3 Ways to Sell Your House Cheaper Than Using an Agent

by | BiggerPockets.com

If you’ve lived in your home for a few years, you’ve been building equity into your mortgage. When it comes time to sell, you’ll be glad for all the money you put into it. It’ll give you a nice amount for a down payment on a future house. However, many home sellers cringe when they realize they have to pay up to 6% to their selling agent.

As a result, many sellers are looking for ways to avoid paying the agent commission.

“Homeowners across the United States are figuring out that they do not need to pay what agents demand and they may not need an agent at all,” says Damon Darlin of the NY Times. “At the same time, technology is giving consumers tools to nearly circumvent the agent.”

You too can take advantage of these savings if you know where to look.

1. SimpleShowing, a Tech-Enabled Brokerage

Historically, consumers have relied on agents to help determine a fair market value for their property and help market their home to buyers. But today, homeowners have virtually the same access to property data as agents. So, most consumers can already determine an accurate selling price. And marketing occurs automatically via MLS distribution on the internet. As a result, the main thing that savvy sellers need help with is the contract.

Related: Attention, Real Estate Agents: Stop Worrying About Job Disruption and Start Investing NOW

Online brokers like SimpleShowing charge a fixed fee of $5,000 to list the home on the MLS, which includes professional photos and help with things like negotiation. Say goodbye to the 6% commission!

As digital real estate apps and data become more prevalent, home sellers seem to be less and less reluctant to opt for agent alternatives. Tech-enabled brokerages have begun to emerge to meet the needs of these consumers that no longer need the hand-holding of a traditional agent. Tech brokers like SimpleShowing offer full service, licensed agents for only $5,000 paid at closing. Compared to the standard commission, sellers can save thousands of dollars.

2. For Sale by Owner (FSBO)

The brave homeowner will try the for sale by owner approach, commonly known as FSBO. A FSBO home essentially means that you won’t use a brokerage or agent at all. Instead, you’ll do all the legwork yourself with no commission costs.

If it’s successful, it’s an awesome way to save money, but it’s not easy. You don’t have access to the MLS, which significantly limits your exposure to potential buyers.

If you want to be successful, Piper Nichole, author of the book The For Sale By Owner Handbook, warns that the first step is pricing the home right.

“When a home sits for a long while, buyers start to wonder what is wrong with it,” she says. “The best option is to come out of the gate priced right.” Understanding the market and being willing to market your property effectively is the best strategy for saving yourself 100 percent of the agent commission rate.

3. “MLS Only” Listing

The general standard rate for real estate agents is between five and seven percent of the purchase price of the home. However, some real estate agents, known as discount agents or “MLS only” agents, offer a lower percentage for their services. Some will charge as little as one percent or even a few hundred bucks. But usually this only includes one thing—exposure on the MLS.

“You need to consider… whether this is a case of ‘getting what you pay for,’” says Michael Douglass, a real estate expert and contributor to The Motley Fool. “There are plenty of great discount real estate agents out there. (My wife and I had a fantastic experience with ours.) But there are also undoubtedly some who go the discount route because they can’t compete on customer service, negotiation, or some other critical component of the home-buying or home-selling process.”

trade-up-home

Related: Will Real Estate Agents Be Made Obsolete by 2025?

In order to ensure that you’re getting a good discount real estate agent, Douglass recommends finding a neutral location for an interview, such as a restaurant or coffee shop, and asking at least the following three questions:

“Because you charge less, you must be driving lots of extra sales volume. What do the trade-offs look like?” “What lenders would you recommend working with?” and “What if things don’t work out between us?”

The agent’s answers will teach you a lot about their philosophy and ability to handle difficult situations. It will also help you to test the agent’s competency so that even though you’re getting a discounted rate, you’ll be able to get a great house for your money as well.

Have you used any of the above methods? Anything you’d add to this list?

Comment below!

About Author

Larry Alton

Larry Alton is a professional blogger, writer and researcher who contributes to online media outlets and news sources. A graduate of Des Moines University, he still lives in Iowa as a full-time freelance writer and avid news hound. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing.

4 Comments

  1. Jack B.

    Missed the super cheap flat listing fee. For $500 you can even get a sign, lock box, flyers, etc. I’ve sold two of my houses saving 50-60K in commissions that would have otherwise gone to a high school educated glorified door opener.

  2. Michael P. Lindekugel

    discount brokerages are nothing new. they have been around since the 1990s. during each recession, i have seen them go out of business typically because they dont spend much time or money on marketing. the exception is redfin, but they came close to closing during the Great Recession. they got cash infusions of $50M and $70M to stay afloat and they still cut the rebate to buyers and increased the price to sellers on several occasions. only recently has redfin started making a profit. their stock is getting hammered on recession fear and market correction fear. dirty little secret in the industry after a while the best redfin agents leave and move to traditional brokerages where they make more money. that begs the question is the discount brokerage a viable business model? if they go out of business during recessions, then probably not. the smaller discount brokerages certainly are not working the same volume as redfin or have anywhere close to the same economies of scale.

  3. Boone Bergsma

    Thanks for sharing Larry! Saving on the typical 6% real estate commission will definitely make your pockets bigger 🙂 and helps sellers keep more of their hard earned equity at closing. If property sellers want to still save big but avoid the hassle of FSBO there are more and more 1% realtors offering top level service that could cost less than the $5000 flat fee of SimpleShowing. Anyone considering selling a home should consider the benefits of a 1% realtor, https://www.biggerpockets.com/blogs/11459/79882-use-a-1-commission-realtor-to-sell-your-house-and-save-thousands it normally takes home owners years to build up equity and makes no sense for them to use such a large amount of it on selling their property. Between apps, flat fee brokers, low commission real estate agents, and whatever the next tread is when it comes to selling real estate, technology is changing the game.

  4. Glenn F.

    If SimpleShowing charges $5000, a typical 200k house would list with a full service agent at 3% which is $6000. That’s only a $1000 savings. You’re still going to have to pay the buyers agent their 3% regardless.

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