BusinessWire reports that US homeowners are sitting on home equity windfall of $26,300 on average. To tap into this cash, some may refinance their homes or get home equity loans. Others are looking at selling. This is a great time for a move due to the low interest rates. Many are now rethinking where they live because of the new tax bill.
However, not all people are excited to pay full Realtor commissions. Are there other options for people who are thinking about selling their home in 2021 or beyond? What do they compare to the traditional real-estate business model?
Traditional Real Estate Brokers In Florida
Florida’s traditional real estate brokers charge a 6% commission. This is 6% of the sale price of the house.
If you were to list with an agent and make a sale for $500,000 gross, you would be paid $30,000 in commissions.
The listing broker is responsible for the commission. Any money received by a Florida real estate agent can only be accepted in writing. Any cooperating brokers will be paid by their brokerage. A 50/50 split is common. The broker will then take their share of the 50%. For an average agent working for a large franchise, it is normally 50/50. The agent who worked for your $30,000 would receive $7,500.
This is before they pay any additional office fees, license fees, or association dues. Insurance, taxes, and all marketing costs that were involved in selling the home. This is a decent amount of money for the amount of work required. Agents may find that they spend more than they make at a half-price.
FSBO (For Sale by Owner)
Some choose to not pay commissions, by going with the For Sale By Owner (FSBO) route. Go to your local home repair store and grab some yard signs and Sharpies. Then, go online and search for free websites that allow you to list your house. Create flyers and contact a real estate attorney to screen potential buyers. Invest in home upgrades that increase the value of your home. Finally, try to make a deal.
According to the Florida Association of Realtors
- Only 10% of Florida’s home sales are FSBOs.
- There are far fewer FSBO sales now then when record keeping began in 1981
You can become a FSBO if you have a friend or family member who is interested in buying your house. This could save you some money if you are looking to sell your home on a budget. You may be able to save some money by calculating a lower sale price and closing costs. If there are personal relationships between you and your buyer, the bank may not consider it an ‘arm’s-length’ transaction.
Flat Fee Real Estate Services in Florida
Florida offers several flat-fee real estate services. These services are offered by a brokerage, a flat fee real estate agent, and a budget Realtor. They charge homeowners a flat fee for their property to be listed on the MLS. This could also include syndication on other popular Realtor websites. These services offer a range of advertising options, ranging from $100 up to $700.
You can do this by getting your house on the MLS. But, this alone will not sell your house. You will need to pay a commission to buyer’s agents in order to get any interest in your property. They will likely charge between 2.5% and 3% of the sale price. However there are some that are as low as 1%.
You can expect to pay more if you are determined that you need any assistance. Lockboxes to hold contracts, flyers, listing for longer than three months, and contracts for showings. You may need to negotiate a flat fee with an agency if you decide that you require more assistance in negotiations, showings, or managing the transaction.
If you are an expert in a hot market, this can be a viable option to sell. You should be aware that FSBO doesn’t provide the same protection as an agent to limit your liability.