Is It Smart To Sell A House Without A Realtor In 2021?
If you’re thinking about whether you should sell a house without a realtor, this article is for you. We will go over the pros and cons of selling a house without a realtor and with a realtor to help you decide what you should do, given your unique situation.
Before going over the pros and cons of selling a house without a realtor, let’s quickly go over how both processes work.
The Process Of Selling A House With A Realtor
The traditional method to sell a home involves first finding a realtor who will list your home. Finding a realtor now-a-days is not a difficult task considering that there is a countless number of them at every corner!
Once listed, your home is broadcast across many different MLS (multiple listing service) websites. Think Zillow, Trulia, and Redfin. Potential buyers then set up showings and you will hopefully be able to get an offer(s) that works for you. This is an oversimplification of the process, but explains very simple and concise steps of working with a realtor.
The Process Of Selling A House Without A Realtor
When you sell a house without a realtor, it involves finding an investor to purchase your home directly. There are many reasons as to why someone would choose this route over selling with a realtor, which we will get into more in-depth shortly, but 3 common reasons why people choose this route are the following:
(1) A fast settlement: people that choose to sell their house to an investor directly do so because they are looking to close on it quickly without headaches.
(2) No repairs: when selling a house without a realtor, direct to an investor, there won’t be any repairs required because investors are typically experienced and know what they are getting into.
(3) Privacy: when you sell a house without a realtor, there are generally only a few showings at the most, and no one can publicly see that you are in the process of selling your home. Therefore, privacy is maintained.
Should I Sell A House With A Realtor?
With all of that said, the answer to the question of using a realtor is: it depends.
You’re probably infuriated right now as this is the kind of answer a politician would give, but this really is the best answer to the question. We’ll dive into the pros and cons of selling with a realtor below, and hopefully you will be able to find the answer where more context is provided.
Pro #1 Of Selling A House With A Realtor: Price
When you sell your home with a realtor, 9 out of 10 times you will get a higher price than any other way you could sell it. This is not because realtors are miracle workers. In fact, most are very average, with only a handful of outstanding realtors that provide substantial value.
The reason you will likely get a higher price is because when you list with a realtor, the listing goes out to lots of different websites and gets many “eyeballs” on it. It is a simple math equation: the more people you have looking at your property, the higher the price you’ll get due to the competition.
The “No Fee” Myth
Many deceptive home buyers and more particularly, wholesalers, will point out that the seller will pay 5-6% in commissions to the realtors involved with the sale. They will then say that because of this large commission, the seller should sell their home to the wholesaler because there will be no commissions or fees involved.
While both of these statements (realtors charge 5-6% and you won’t pay fees to cash buyers or wholesalers) are true, it is deceptive to lead with these facts. While it is true that professional home buyers do not charge fees or commissions to a seller like a realtor would, they are looking for a significant discount on the property.
Therefore, it is not a fair comparison to selling with a realtor. For instance, if you sell your home with a realtor for $200,000 and agree to pay 6% in commissions, this comes out to $12,000 that you will pay the realtors involved. But if you sell to a professional home buyer, they will likely want to purchase the property for 10%+ below market value.
So, this comes out to $20,000 at a minimum that you are “paying” to them in this scenario. Wholesalers try to go under contract at an even lower price since they have to “sell” the contract to an actual investor. You can expect a wholesaler to offer 50-60% of the after-repaired value (ARV) to a seller. Now the 6% commission isn’t looking too bad, is it?
Summary Of Selling A House With A Realtor
You’ll notice the only pro to selling a house with a realtor is the price you will get. The reason for this is because of the exhausting process of selling a house on the traditional market with a realtor. Inspections, appraisals, and showings galore make it a very tiring process that we will dive into more below.
Con #1 Of Selling A House With A Realtor: Privacy
When listing a property on the market with a realtor, there will be lots of showings, open houses, and ultimately there won’t be very much privacy during this process. Lots of people are okay with getting a slightly lower price for their home in exchange for not having to go through this process, and rightfully so!
Having your business broadcast to hundreds of thousands of people online and having many people come to see the property and disrupt your normal life is not fun for anyone, much less people that have a property with some deferred maintenance needs, clutter, etc. This is why the lack of privacy makes this route less desirable.
Con #2 Of Selling A House With A Realtor: Speed
According to this article from Zillow, it currently takes on average 55-70 days to sell a house once it is listed on the market. This doesn’t count the time needed to clean up and repair the property as needed, it is simply the time from when the property is listed until it settles.
This study is also comprised mainly of homes that are in good shape, that are relatively easy to sell. If the data were to be broken down, I would guess that homes being sold as is take a longer time than this to sell. Compare this to an investor who can visit a property, and buy it for cash within 10 days.
Con #3 Of Selling A House With A Realtor: Repairs
Realtors will generally recommend that the property be cleaned up and updated to market standards before listing it. If a property has been owned for a long time, this can be a very expensive and exhausting process that many people wish to avoid.
