Why use a real estate agent to sell your house?
Many people think that a real estate agent is the only option when it comes to selling their home. They think, “I need to sell my house, so I should find a real estate agent to list it for me.” They never consider the fact that an investor can meet them at their home, make an offer, and get their cash in 10 days. Perhaps you have considered this option but imagine that the investor will not pay you what your home is “worth.” Let’s examine the true sales price of a home when you sell with a real estate agent.
Home List Price: $300,000
Price you’ll likely be offered: $291,000 (homes typically sell for 3% below their list price)
Agent Commissions: $17,460 (buyer’s agent typically gets 3% and seller’s agent typically gets 3%, for a total of 6%)
Repairs: $5,000 (no matter how good your home is, there will be termite damage and/or paint touch-ups, among many other things)
Closing Costs: $9,000 (closing costs are generally over 3%, here in Los Angeles transfer taxes are extremely high and if you are selling a lower priced home you often have to pay some/all of the closing costs of the buyer, so this number could be much higher)
Total cost of sale with an agent: $40,460
Remaining balance after sale: $259,540
This might not surprise you. Most people know that there are many costs associated with selling your home. What they may not think about is the costs associated with not selling your home. A house in good condition can take 6 months to sell and a house in poor condition may never sell! Let’s say your house is in good condition and the market in Los Angeles is average (we just had one of the worst real estate crashes in Los Angeles) and you have a good realtor selling your house in 4 months. During these 4 months, you are still paying the mortgage, taxes, insurance, maintenance, and all other costs associated with owning real estate. Maybe you’ve already found another house or apartment and are now paying double your housing costs! Let’s examine what happens to your net sales price when we factor in the costs you’ll spend during those 4 months.
Mortgage payments $1,288 ($240,000 at 5% over 30 years) x 4 months = $5,152
Taxes and Insurance: $450 x 4 months = $1800
Maintenance/Utilities: $250 x 4 months = $1,000
Total cost to sell with an agent now: $48,412
Remaining balance after sale: $251,588
As you can see, it’s down almost $50,000 from its initial list price, which is about 16.33%. This assumes that your home is in average condition. Homeowners often think their home is in average condition only to have a home inspector show up to find that the roof has a leak in the attic, the electrical system hasn’t been updated in 70 years, or the foundation is in need of repair. . These problems can cost tens of thousands of dollars to fix, and you can bet the buyer will want these things fixed before moving in.
If you need to sell your house fast, you cannot afford to wait 4 months for your house to sell. Investors can help sellers in many situations because they pay all cash, buy “as is,” pay most normal closing costs, and can close in 10 days. They also buy houses in any state or situation.
The next time you want to sell your home and need a quick, hassle-free sale, consider selling it to an investor.
