(commission rates are generally negotiable and vary in different parts of the country),
that is $18,000 in gross commissions, if you use an agent and the buyer does also. As the seller, you would get $282,000 less any fees and costs you are responsible for.
Many prospective buyers work with agents. Often, these agents will bring their buyers to a FSBO such
as yours, especially if their buyer has requested it or they themselves have driven by or seen it
advertised. Agents will accompany their buyers in order to maintain control of their clients and
also to make contact with you. A good agent will also contact you before bringing in their client
and inquire if you are willing to "cooperate" with them. They are simply asking if you would be
willing to pay them a commission if their buyer actually buys.
We recommend you cooperate with agents as this will greatly increase the probability of successfully
selling your house in the shortest amount of time. You will also have the added benefit of dealing
with someone who knows what they are doing. The rate of this cooperation for the buyer's half of the
commission is negotiable, but should be between 2 and 3%. One half of the 6% in our example or 3% of
$300,000 = $9,000.
Your initial offering price should take the possibility that your buyer will be represented by an agent. Therefore, let's take the $300,000 and subtract $9,000 from it or $291,000. Setting your initial
asking price under $300,000, in order to attract prospects, and above the $291,000 in order to cover any possible commissions, is
what we would recommend.
Say $296,900 would satisfy the twin objectives of pricing: Bringing in buyers and maximizing your
money, while leaving room to pay a buyer's agent's commission, if necessary.
Keep This In Mind
There is more to setting the right price than seeing how much you can get. Here's why:
Suppose you were able to find a buyer who was willing to pay far above market value for your house.
For whatever reason, he just has to have your house. Unless it is a cash offer and he rolls up to
the closing with a wheelbarrow full of twenties, (of course, we are talking hypothetically, since
Uncle Sam would be plenty interested), your buyer is going to need a mortgage. The lender, being
no dummy, is going to have the property appraised. After all, the lender needs to be protected in
the event your buyer defaults. The lender has to be assured he can at least cover the amount of
money he has loaned out to purchase the property. Therefore, if the buyer has agreed to pay a price
that is substantially over market, he may not be able to get a mortgage. Assuming there is a
mortgage contingency in the real estate contract, the deal will not go through.
Not only have you lost the sale, but you have lost precious time. As bad as the market is, it can get worse,
plus you may have to answer to the next buyer about why the deal fell through.
Pricing ABC's - Pricing Your House to Sell
Pricing ABC's - Pricing Your House to Sell - Determining the Price
Pricing ABC's - Pricing Your House to Sell - Finding Comparables
see Staging for Sale for tips on staging your house to sell ASAP.
