Sucessful Relocation: An Interview
Successful Relocation: An Interview
Or, "How Joe Sold the House Himself and Saved a Bundle"
Update: Second Buyer Comes Through
Update: The first buyer has dropped out, and has lost $15,000 in earnest money.
"Joe" was able to repeat his selling process. He put the property back on the market for a week, with the announcement that bids would be taken on Saturday. His number two bidder from selling round one came back, but produced a low-ball offer, lower than they had been willing to pay before. As the bidding war played out, they raised their offer, but lost to a buyer that Joe and his wife favored: The Judge. The choice of buyers this time had as much to do with personal character as it did with the amount of the offer. An older man working as a court judge impressed them with his straightforwardness. He seemed like a solid type who would not play games when it came time to close.
All told, the earnest money from the first buyer did cover the expense of carrying two mortgages, and then some. The remaining cost was in stress and time. One could debate whether the savings of using a limited service realty agent was worth the hassle. Certainly it is not clear that problems with buyer number one would have been avoided by using a full service realtor. However, the impact on Joe's life would have been reduced. Joe minimizes this, saying that a couple of three minute phone calls per day were worth it. I observed more interruption. Joe took a few afternoons off work, and fielded home selling calls during meetings with coworkers. The increased stress on him was evident some days, particularly when the first buyer reneged.
Comments? Has anyone else had personal experience with a limited service realtor, that they would like to share?
Joe (not his real name) graciously agreed to an interview on the topic of his home sale. I had marveled at the rapid, profitable sale, which he handled with a limited-service realtor. True, he only moved a few blocks, so it was not one of the out-of-state locations that are the topic of this blog. But, he moved from one historical Wallingford house to a better one, and closed a great deal. We sat in a cafe in Pioneer Square for the interview.
Monte: How many houses have you bought and sold?
Joe: Three or four -- Four, including my wife's condo.
Monte: How many of those involved a full-service realtor?
Joe: I did three with limited service brokers, and one with a full-service realtor.
Monte: Have you "flipped houses" (bought and sold houses as a profitable business)?
Joe: No. One was a rental property, but the others were all primary residences.
Monte: How much do you estimate that you saved by selling your family home yourself?
Joe: About $19,000 US.
Monte: Wow. How did that break down?
Joe: I paid the limited service realtor $799. Typically, I would have paid 3 percent, so $20,100 on a closing price of $670,000.
Monte: What other expense did you incur by doing the sale yourself?
Joe: I paid a "house dresser" to advise me how to present the house, rented a storage unit, and bought some decorative items. It adds up like this:
$20,100 Savings on realtor fees -$125 Storage unit for two months -$100 45-minute consultation with house dresser -$1800 Decor, mostly art for the walls +$1200 Money from returning some of the art ----------------------------------------------- $19,275 Total savings
Monte: What did the limited service realtor provide?
Joe: The plant a professional-looking sign in the yard with their name on it, which provides more a more legitimate look than a FSBO sign. She listed the house on the Multiple Listing Service (MLS). You get an MLS key box. You put your spare key in there, so any buyer's agent can get in to show the house. She helped with the content of a flyer, which we had to make. We also had to keep her informed of all the offers we received. She took care of the offer timing and terms, the paperwork. She advised us how to fill out the "agent-only" remarks in the MLS listing.
Monte: Describe that.
Joe: There is a section of each listing that only realtors are allowed to read, not the buyers. We included the terms that the buyer's agent would receive the customary 3%. A lot of buyer agents will dismiss a DIY listing, but the commission kept them interested. It also included details like the date that offers would be accepted, and the Open-house dates and times.
Monte: So that kept the buyer agents happy?
Joe: Yeah. In fact, at times the buyer agents were working in my best interests. They would advise me on what counter offer I should make, and they leaned on the buyers to pay more nad to make up their minds.
Monte: You priced the home yourself?
Joe: Yes. We offered it slightly below market, at $619,000. By doing that, and by announcing the day that we would take offers, we managed to get six offers in ten days.
Monte: Excellent. What were the offers like?
Joe: One advantage of listing yourself is that you are not bound to sell. Most seller agents will have you sign documents promising to sell the house, and to do it through them. That's why we were comfortable starting at below-market; we were not really bound to that price, unless someone showed up with cash in a suitcase, with no contingencies, and we had no other offers.
So, these six buyers made a few offers each. The highest one was verbal, which posed a problem. In order to bring that offer to a competing buyer, and ask for more, you are supposed to have it in writing. That buyer was being tricky. We explained the situation to our favored buyer, and they matched the $670k, added no contingencies, and got the house.
Monte: I suspect that this is something not everyone can do themselves. Have you had any sales jobs or training?
Joe: I worked for four years as a customer service rep in an import auto repair shop. It was not really selling, but involved a lot of communication and negotiation. I represented the customers to the mechanics, and vice versa.
Monte: Speaking of cars, are you the type that likes to haggle over the price of a car that you are buying.
Joe: Yeah, I love that stuff.
Monte: With a wife, two kids, and another on the way, you are a busy guy. What impact did the extra work of selling your home have on your professional and personal life?
Joe: Judging by the business cards left, about 10-15 agents per day showed the house. My wife and I both work, so we were not in the home. I took about 5 phone calls a day at 2-5 minutes each. The redecoration and storage required me to take a day off work. We had open houses one Saturday and Sunday, that ran over time, so we had to be scarce from 11:30am to 5pm. We took offers on a Sunday morning. The buyer fretted for quite awhile. I ended up making a trip to the copy shop at 9:30pm that night. I was sweating bullets that day.
On three occasions, agents needed to show the place in the evening. We told them that we needed to have the house back at 7pm, so that we could put the kids to bed. On those nights, the family went out to dinner.
Monte: And nineteen thousand dollars will buy a lot of dinners.