#1 Best Way To Sell Your Home
- It’s the cheapest and easiest way to sell your home.
- Neither real estate agents nor For-Sale-By-Owner websites will tell you about it.
- In truth, it’s obvious but a bit of a longshot.
So what’s the best way to sell a home?
The guitarist. I have a high school friend who one day heard a knock at his front door. He opened it and a famous musician was standing there. The musician said he was interested in buying my friend’s home. My friend and the musician had a mutual friend who had been inside my friend’s home and who knew my friend planned to sell it. The musician ended up buying the home.
The friend of a friend. Here’s a more typical story. A friend in my neighborhood used to live in Seattle. When she was getting her home ready to sell – but before she had hired a real estate agent – a friend of a friend approached her and said, ‘Hey, I hear you’re moving to Arizona and you’re going to sell your house, I’d be interested in buying it.’ And, indeed, her friend of a friend ended up buying her home.
No real estate agents were involved in either sale. Each seller kept the 5% to 6% of the value of their homes that would have gone to real estate agents. They likely were more flexible on price because of that savings.
A forgotten tradition
The National Association of Realtors estimated in 2015 that 9% of the homes that are sold in the United States are sold without the help of real estate agents.
About 5% were sold “For-Sale-By-Owner” where home sellers put for-sale signs in their front yards and actively market the homes to prospective buyers.
But there’s still that other 4%. That 4% is rarely talked about.
About 4% of the homes sold in the United States – that’s over 200,000 homes a year – were sold by word-of-mouth.
These homes weren’t actively marketed by either real estate agents or home sellers. This 4% of homes that sold weren’t traditional For-Sale-By-Owner home sales because these homes were NOT actively marketed – no for-sale signs in their yards, no traditional marketing at all.
They sold by word-of-mouth before the sellers hired real estate agents.
That’s what happened to my two friends. Both intended to eventually hire real estate agents but both found buyers first. To be sure, it was serendipitous but there’s not a better way to sell a home.
- You save the 5% or 6% of the home’s value you would pay to real estate agents. That’s probably a large part of your equity.
- You put little or no money into marketing.
- You put little or no time into marketing.
- You don’t have to get the home looking spectacular.
- You don’t have the inconvenience of showing the home. No, “Yikes! There’s a showing in 20 minutes! We gotta grab the kids and the dogs, straighten up the place and run!” No real estate agents arriving unexpectedly without an appointment and asking you if they can come in and show the home.
Is it pure luck?
Is selling by word-of-mouth just pure luck?
Or can we make our own luck?
Can we improve the odds that we sell our homes this cheap and easy way?
I think we can.
This is what I suggest you do.
Tell everybody you know
If you’re thinking of selling your home in 1, 2 or 3 months, start right now telling everybody you know that you’re planning to sell your home soon.
Get the word out to all of your friends and to all of your neighbors.
Neighbors are particularly good because they may have friends who have talked about buying in the neighborhood.
- Tell your Facebook friends.
- Tell the parents of your children’s friends in school.
- Tell the people on your softball team.
- Tell the people at work.
- Tell the people at church.
- Tell everybody you know that you’re thinking of selling.
- Tell your Facebook friends again.
And tell them you’ll be more flexible on price before you hire a real estate agent.
It’s a longshot so work on Plan B too.
You know any great agents? When you’re telling everyone about your plans to sell your home, be sure and ask them if they’ve used any real estate agents they can wholeheartedly recommend. Recommendations of agents they’ve actually used to buy or sell a home are FAR better than recommendations of agents they only know from their book club or softball team.
If word-of-mouth marketing doesn’t work for you – it is a long shot after all – you’ll want to be all set with Plan B and to start interviewing your list of highly recommended real estate agents. Or, if your Plan B is to go full on For-Sale-By-Owner, you’ll want to kick those plans into high gear.
But there’s more!
Know that your work isn’t done when you find a buyer.
The hardest part, of course, of selling a home is always finding the buyer but there are still a ton of other things you have to do.
- You have to come to an agreement on price and terms with the buyer, of course.
- You have disclosure, inspection and repair issues.
- And you have a lot of paperwork that needs to get done.
Just because you find a buyer, those other things still have to be done, and done well.
Attorney or agent? I could do hours and hours on your options but if you have done the hardest part and already found a buyer, you’ll find a way to get the rest done.
You have lots of options. Hiring a real estate lawyer to advise you and prepare the paperwork is key. Or you could hire a real estate agent who charges a flat fee to help you.
The cheapest, easiest & best way to sell a home
I hope you can see why I think that selling a home by word-of-mouth is clearly the cheapest, easiest, best way to sell a home.
There’s a lot of serendipity to it, however, you can make your own luck to some degree.
