Case Study:

300,000 Properties Case Study

  Agent FOMC Houzzbuyer.com
Time To Sell ~6-12 months. ~8-12+months ~15days
Agent Fees $18,000.00 $9,000.00 $ -
Closing Costs $6000.00-$8000.00 $6000.00-$8000.00 $ -
Holding Costs (utilities,taxes,mortgage etc..) calculated for 12 months $19,452.00 $19,452.00 $ -
Need fixups yes yes no
Need staging yes yes no
Financial contingencies yes yes no
Home inspection contingencies yes yes no
Other contingencies yes yes no
You need to market your house no yes no
You need to paperwork to sell your house no yes no

We are a group of reputed real estate investors and brokers with more than 30 years of experience in this business. We understand real estate and the needs of the seller like you. Our whole buying process is confidential and hassle free, offering you the top dollars for your property; saving you money in long run. Following comparable will provide you an idea why selling to use makes more sense for many home sellers.

Read on for detailed analysis:

We understand that you need to sell your house and we also understand that it can be an overwhelming process for you. Selling in a market like today’s can sometimes be very frustrating, expensive and time consuming. With so much competition with other houses that are competing with your house to sell, it gives buyers out there more choices and sometime causes sellers to wait 3, 6, 12+ months to sell their house for a price the seller feels fair.

For a homeowner, essentially there are 3 choices to sell the house. We want to take this time to explain the process that is involved with these choices and the Pros/Cons associated with each choice so that you can make an informed decision on how to sell your house.

 

Let us explain each of these options in detail so that you can be informed and be able to make the right decision:

  1. Working with a real-estate agent is the most popular and the traditional way to sell a house today. If a house owner decides to list the house in the market with a licensed real estate agent, you will have to go thru the following process.

    1. Decide a real-estate broker company you want to list your house with, a few examples of these broker companies are Keller Williams, Weichert Realtors etc. It's important to choose from a right broker because some brokers are more popular in some areas than others and many prospective buyers work with them. This gives a better chance to get an offer on your house.

    2. Contact an agent from the broker company, make sure that the agent is experienced dealing with complexities involved with a real estate transaction.

    3. Once you decide a real-estate agent you want to work with, s/he will visit your house to determine what they feel it may sell for.

    4. Real-estate agent then discuss that the price they want to put your house on sell for, if you agree you move to the next step.

    5. Real-estate agent then prepares a listing agreement that you will need to sign, this agreement is valid for normally 6 months where the agent exclusively represent you and sell your property.

    6. As a part of signing the contract you will be asked to disclose the age and condition of house, age of the roof, appliances etc.

    7. Agent now lists the property on MLS (Multiple Listing Service), markets it. At this point the buyers will start seeing your house as available in the market for sale. If and when a buyer is interested in your house, s/he will make an appointment with the real-estate agent and schedule a house showing. Note that the house must show well to sell well. Curb appeal is important. --note that you have to fix up house and costs*******

    8. If the buyer likes your house, s/he makes an offer on your house. The real-estate agent takes care of the negotiation and the paperwork required to complete the transaction. In return the agents charge their fee which is usually a total of 6% of the value of the house you agreed to sell it for. 3% goes to your real-estate agent and another 3% goes to the real-estate agent representing the buyer.

Timeline this route takes to sell the house: 3 - 12+ months.

How much it costs you to sell the house: 6% of the house sale price. For example if you agreed to sell your house for $300,000.00, you will pay $18,000.00 as fee to the real-estate fees.

Pros with this approach:
  • Agents are trained in what they do, they know the local real-estate market and have access to MLS
  • They will do all the legwork to market your property, negotiate with prospective buyers and complete the necessary paperwork.

