more $$, you get the same services plus more. Most of these companies will leave the negotiations and paperwork up to the Seller to deal with. Simply put, they are selling the tools that an Agent has but do not offer specific services as part of their plan.
Pros- This is the cheapest way to get your home on the MLS. You still have to offer a co-broke commission but there are some savings on the listing side.
Cons- This is one step up from doing For Sale By Owner. You are doing the majority of the work with little to no guidance for pricing or staging your home. You also may not have help to negotiate the terms of the deal when you get an offer.
If you are a do-it-yourself type and know the ins, and outs of selling your home, this might be the best option for you. Make sure you do your research and know exactly what your paid-for services will be covering.
The Traditional Model
Before I go too far explaining this model, I will throw out this disclaimer. The fee a Real Estate Broker charges are set at the sole discretion of that Broker. However, it is very common that an agent in this market will charge 6% to sell your home, 3% for listing the home and 3% as a co-broke to the Buyer’s agent. I am using the 6% as just an example.
With that being said, of the 45,000+ Agents in Maricopa and Pinal County, the majority of real estate agents work within the traditional model. When I say a majority, I would estimate 98%-99%.
How it works – You hire an agent when selling your home in exchange for a percentage of the sales price. Let’s say 6%. Your agent now has the option to offer a “Co-Broke” This is where your agent can offer a percentage of their commission to the Buyer’s agent. Let’s say 3%. The agent markets this process by entering your home into the MLS. The MLS is by far is the best tool to market a home. Your home is marketed to all the Realtors in your area that have access to MLS who may have clients looking for a home like yours. Because of websites like Zillow and Trulia that are capturing your listing from the MLS, your home is accessible to the home buyers in your area. If you pick a good agent, you will get all the services that you would expect when selling your home – professional photography, pricing and staging advice, help with negotiating contracts, coordinating inspections, and the list goes on. This is just the way things were done.
Pros- It the way most homes are sold. It’s been done this way for years. It’s proven to work.
Cons- The cost is high. Buyers now have access to the product. With 3rd party websites marketing homes, this fee structure may be a little dated.
The Flat Fee Model
In the past few years, this model has gained in popularity. More and more people are using this model when selling their home. It’s not a new concept. I personally have been selling homes since 2001 using the flat fee method. The model works a bit differently than the traditional model but uses many of the same principles. Instead of charging a straight percentage when selling your home, you are charged a flat fee for their listing service. You are paying the 3% for the “Co-Broke” fee, but you are saving thousands of dollars on the listing side. To give you an example, most of these flat fee companies charge $3000+ 3% when selling your home. On a $400,000 sales price, that is a saving of $9000 from the traditional model. The home is listed on the same MLS. The home is being seen by the same Realtors and the same Buyers. Some companies are offering the same full services that you would expect to receive when going the traditional route, but you will save extra money.
Pros- You can save thousands when selling your home while still getting great exposure through the MLS. Many offer the full service.
Cons- This is not a new concept. Not all are successful using this model. There are some copy-cat companies that mimic the fee structure but don’t understand how flat fee works. Interview your agent and make sure they have years of successful experience working with this model.