Options for a Home Seller – Part 2

Part 2: Net Listing

Part 2 of an 8 part series -

Goal: To educate a home seller on the options for selling their home.

“What are my options?”

This is one of the most common questions I receive from home sellers, and it’s a valid question. How do you, as a home seller, expect to make an informed, intelligent selling decision without knowing all the options you have available? The short answer is you can’t. But don’t fret! The goal of this article is to clarify and explain all the options you (home seller) have when liquidating your property.

Below is an outline of the options at your disposal (in no particular order):

1. Traditional Listing
2. Net Listing
3. Mortgage Assumption
4. Cash sale (off market)
5. Owner financing
6. Short sale
7. For Sale by Owner (FSBO)
8. Foreclosure

Now that you know all eight options let’s dive into more detail describing each option and cover a few pros and cons.

2. Net Listing – A  net listing is a traditional real estate listing with a twist; the broker and the seller have agreed on a predetermined amount the seller will “net”. The same TREC listing agreement paperwork is used with the caveat that under the broker’s compensation, instead of being a percentage of the sales price, it states “$XXX,XXX” net to seller (less pro-rated taxes and curative title issues). You as a seller know what you are netting after the sale before the house is sold. And you don’t pay any commissions or fees, as they are paid out of the brokers profits.

• Pros
  • You know your “walk away” money. Before the house is listed, barring there are no serious problems after an inspection and the house closes, you know what you are walking away with (netting) after the sale. You don’t need to get your calculator out to determine what you will make if the selling price drops five or ten thousand.
  • No commissions or closing costs. You pay zero commissions, closing costs, fees, etc. All those expenses are the broker’s problem!
  • Can sell as-is. Like other selling options, net listings can be sold as-is, relieving the stress and expense of completing repairs.
  • Marketable to cash buyers. Your house will be marketed on the MLS and can also be marketed to the broker’s personal cash buyers. These cash buyer lists can consist of tens of thousands of investors.
• Cons
  • Inconvenience of showings. As with the traditional listing, you will have to show the home to the retail buyer or investor. The number of showings may be minimal, if you receive an offer quickly, or extensive, if you show the home numerous times.
  • Undetermined broker profit. You have no say (unless you have an addendum) of what the broker is paid. He/she could sell your property for 250k while having it contracted to you at 150k.
  • Buyer qualifying for financing. As with any retail buyers, they could have financing issues that you find out about after weeks into the transaction. Those are valuable days on market wasted if you are in a hurry to close.
  • Uncertain close date. Like traditional listings, there is no set close date. The house could sit for a few days, or a few months, before a buyer is found. Again, this can create issues if you are trying to close on or before a particular date.
  • Home inspections. You may not know the attic needs more insulation, the duct work has mold, the electrical is out of code, etc. but the inspector will, which he’ll write up in his/her report and give to the buyer. In other words, the inspector could find serious problems you didn’t even know existed!

Continue with Option 3 of our 8 Part series!