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5 Responses to #1 Best Way To Sell Your Home – 200,000 People a Year Do It
Yes, smart. And this advice about word-of-mouth is
particularly useful in certain attractive suburban and city neighborhoods where
neighbors own their homes for 15+ years on average. Long-time neighbors LOVE to
hear this kind of inside information about an off-market home. It is like
proverbial cat nip. I have lots of experience with these types of off-market
sales between friends/family/neighbors — the custom is for the Seller to sell
the home as-is and exactly at market value (or whatever price the Seller
chooses to meet Seller’s goals), minus approximately 2.5% for what the Seller
would have otherwise needed to pay a buyer’s agent had the home gone to market
(listing on the MLS). So that’s why it is often a good deal for the seller, because
they get: (1) to choose any price they like, (2)no hassle sale, (3) as-is, (4)
keeping an extra 3.5% in their pocket in seller’s agent commission savings, and
(5) a nice neighborly feeling, because the buyer is usually a friend or family
member of one of your neighbors, and that helps build community. The real
downside though to these word-of-mouth off-market sales is that the Seller
often wonders – ‘would I have gotten more for the home if it was listed?’ It’s
natural to wonder that; and moreover, receiving multiple offers helps sellers
accurately gauge the true value of the home. So I recommend to my seller
clients to list the home if they know about themselves that they’re just going
to beat themselves up over the price uncertainty, or if they definitely want to
seek out multiple offers to ensure the highest chance of getting the price they
want. In most cases though, they choose not to list on the MLS because they
feel comfortable with whatever price they negotiated one-on-one with a buyer
found through word-of-mouth. For if they didn’t feel comfortable with that
price they negotiated, they wouldn’t sell at all, and then they would be back
at square one anyway listing on the MLS. So that is why, logically, it makes
sense to pursue word-of-mouth whether or not you ultimately list. That’s the
real secret that agents might not explain fully when they are inviting sellers
to sign a listing agreement. Think about it, sellers, because 6% of a house is
a lot of house to give away before you think about it.
Wow! What a great comment!
“It is like proverbial cat nip.” So true. That’s one reason why “coming soon” / “pocket listings” / “off-market listings” are becoming more popular with real estate agents! There’s an excitement buyers feel, like they discovered a treasure in a thrift store bin.
If a home has been on the market a month, buyers know it’s been “rejected” at that price by all potential buyers for a month. If the home hasn’t hit the market yet, they don’t have that data point, buyers can get excited about finding a treasure and be more likely to pay the high end of market value.
I’m a big fan of using appraisals to remove any potential buyer’s or seller’s remorse. Finding a good appraiser for your area is a bit of a challenge, there’s a lot of variability in the quality of appraisers.
I just learned this week that there’s a specialization among appraisers called “Relocation.” They get hired by relocation companies that are hired by large corporations to facilitate relocating company employees around the country. Relocation appraisers get judged by how close their appraisals are to the actual sales prices of homes. The typical appraiser works for banks and doesn’t typically get that kind of market feedback about the accuracy of their appraisals.
I like appraisals too, definitely. In virtually 100% of off-market sales, the seller goes online or uses a realtor to check comparable sales, but in my experience only about 20% of FSBOs will pay the $300 or so to purchase an ‘independent’ appraisal. I put that word in quotes because even with an appraisal (or a Comparative Market Valuation), there is always the concern that ‘he who pays the piper sets the tune/price’, so there is simply no substitute for discernment and experience here. And even with those attributes in your corner, there is still no substitute for multiple offers! But at the end of the day, we’re very fortunate in America to have such reliable comparable sales data. And that’s pretty much what everyone is looking at anyway (appraisers, agents, buyers, sellers), so it’s self-fulfilling if you know what I mean. Appraisals are particularly accurate in suburban and city neighborhoods for standard homes, especially in neighborhoods that have seen regular sales activity in the last few years. In the countryside, LOCAL appraisers run the show. Every now and then you’ll hear a story about an out-of-town appraiser (a city slicker) trying to value a country property, and the numbers just don’t compute.
By the way, that’s really interesting about the relocation appraisers receiving market feedback on their valuation metrics – i like that a lot! Good accountability is good policy.
Totally agree. “… there is always the concern that ‘he who pays the piper sets the tune/price’.” I would definitely want to be the one paying the appraiser just in case there’s any subconscious bias.
But like you say, I guess it gets down to confidence. If the seller is confident in the home’s market value, the seller doesn’t need an appraisal, and if the buyer is getting a loan, the buyer is going to be getting their “own” appraisal later in the transaction anyway.
Bingo! And that leads to yet another good reason to pursue an off-market sale… If the off-market buyer does cancel for any reason (i.e. low appraisal), there is no stigma associated with a typical cancellation (i.e. ‘re-listing’ on the MLS again) because of course there was no original listing on the MLS in the first place. So if/when the time does come for the seller to list on the MLS, they are better informed (because of the recent appraisal from the off-market buyer’s lender), and they get started with a fresh and clean MLS listing. Nice.
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