You want to sell your house and you’re looking forward to putting some money in your pocket. But did you realize that selling your house may mean you have to PAY money? In this blog post, we break down what are the different fees paid to agents versus paid to investors…
It’s true… selling your house can sometimes mean that you have to pay. (This isn’t always the case but it often is.) We want to you to know about the different fees you have to pay because this information may help you decide whether to work with an agent or to sell your house directly to an investor.
What Are The Different Fees Paid To Agents Versus Paid To Investors? — Agent Fees
When considering selling your home, understanding the potential costs involved with each option is crucial. Homeowners often weigh the decision between working with a real estate agent or selling directly to an investor. Each option has its own fee structure, and it’s essential to know what you’re getting into.
Fees When Selling with an Agent
A licensed real estate agent acts as a salesperson whose primary role is to market your property and find a buyer. To do this, they will use various tools and marketing strategies, including listing your property on the Multiple Listing Service (MLS), hosting open houses, running online ads, and more. While this approach can yield competitive offers, it does come at a cost. Here’s a breakdown of typical fees:
- Commission: This is the largest fee associated with selling your home through an agent. The commission is typically around 6% of the final sale price, which would be approximately $6,000 for a home sold at $100,000. This commission is split between the listing agent and the buyer’s agent.
- Marketing and Advertising Fees: While some agents cover the cost of marketing as part of their commission, others may require you to pay additional fees for specific advertising efforts. This could include professional photography, video tours, targeted social media ads, or premium listings on real estate platforms.
- Listing Fees: Depending on the agent and their brokerage, there might be a fee to list your house on the MLS or other real estate sites.
- Signage and Staging Costs: Some agents charge for placing a “For Sale” sign on your property or suggest home staging to make your property more appealing. Staging may involve hiring a professional service, which adds another expense.
- Brokerage Fees: In some cases, agents are required to share a portion of their commission with their brokerage, and these costs may be indirectly passed to the homeowner.
- Title Company Fees: While the seller or buyer may cover these fees depending on the agreement, working with an agent often means the homeowner will shoulder part of the title and escrow costs.
Given all these fees, the final amount a homeowner receives after closing may be significantly reduced, especially when compared to the original sale price.
Fees When Selling to an Investor
Selling directly to a real estate investor is a different process and usually involves fewer costs:
- No Commission Fees: Unlike agents, real estate investors do not earn a commission from the sale. This eliminates the 6% fee that would typically go to the agents involved in a traditional sale.
- Minimal to No Closing Costs: Many investors take care of all the closing costs as part of the transaction. This means homeowners don’t have to budget for costs like escrow fees, title insurance, or transfer taxes. However, policies can vary, so it’s important to ask the investor if they cover these costs.
- No Marketing Fees: Because investors don’t list your home on the open market, there’s no need for marketing, advertising, or staging fees. They usually make direct offers based on the current state of your property, which also means there’s no need for costly improvements or repairs before selling.
- Quick Sales and Convenience: The simplicity of working with investors often translates to quicker sales and fewer complications. Investors typically buy homes as-is, which saves homeowners the time and expense of prepping their homes for showings or negotiating buyer requests for repairs.
Key Differences: Agents vs. Investors
- Transparency and Upfront Costs: With an agent, it’s essential to clarify all potential fees upfront to avoid surprises. An experienced agent should be transparent about their commission structure and any extra costs you might incur. When dealing with investors, ask if there are any costs you’ll need to cover, such as closing costs, so you know exactly what to expect.
- Net Profit: Although you might receive a higher offer by selling through an agent, the overall net profit after fees and expenses might not be as high as expected. On the other hand, selling to an investor might yield a lower sale price but could result in more money in your pocket due to minimal fees.
Conclusion
Choosing between selling through an agent or directly to an investor depends on your priorities, timeline, and financial situation. If maximizing your sale price and marketing exposure is important to you, working with an agent may be the way to go. However, if you prioritize a fast, straightforward transaction with minimal fees and fewer complications, selling to an investor might be the better choice. Always weigh the total costs involved to make the most informed decision for your unique situation.
The One “Fee” You May Not Be Thinking Of
There’s one more cost (“fee”) that you might not be thinking of: when you work with an agent, they’ll get you to fix up your house and then you’ll have to pay bills and taxes for as long as it takes the agent to find a buyer. So although this isn’t a fee to the agent, it’s a cost you’ll have to pay because of the agent… yet when you sell the house to an investor, they buy quickly so you end up saving this cost as well.
So what’s right for you? It depends on how much you’re willing to pay and how quickly you need to sell.
If you want to go over this in more detail or confirm that we won’t charge you any fees if you sell your house to us then please get in touch and we’ll be happy to walk you through it.