Cons with this approach:

  • This approach can be expensive
    • Remember the house must show well to sell well. Before you list your house in the market is advisable to fix up the house, do a fresh quote of paint, and take care of the curb appeal. This all costs money and expenses depends on how much work you need to do before the house can be shown to prospective buyers
    • Consider agent fee which is usually 6% of the agreed upon sale price. If house is selling for 300K the fees will be 18K.
    • Consider "carrying cost". Carrying costs are the costs that you have to keep paying until hour house is actually sold. Your mortgage, taxes etc.
    • Consider closing costs. Based on our experience, buyers usually ask seller to pay for the closing costs that can run in thousands of dollars.
    • They will do all the legwork to market your property, negotiate with prospective buyers and complete the necessary paperwork.
  • This approach can take a long time before the house is really sold, usually 3 to 12+ months.
  • Risks
    • Real estate contracts contain contingencies like home inspection contingency, HOA by laws contingency, financial contingency etc. After the contract is signed between you and the buyer and before the actual closing if any of these contingencies are not met the whole deal can be terminated. We have seen many cases where buyers were not able to meet financial (mortgage) contingency and the contract fell thru right before the closing.
  1. For Sale By Owner (FSBO)
  2. This simply means Selling Your House Yourself. In the recent years the “For Sale By Owner” concept has become popular. If you decide to go this route you can list your house with sites like zillow.com, Trulia.com, craigslist.com. With a small fee, you can also take services of sites like ForSaleByOwner.com. If you list your house on ForSaleByOwner.com, they will list your house on their website and provide signs that you can put in your front yard showing that your house is on sell by owner.

General process to selling your house yourself:

  1. Get the true market value of your house. This depends on many factors like condition of your house, recent updates, location etc. It also depends on how much other similar houses are selling in your neighborhood. Getting to a true market value for your house can be tricky but you can hire an appraisal company to get the most accurate value of your house.
  2. Do necessary repairs before you list the house. It is important that your house shows well to sell well. Curb appeal is important.
  3. Decide if you want to pay 3% agent fee for the buyer side of agent, this is to incite the buyer's agents to bring their customers to see your house.
  4. List your house with online sites and market it to get buyers.
  5. Do all necessary negotiation and paperwork when time comes.

Timeline this route takes to sell the house: This route is usually slower than selling your house thru a real-estate agent, it's simply because real-estate agents are trained and experienced in selling houses, they have network of people/other agents and utilize that network to market your house. When listing your house in the market FSBO, we suggest you should expect at least 6 -12+ months before the house is really sold.

How much it costs you to sell the house: If you decide to pay for buyer's agent fee (usually 3%), for $300,000.00 house its $9000.00. If you pay for the buyers closing costs, it will run into thousands of dollars. We should estimate the total cost to be around $18,000.00 to $20,000.00. Plus Carrying costs, fix-up costs.

Pros with this approach:

  • You can save significant money by selling your house yourself as you do not have to pay agent fee.

Cons with this approach:

  • It takes a lot to sell a house. If you are not comfortable with the process and marketing the house yourself then this can become overwhelming experience. Taking care of paperwork, valuating your house can take time and any errors can cost way more than you are looking to save.
  1. Selling to real-estate investors:
  2. Another option to sell your house is to work with a local real estate investor who buys houses. There are many reputed real estate investors across the United States, who buy houses. These investors buys houses to either fix them up and resell them by turning profit or hold onto them as a rental property. In some instances they sell them to other real estate investors.
  3. Following is the process involved with selling your house with a real estate investor:
    1. You work with a reputed real estate investor and submit your information about your house
    2. Real Estate investor calls you or meet with you in person to understand your situation and learn about the house you are willing to sell.
    3. Seller and the Investor then fix a convenient time to visit the house and evaluate the house.
    4. In most cases the investor comes up with a cash offer.
    5. You review the offer and decide if it works for you.
    6. If it’s a fit, closing happens at a title company and the title company prepares the documents... the investor buys with all cash so it’s a quick close and you get your cash quickly.
    7. The house sale is complete.

Investor buyers don't ask you to fix anything in the house, most offers are on as-is basis.

Timeline this route takes to sell the house: This is the quickest and most hassle free process to sell your house. Since the offer from an investor is not contingent upon anything, no fixups are needed, no loans to get approved. Investor pay in cash. The process takes anywhere from 7-30 days (many times investors can close within 7 days if you need it to). This is the option many sellers go with when they need to sell their house fast with little hassle.

How much it costs you to sell the house: The cost to sell your house to a real estate investor is very low.

  1. There are no commissions or fees.
  2. Often times the investor will actually pay for 100% of the closing costs as well.
  3. Because the sale can be closed within a matter of couple of weeks you save thousands of dollars in carrying costs and,(mortgage payment, taxes, insurance, utilities, HOA fees, etc. ) as compared if you are selling the house using Real Estate agent or FSBO routes.

