The typical real estate commission is 6% of the sale price. That means that if you are selling a house for $400,000, you will have to pay a commission of $24,000 ($400,000 times 6%).
That may not seem like a lot of money on a $400,000 sale. But this is where it’s important to remember that though the commission is based on the sale price of the property, it’s actually paid out of your home equity.
For example, let’s say that although your home may be worth $400,000, you have a $250,000 mortgage on it. That means that you have net equity of $150,000. But if you’re paying a real estate commission, you’ll have to reduce that by $24,000. That will give you a net of $126,000 at the closing table.
Collectively, they may reduce your net equity further, down to $120,000 or less. Not to mention any repairs that maybe required from a regular buyer. By the end game the total fees and costs might be anywhere from 8-10% of the list price eating into your equity. No to mention the difficulty to sell and handle all the areas below.
FSBO home disclosures
Federal and state law mandates certain disclosures and material facts. You must give the buyer a copy of all required disclosures. Have your buyer sign a receipt indicating that you provided these things.
If you live in a community, co-op or condo with a homeowners association (HOA), your buyers and their mortgage lenders will want copies of the covenants, conditions and restrictions (CC&Rs). That’s a set of rules homeowners must abide by.
1. What’s my property worth right now?
2. Am I willing to deal with buyers’ real estate agents?
3. How much do I like sales and marketing?
4. Can I stand people stomping through my house and saying rude things?
5. Am I willing to screen my own buyers?
6. How to evaluate and counter offers?
7. Due Diligence/Appraisal contingencies and repair work?
8. Legal home disclosures of material defects.
9. Pictures of property
10. Signs and handling calls from interested parties.
