Selling your house for the first time can be tricky.
Let’s say you’ve listed your home with a real estate agency, and they have tried (their best?) to sell it. There were opens for inspections, some people came through with offers, but no one offered the price you would be prepared to sell for. As a result, a couple of months later you still find yourself in the same situation, no serious buyers in sight and you begin to wonder whether or not your agency is the right one for the job.
So you decide to sack the agency and sell on your own, through internet, friends or family. 2 months are enough time for the word to get out there and you are beginning to get approached by people interested in buying your home.
Some buyers may be smart enough to propose that you reduce your asking price by the amount of estate agent’s commission. That would make sense: since you have no agent and don’t have to pay the commission, you don’t need to be ‘passing’ it on to the buyers.
For example, if the price you wanted to get was $400,000, and your previous real estate agency was charging a 2% commission on sale, then to achieve your desired price the house would be put on the market for $408,000 = $400,000 your price + 8,000 estate agents’ commission. This way the buyer would be paying for the house and the commission, that’s how it’s done.
When selling on your own, you don’t have to pay the 8K to the agent, so it is possible to price your house at 400K and still get your desired price. Lower price makes the house more attractive to buyers therefore improving your chances to sell.
However…
Wait a minute before jumping on this offer. There may be one little, but significant nuance to check before you agree to sell for your desired price minus agent’s commission.
If the person who you will be selling the house to was originally introduced by the real estate agency, you may still be required to pay them a commission. It makes no difference that your exclusive listing agreement had ended before your house was sold. Many such agreements state in fine print that the vendor is still liable for a commission if the agency was the “effective cause” of a completed sale, no matter when the contracts were exchanged.
Read the article linked here for a true story that almost cost Justine and Jane $20,000 in agent fees they were required to pay, completely out of the blue, 2 months after settlement.
Were you ever caught in a similar situation before? What did you do?