This immediately eliminates thousands of dollars in costs that you would have to pay when working with an agent or selling the FSBO route.

The main cost with working when a real estate investor is the fact that an investor don't pay full retail value for a house. As any other business, investors invest money to turn profits. They usually look to buy houses at discounts and sell them on small profits.

This does not necessarily means a loss to the seller. For many people selling at a lower price makes sense in return for the elimination of commissions, closing costs, fee and carrying costs. These expenses can add up quickly. Take the following example.

House value is $300,000.00

Your monthly mortgage payment (including taxes and house insurance) is $2,000.00 Let's say it takes 9 months to sell your house using real estate agent route.

Real Estate commissions: $18,000.00

Closing costs: ~$10,000.00

Carrying costs: $18,000.00 (you know that most of our mortgage payments contain the interest going directly to bank)

Repair costs:

Total approximate expense: $46,000.00

Compare it selling the house in 7-10 days in cash in discount.

Pros with this approach:

  1. Quick sell within 7-10 days.
  2. No unknowns and last minute surprises when working with contract contingencies.
  3. No fees or commissions, many times the investor will pay all closing costs as well.
  4. Investors will buy your house “as-is” and won’t require you to repair anything, clean anything up, or even remove everything from the house. They’ll pay for those costs themselves after the sale is closed.

Cons with this approach:

Just like the above mentioned approaches, there are drawbacks here too. The main drawback here to may be that you are selling at a discount in return for the speed and convenience that a real estate investor is able to offer. If you’re able to work with an agent and the agent is able to sell your house for full market value within 3 months (and you can wait 3 months)... you may be ahead going that route. But, if it takes longer than 3 months for the agent to sell it... the “carrying” costs we mentioned earlier start to eat away at any gains you may have working with an agent. Selling To A Real Estate Investor This strategy is mainly for people who are willing to sacrifice a bit on the sales price in exchange for a fast convenient sale with no hassles. If you need to sell quickly (days or weeks rather than months), investors can close quickly. If you don’t want to hassle with repairs or cleaning up the house, investors actually will take care of that for you. 6 Investors are able to get a good house at a fair price that leaves them room for a profit... and you are able to get out from under the house and the payment and can move on more quickly.

Conclusion In the end, there’s no one-size fits all solution. If you have lots of time and aren’t in a hurry to sell... seriously consider going the FSBO route first to see if you get any bites. Then, if you still have lots of time (you don’t care if it takes longer than 6 months to sell) you may work with an agent. However if you need or want to sell quickly.... maybe you’re in foreclosure, or you inherited the house and don’t want to mess with the hassle, or you’ve moving, or you already bought a new house and can’t handle two payments anymore, or any other situation that calls for a fast and no hassle sale... working with a local real estate investor may be the way to go. Just like with anything, do your research and make sure you trust the investor you’re working with and make sure the actual closing is done at a reputable place like a title company. The vast majority of real estate investors out there are honest and do great business. Work with those ones, ask for references if you’d like, and trust your gut. Good luck on the sale of your house! We hope this guide will help you make sense of your options when selling a house and will help you move forward with what makes sense for you and your goals. In some instances working with a reputable agent is the best route... and in some cases working with a reputable investor is the best route. Weigh your options... and good luck! :-) If you have questions about working with a real estate investor to evaluate how much your home is worth and what an investor will pay for your house... return to the website where you got this guide and contact us. We are a real estate investment company that focuses on helping homeowners reach their goals… whether we buy your house or not… we’re on your side. We look forward to helping you as a resource and working with you on the sale of your home if there’s a fit. - Your local real estate investment company. PS - If you’re still not sure what option is right for you... use this quick little test. Can you wait 6 months to sell your house? If the answer is no or “I’m not sure”... contact us and 7 we’ll give you a no obligation offer on your home. Take our offer, look it over, pass it by people you trust, and take your time to decide. There’s no pressure. If you feel that helps you reach your goals... great. We can close quickly, no fees, no commissions... and we’ll even pay closing costs. Pretty darn painless. Just connect with us to get the ball rolling.