We want to sell a house without an agent. What are the pitfalls?
Q. Mom, 97, moved in with me when COVID happened and we were about to sell her house. We wanted to sell it as is, without a real estate agent. What pitfalls should we be aware of? And where should we put the money after the sale? I think most bank accounts are only insured for $ 150,000.
– Adult child
A. Selling a house is a big job.
For starters, you don’t need a real estate agent to sell your home.
If you are selling your home yourself, the process is known as “For Sale by Owner,” said Marnie Hards, certified financial planner at Aznar Financial Advisors at Morris Plains.
If you do this, you must be prepared to put a lot of time, energy and effort into the process, from marketing and staging the house, answering questions from potential buyers, etc. she declared.
“You will also need to educate yourself about the laws governing land transfers to understand what kind of documents you will need to prepare and who needs to sign them,” she said. “In New Jersey, you’ll need to hire a real estate attorney to take care of the paperwork. There may also be mandatory disclosure laws that would require you to disclose certain characteristics of the home. “
Selling a home without an agent could save you thousands of dollars given that you would typically pay a commission of 5% to 6% of the home’s selling price, she said.
“I understand the temptation to do it yourself in order to avoid what could be quite a high fee, but there are some risks involved in doing it yourself,” Hards said.
First, an agent can discourage their buyers from working with you, as it’s usually more complicated and difficult to close a deal without a professional working on both sides of the deal, she said.
Depending on how long the house is in your family, it can be an emotional process, Hards said. When you involve a professional, he or she can remain detached and unemotional, which usually leads to better results, she said.
Plus, realtors usually have a much larger network to market your home to, she said.
“Realtors are generally skilled at asking the right questions to determine if the buyer is suitable and qualified,” Hards said. “They also need to be comfortable and knowledgeable in the negotiating process, which can be difficult if you’ve never had to go through this process before.”
Also note that it can be uncomfortable for potential buyers to see a home when the owner is there, she said. Buyers tend to be more likely to spend more time viewing a home if they are working with an independent party, such as a real estate agent.
And finally, the paperwork can be complicated, and a real estate agent should know a lot more than you do, she said.
“If you are in no rush to sell the house you can always try to sell it yourself first and if it gets too expensive you can hire a real estate agent,” she said. “Keep in mind that the average time it takes to sell a house across the country is between 55 and 70 days. “
After you sell the house, if you decide to keep the proceeds in cash instead of investing it, you should consider a high-yield savings account, Hards said.
“Unfortunately, interest rates on savings accounts are quite low, so it’s worth looking for a reasonable return,” Hards said, noting that you can search for the highest interest rates online. “The amount of FDIC insurance depends on the account name. If it is individually titled, you will have $ 250,000 in insurance coverage per bank.
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Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly electronic newsletter.