Venture capital funds have poured millions into real estate technology startups over the past 10 years, and it’s not slowing down anytime soon. The result? Many options for anyone thinking about selling a home.
In this article we’ve laid out all the routes you can take to sell your home in today’s market. We’ll start with some of the more well-known methods, and introduce you to some of the new models being used by homeowners across the US.
Full-Service Real Estate Agents
The most obvious – and still the most widely-used – method for selling a home is a full-service listing with a licensed REALTOR®. Commissions are only paid when the home sells, and typically range from 4% to 7% of the home’s sale price. Some charge a flat fee upon closing, plus a buyer agent commission. Either way, the services typically work the same
Even more ‘progressive’ real estate companies, such as Redfin, fall into this category because the structure of the service itself remains the same – it looks like this:
- Agent provides a free market analysis, helps with pricing, and staging
- Photography is provided
- Home is marketed in various ways, but primarily through the MLS and online websites
- Open houses and showings are handled by the agent
- Agent provides and assists with all paperwork
- Negotiations are done on your behalf
- Your hand is held all the way to closing
The downside of traditional listing services is the high cost, but also the hassle of dealing with showings, and the inconsistency of service from one agent to the next (the service is only as good as the single agent assisting you).
For Sale by Owner
The ability to sell your home yourself has certainly become easier over the past decade as more and more technology has been made available to homeowners. For example, Zillow provides homeowners with some of the best marketing and exposure you can receive – second only to the MLS. You can also find tools to help you with organizing all of the tasks involved with your home sale, and electronically signing documents. However, there are still some major restrictions to this method.
The downside of selling your home entirely on your own, is lack of access to resources tightly controlled by the association of REALTORS®. Here are some of those things:
- The MLS
- Standardized contracts and documents
- Access to industry data to help with pricing and strategy
- Professional advice (unless you hire an attorney)
Selling by owner obviously can save you thousands in commission, however, according to studies performed by the National Association of REALTORS®, the savings don’t always add up.
Reports also show the number of for sale by owners has declined year over year. And this is due to the number of new services available to homeowners. Especially, the type of service we’ll discuss – Flat Fee MLS.
Flat Fee MLS
Multiple listing services are regional databases used by REALTORs® to market homes for sale. When a home is listed in the MLS, it is typically syndicated to Realtor.com, Zillow, and hundreds of other real estate websites who use the MLS as a data feed.
Flat Fee MLS listing services are nothing new. They’ve been around since the early 2000’s, and have been a sound alternative for DIY for sale by owners who didn’t mind doing a little bit of the legwork in exchange for thousands in commission savings.
Pricing for these service range from $95 to $495 in upfront fees (you choose your own buyer agent commission), and here’s what is typically provided:
- A listing in the MLS, Realtor.com, Zillow, and hundreds of real estate portals
- Standardized contracts and addenda
- Access to industry data to help with pricing and strategy
- Professional signage, and various other marketing materials
- Virtual assistance – help with questions and negotiations
The downside – if you consider it one – is that you will have to do a little work yourself. Here’s some of the things you’d be doing on your own if you utilize a flat fee mls service:
- Taking your own photos
- Showing your own home
- Hosting open houses
- Following up with showings to solicit offers
- Establishing your own pricing strategy
This is the type of service most often used by homeowners who want to utilize REALTOR® tools, while reaping savings typically provided to a for sale by owner.
We Buy Houses for Cash
There are thousands of real estate investors out there who will offer to pay cash for your house. This is certainly not an option if you’d like to sell your home for top dollar. Expect low-ball offers.
These types of services are best for these circumstances:
- The house is in dire need of repairs
- The house belongs to a deceased family member
- You are at risk of foreclosure
- You need to sell fast, and price doesn’t matter
The downside to this approach – if it’s a fit for your situation – is that it is tough to know if you’re dealing with a legitimate real estate investor, one who actually has the ability to purchase your home for cash. There are a lot of wanna-be investors out there who have watched midnight infomercials on how to make millions in real estate, that you could waste your time with. Do your homework and check references of any investors you encounter who offer this type of service.
This is a rather new spin on the above, We Buy Houses for Cash, approach. Albeit, one that is much more sophisticated – and legit. These are well-funded corporations that will typically make a bonafide cash offer on your home within 24 hours of entering your information on their website.
Some of the larger companies in this category include OpenDoor, OfferPad, and Perch. Some of the more well-known real estate names have also gotten into this business, like Zillow and Redfin.
There are catches – a lot of fine print. Based on reviews of these services, here are a few things you can expect:
- Offers are at, or below, market value of your home
- Offers may include a 6% discount/fee
- Closing typically take about 30 days, subject to inspections and appraisals
- Services may not be available in your area
It’s tough to find reviews on these types of services. Reviews have been mysteriously hidden from the search results in Yelp, but you can still find them here.
The upside to this type of service is that it is hassle-free, since you don’t have to deal with showings and negotiations. However, the downside is that you may not receive top-dollar for your home.
One of the newest models available are services that charge you zero commission. Instead, you list your home on their platform, and then a “marketplace fee” is charged to the buyer who submits an accepted offer.
These services typically provide you with the same level of service as the Flat Fee MLS services discussed above. However, the few companies that have launched with this model have a much larger technology component and a lot more risk.
This may sound like sound like a good idea to save money when selling your home, but it may deter home buyers and agents representing homebuyers who aren’t accustomed to paying the fees typically charged to the home seller.
Ready to Sell?
As you can see, there are a handful of options available to you when selling your home today. It really boils down to what you’re looking for:
- Someone to do all the work for you: Full Service Real Estate Agents
- You’re ready to tackle it 100% on your own: For Sale by Owner
- You’re desperate: We Buy Houses for Cash
- You want to save money by doing a little legwork: Flat Fee MLS
- You’re willing to sacrifice a little money for convenience: iBuyer
- You just want to try something new: No Commission
Which is right for you? That’s up to you to decide.
Author: Emily Fisher
Emily is a licensed real estate agent and Brand Ambassador for Worth Clark Realty and Transactly. She has helped grow the brokerage into a top 50 fastest growing company, repeat INC 5000 winner and contributed to their multiple rankings on the SBJ Best Places to Work lineup. In her personal life, Emily is a queso connoisseur, a documentary enthusiast and makes her daughters own toddler trail mix.