When To Sell A House With A Realtor
I am in no way an advocate for realtors. Like I mentioned above, I think most of them are average, at best. Many of them being below average. That being said, there is always a time and place for realtors. In certain situations, it makes more sense to sell with a realtor, and in certain situations it does not.
If your property is in good condition, it is going to make sense to sell with a realtor the majority of the time. Most people that are looking to buy a home the traditional way are seeking out these kinds of homes that are considered “turn-key.” These homes require very little work or updates.
If you have a house in good condition, but need to sell it quickly for any reason, then it still could make sense to find a professional home buyer as opposed to selling with a realtor. You will just likely sell it for a slightly lower price.
If your house is in immaculate condition, then it is 99% of the time not going to make sense to sell through any other channel other than with a realtor. You will get the best price doing it this way, and this is what we recommend. An investor-buyer will usually not be able to buy it anywhere close to the price that a “retail” buyer will offer.
Now that we’ve gone through the pros and cons of selling a house with a realtor, let’s go over selling a house without a realtor, directly to an investor.
Should I Sell A House Without A Realtor?
If your home is in below average or bad condition, and requires a good amount of work, then selling without a realtor might be the best option. Properties can be sold as is with a realtor, except the process is usually much simpler when you deal with a professional home buyer.
Realtors are usually not investors. They know the market and know how to sell a home that is in good shape, but they will likely give bad advice in regards to how to sell an as is property. Dealing with a few competent and well-intentioned professional investors is the best route to take if you plan to sell your home as is.
Con #1 Of Selling A House Without A Realtor: Price
The pros and cons between the 2 options we are discussing in this article are flip flopped, price is the pro for selling a house with a realtor, but for selling a house without a realtor, it is the con.
Real estate investors are looking to create profit and are not trying to lose money, so paying slightly under market value is usually how they operate. This is why price is typically sacrificed when selling direct to an investor. If price is the only thing that a seller is looking for, then it makes more sense to list with a realtor.
Many sellers will elect to give up the potential for the highest possible price in exchange for the pros that comes with selling a house without a realtor, to an investor. Opendoor is an example of a company that recognized this and created a business to serve this need.
Pro #1 Of Selling A House Without A Realtor: Privacy
Maintaining privacy is much easier to do when there are, at most, a few showings at the property to private investors. There are also no open houses, usually no inspections, and no sign in the yard to indicate you are selling your house.
Compare this with selling with a realtor and you can understand why people elect to go this route and sell a house without a realtor.
Pro #2 Of Selling A House Without A Realtor: Speed
When selling direct to an investor who is capable and trustworthy (not a wholesaler), the process is typically much smoother and quicker for a few reasons. The first reason is that they won’t be using traditional financing that takes 30+ days.
Investors will generally use cash or private lending sources, which allows them to close in 10 days or even less. This can be a HUGE benefit to someone looking to sell a property quickly without any of the headaches.
Pro #3 Of Selling A House Without A Realtor: Repairs
The time and money that is necessary to update a property and address any repair needs will oftentimes outweigh the potential to get a higher price after this is done. Investors are experienced and understand what to do when a property needs work. Therefore, they will not be scared of properties like these.
Retail buyers who are purchasing properties on the MLS (Zillow, Redfin, Realtor.com) are generally not as experienced and might like the idea of a fixer-upper after watching HGTV’s Flip or Flop. But, after doing inspections, and having reality set in, they will often realize that they are not ready for a project like that.
I saw this scenario multiple times from my days in the mortgage business where a young couple would attempt to buy a fixer-upper only to cancel the contract once the emotion created from HGTV shows faded.
Experienced investors on the other hand know exactly what they are getting into and nothing will scare them about a property needing significant repairs. Because of this, you can sell a property as is without any fear.
When To Sell A House Without A Realtor
They say there is a time and place for everything. Some of the situations that make it attractive to sell a house without a realtor are:
~ Property has lots of maintenance needs.
~ Financial reasons or other factors that make it necessary to sell the home quickly might also be at play in addition to the condition of the property. If you are looking to sell a home with a realtor, it is usually not a quick process and can take anywhere from 30-90+ days in total.
~ A property that has recently been inherited requiring lots of work.
~ Desire to get a fresh start from a property with lots of clutter.
~ Someone simply not looking to spend the time, money or energy required to fix up and sell the traditional way.
I once attempted to sell a property (that was in good shape) with a realtor and it took 7 months and 3 contracts, with two of them being cancelled by the buyers, before it was sold. This is not the norm, and it was a unique property in a rural area, but it can happen when dealing with a realtor.
If you have a home needing a lot of work, or need to sell your property quickly, then selling with a realtor will likely not be the best bet. If you have time and the home is not in too terrible of shape, then working with a realtor to sell your home may be the best route for you.
If you decide to try selling with a realtor and don’t know any, Zillow is a great resource for finding a good one to work with. You can look at reviews and decide who is the best for your unique situation.
If you have decided that it probably makes sense to find a professional home buyer to sell to, we recommend checking out Home Sale Solutions. We are an experienced home buying company in the Virginia area.
It is 100% free and there are zero commitments or obligations. As always, feel free to reach out to us with any questions you might have and we will be happy to help!