How to Sell Your Home for the Most Money
If you are planning to sell your home and you want to get the most money for it, make sure you list the home with the right agent and it gets put on the “open market.” When we refer to the “open market,” we are talking about marketing the home through MLS (Multiple Listing Service) and other real estate sites. The reason an agent would opt not to put the home on the open market is simply to make more money by trying to sell it to someone they know!
Remember, when a home is sold there is a predetermined commission of 5-6% of the sales price paid to the agent at closing, so if there is no other agent involved if the agent sold it directly to a buyer they are getting paid the full commission amount. There isn’t anything illegal about this, but we do find it highly unethical since the agent’s main goal is to get the most money for their seller and the only way to do this is to put it on the open market. By not selling on the open market, the buyer pool goes from thousands of buyers to a handful at best. Now most of the time when a home is sold on the open market there is another agent involved who represents the buyer and is paid half of the commission, so the agent may get less but the home sales price is always higher which is what is in the best interest of the seller!
As you can imagine, with the number of homes we sell, we are faced with this situation quite often and we have never wavered from our responsibility of making sure that our clients get the most money for their home.
Here are 2 quick examples that help illustrate this point:
1) We were recently hired to list a home that was a very desirable contractor or investor opportunity. The seller asked if we knew someone who would be interested in buying it and of course we knew a couple of investors who would purchase the home at a discount and we would in turn make a full commission since we would not have to share it with anyone else. But since we know that the open market will always bring more, we told our client that even though it would reduce our commission we felt more comfortable putting the home on the open market for all buyer agents and buyers to make offers on the home. So after 60 showings and 17 offers, we sold the property for $432,000 to a buyer that another agent brought. Since our clients would have been happy with $325,000 and we had a number of buyers who would pay that, by following our own open market advice our clients profited an additional $107,000. Yes, we didn’t make as much versus selling it ourselves but who cares–an agent’s responsibility is to make sure the home is sold for the most money, period.
2) Another example was when a colleague’s parents were going to put their home on the market and they asked us to come up and take a look at it. The home was older but was in a great location, large lot size, and classic style home. It was a colonial built in 1910 with good bones and detail but in need of a renovation. I told them that the home would easily sell for between $425,000-$450,000. Since they had lived in the home for a long time they had quite a few friends and neighbors that had expressed interest in the home if they ever decided to sell. They also knew plenty of local real estate agents in the area and against our advice, decided to list with one of their friends. The home was never put on the open market but rather sold to a friend of the agent for $450,000.
We were delighted to hear they got that much money without putting the home on the market but were skeptical that the price would stay at that. So about a month later we spoke to the sellers to see how things were progressing on the home and they said after a slight price reduction after the home inspection they would be closing shortly. We inquired on the “slight reduction” and were floored to hear that after the buyer discovered some knob and tube wiring and other updates were needed, but clearly knew about beforehand, the price was reduced by $100,000!!! This is the classic case of someone overpaying to secure the property and then using some excuse to reduce the price. So by selling the home directly to a buyer through a real estate friend and not having it go onto the open market the sellers were short changed at least $75,000. Without the additional offers and interest that the open market would’ve provided the sellers may have felt stuck. Not to mention the agent clearly was not looking out for their best interests since they had brought the buyer in as well. This sale was for their retirement so there is no question this will have an immediate impact on their plans.
These examples happen every day and sellers are misled into thinking that the agent or the easy buyer is the best deal. Never get fooled into thinking that not putting the home on the open market or an agent claiming they have buyers ready to buy the home is in your best interest, because it is not! There is only one way to sell for the most amount of money in today’s market: list it on the open market!