Did you know you do not need a real estate agent or broker in a real estate transaction?
If you think about it, buying and selling real estate property is like buying and selling a car, you can do it yourself.
Real estate agents and brokers are just car sales men in the real estate. They just want to make money from you.
For sale by owner makes sense and saves you lots of money.
And here’s how.
The median single family homes in Hawaii is $750,000. The average commission for a real estate transaction with a real estate agent or broker is 6%. You’re paying $45,000 for a random joe to sell your home. If your home is worth a million (which is majority of the homes in Honolulu), you’re paying this random joe $60,000 to push papers for you.
How about you save the $60,000 and hire an attorney, who can draft your purchase contract and give you legal advise about your estate planning and tax at the same time.
People are afraid of lawyers because they think they cost too much, which is true. They do charge a lot for good reasons, they have your ass cover when the time comes.
My attorney charges $400 an hour. The $60,000 commission you pay for your real estate agent, who does not provide any legal advice because they don’t know anything, will buy you 150 hours of attorney time.
My attorney went to 4-year undergrad, 2-year law school and passed his BAR exam, and is entitled to charge $400 an hour for legal fee, which is consider expensive.
A real estate agent (may or may not have a college degree) went to real estate agent prelicensing course for 60 hours and passed the real estate salesperson license test.
Say your real estate agent spends 50 hours for your listing…I don’t know, they may do 1 or 2 open house (4 hours each), writing listing description, etc, etc. Let’s say 50 hours, that’s $1,200 an hour.
Unless you make more than $1,200 an hour, I would do it myself.
Did you know how easy it is to sell your home on your own. The hardest part is marketing.
Read “How to Market Your Real Estate Property?”
Chances are if you’ll need your attorney to draft the purchase contract and go over your trust and estate planning stuff, you’ll probably needs a few hours of your attorney’s time, which probably would cost you a few thousand.
Even if you use a lot of your attorney’s time chit-chatting, say 50 hours, you’ll still come out only $20,000 on attorney fees.
Remember, the commission you pay your broker or real estate agent is just one of the closing cost. You still have more to worry about when you close.
If you used a real estate agent or broker, his/her only tasks are writing you listing description, list in MLS, find a new agent to do open house for them, answer calls from other agents about showing. Most of the time, it’s the buyer’s agent who show up to showing, so your agent just sits pretty in the office waiting for an offer to come through, and get you to say “yes” to the first offer that come through, so he/she can close and pocket the commission.
Once you have an agreement with the buyer, signed the contract and start escrow. There’s not much left to do - schedule home inspection, and just wait.
Real estate agent or brokers are not allow to give any legal advice. The standard Hawaii realtor’s Purchase Contract specifically provides that your real estate agent is not providing you with legal advice, and you should seek legal counsel. So, you are might as well hire an attorney from the beginning.
You know what’s worst?
Of course in Hawaii, everyone knows a friend or a relative who is a real estate agent. Hiring a Hawaii realtor is especially inefficient when the sale is between family members, and both sides are using a family friend to be the dual agency broker. That “family friend or relative” may receive a six percent (6%) commission for processing paperwork, even though as a dual agent they have probably utilized the standard “Dual Agency” disclosure which provides that he/she cannot really take sides. So who does he/she work for?
They can't give legal advise, and they can't take sides. So why are you pay this person?
Related article: Real Estate Agent…Absurd?
Anyway, if you decide to sell your real estate property on your own and put up a for sale by owner sign in your front yard, the process is really simple.
Advertise your real estate property like you would selling your car. Seriously, do you hire someone to sell your car?
Write a very descriptive ads from your property.
Show your property to potential buyers. You can do a open house event or private showing.
When you have a potential buyer, contact your real estate attorney to have him/her draft your real estate purchase contract.
Have both parties signed.
You’ll contact an escrow company to open escrow. Actually, the buyer opens escrow. When I purchase my last real estate property, I went to Downtown to the escrow company myself. My agent did nothing.
Your buyer should contact a home inspector for home inspection. This is a buyer’s expense. It’s up to the buyer to have an home inspection.
If you’re a condo owner, you’ll contact your property manager to have condo doc send over to your buyer.
The escrow and title company will make sure the transaction goes smoothly and both parties get what they agreed upon.
The other advantage of selling the real estate property on your own is that you know the property best. You get to meet the buyer directly, interact and negotiate with them directly without a third or fourth person involved.
According to the National Board of REaltors, 44% of buyers find their homes online (not from an agent).
Related article: Simple Home Selling Tips to Sell Your Home FAST.
There are many available sites to market your real estate property for sale. Here’s are a few that I use. If you type in “for sale by owner” in Google, more sites would show up.
Owners.com allows your listing to be posted in your local MLS.
Don’t forget social media. Share your postings on Facebook, Twitter, Instagram, wherever your people hang out.
Having hard time selling your real estate property? Let us help
Related article: Sell Your Home Fast