The average real estate fee is two to six percent of the sale price in most markets. That means you would have to pay a commission of $24,000 ($400,000 times six per cent) if you sell a house for $400,000.
On a $400,000 sale, that might not seem like a lot of money. But here is where it's important to remember that while the commission is based on the property's selling price, it's actually paid out of your home equity.
Let's assume, for example, that while your home might be worth $400,000, you have a mortgage of $250,000 on it. Which means you have $150,000 Net Equity. But if you pay a real estate fee, you're going to have to cut it down by $24,000. At the closing table, that'll give you a net of $126,000.
It's likely that other sellers will also be paying closing costs. They can collectively may your net worth even lower, down to or below $120,000.
Of this reason, home sellers sometimes want to sell their homes without a real estate agent using a site like for sale or rent by owner. It is clearly cost-effective.
Because you do not use a real estate agent, you will have to deal directly with any prospects for the purchase. It's a situation of giving-and-taking, that you have to recognise from the outset. The buyer would almost definitely come in with an bid that is below the price you ask for. Some tough conditions might also be included, such as making you pay the closing costs.
You would have to go back and forth if the original offer is not appropriate. Hopefully, as you descend on the price, the buyer comes up. You are going to have to know just how far you want to go.
The initial talks are likely to be verbal but the buyer will have to make a written offer until you agree on the basics. To that end, you may want to have a limited supply of state-specific real estate contracts. This can be found by doing a web search. You may also want to view for sale or rent by owner reviews.
The contract shall specify every aspect of the sale, including the selling price, the closing discounts, products to be included in the sale, the closing date and the closing place.
Contingencies would also have to be included in the contract. The buyer may insist, for example, on getting a home inspection. And you will ensure that within several days of approving the bid you receive a copy of the mortgage approval from the lender.
The closing will normally take place in an attorney's office or a title firm, depending on what the practise is in your state. You and the buyer will come to an understanding on this spot.