Selling house without realtor - cash offer

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burgrat
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Selling house without realtor - cash offer

Post by burgrat »

I have a house that I will be selling in the coming weeks. It was a rental for a number of years, I no longer want the property, and I have spent the last few months renovating for sale (new paint - all interior and exterior, new flooring, replaced fixtures, etc.). I have put about $17k total into the renovations. The neighborhood in which it's located is desirable and the housing market at this time is a seller's market (it's located Reno, Nevada). I have had a realtor evaluate the house and she thinks the ideal listing price for the house is $409k. From my research, I agree with her on that price. Assuming I sell it for $409k, the costs of selling through a realtor will be around $25k, so I will net around $386k. That is if all goes ideally, price-wise. It could be less, of course.
Now to the point: The next-door neighbor's father is interested in the house. He has contacted me and I have shown him the property. He's interested in buying the house for his aging mother to live in, to be close to his daughter when needed. This man owns a construction company in the area. He paid cash for his daughter's house (the next door house), and he states that he would pay cash for my house. He has made me a cash offer of $380k. There would be no realtor involved, either side. He stated we could split all closing costs down the middle, 50/50. I told him that I want to do some research into selling without a broker before responding or countering. He is not in a hurry and is not pressuring me. I am interested in selling soon, but I'm not on a time crunch either. Ultimately, I would would be satisfied with $380k net from the sale, either with or without a broker involved. I have not signed any agreement with a realtor either. Again, the location is Reno, Nevada.

My questions would be:
- assuming this buyer is serious, has the money, and we agree on a price, what is the next step? Would I contact a title company to handle the transaction and closing?
- what is the risk of selling this way as opposed to using a realtor?
- would I ask for, and how much would I ask for, earnest money?

I think the main reasons that I would want to go forward with this offer is that it would close faster (less time I have to continue to pay on the mortgage ($1,700/mo) + get my money faster). Also, he and the neighbor (his daughter) are nice people and I understand wanting to move his mom in next door. Overall I think it could be a win-win, but I don't want any significant risk in doing so.

Any advice or suggestions are greatly appreciated!
niceguy7376
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Re: Selling house without realtor - cash offer

Post by niceguy7376 »

What closing costs are paid by seller in general? Outside of that "split the closing costs in the middle", the offer is pretty good. As for title, I dont see a need for you to get title insurance. it is on the buyer to protect the asset that should be getting the title insurance.
fru-gal
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Re: Selling house without realtor - cash offer

Post by fru-gal »

I sold my house but I had a real estate attorney. Much cheaper than a realtor. I would not sell a house without having a real estate attorney involved. So many things could go wrong. Are all the state-required disclosure forms signed, etc.
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ResearchMed
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Re: Selling house without realtor - cash offer

Post by ResearchMed »

fru-gal wrote: Sun Jan 26, 2020 5:30 pm I sold my house but I had a real estate attorney. Much cheaper than a realtor. I would not sell a house without having a real estate attorney involved. So many things could go wrong. Are all the state-required disclosure forms signed, etc.
This is what I did, the two times I sold direct to buyer.
Very easy, and low cost. Hourly rate by attorney, and not many hours, vs percentage with real estate agent.

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soc2003
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Re: Selling house without realtor - cash offer

Post by soc2003 »

I could be in a similar situation as you (renter could be interested in buying the house) and what I am planning to do is tell the buyer to get a realtor that will only charge him 0.25% to 0.5% and I will also get get a realtor that will charge me only 0.25% to 0.5%.

My plan is to go through the entire process: written offer via realtor, inspection, appraisal, title insurance, closing, etc. so it would make sense to get a realtor. But it wouldn't make sense to pay each realtor 3% because most of the work is done.

Many seller's realtors only charge 1% (e.g. Redfin) so asking for 0.25% for a quick transaction shouldn't be a problem.
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Watty
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Re: Selling house without realtor - cash offer

Post by Watty »

You need to set a number to "all closing costs" since that could be more than you think if it includes things things that includes like title insurance, survey, attorney fees, etc.
burgrat wrote: Sun Jan 26, 2020 5:12 pm My questions would be:
- assuming this buyer is serious, has the money, and we agree on a price, what is the next step? Would I contact a title company to handle the transaction and closing?
- what is the risk of selling this way as opposed to using a realtor?
- would I ask for, and how much would I ask for, earnest money?
I would use a real estate lawyer that specializes in real estate law to draw up the contracts. There may be things like required disclosure forms that a title company might miss.

The risk is that you might not be getting a top price for it.

One issue with the $380K price is that you are basically giving him the entire discount of not using a real estate agent. You might net about the $6K less than if you used a real estate agent but he will be getting it for $29K less than if there is a real estate agent involved. Asking for $386K so you would be the same would seem to be very reasonable to me. That is less than a 2% difference. I doubt that he would be offended by a counter offer like that if you explain that you just want to end up the same.

The "split closing costs" is also very vague and needs to be defined and compared to what the seller and buyer typically pay in your area.

One thing you have not mentioned is if he would want to have more inspections done on not.

You would let your lawyer suggest what the earnest money should be.
burgrat wrote: Sun Jan 26, 2020 5:12 pm Overall I think it could be a win-win, but I don't want any significant risk in doing so.
That sounds good to me too.
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Prokofiev
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Re: Selling house without realtor - cash offer

Post by Prokofiev »

Most real estate rules are at the state level so vary widely. When we signed an offer sheet 3 years ago, the requirement was that all known defects be revealed and listed by the owner. We offered 91% of listing and they countered with 93% which we agreed to. However, the house inspection came up with several problems that were obvious, but not listed on the official form. So we asked them to either fix the unlisted items (totally impractical for them) or reduce selling price by $11k. They were not happy, but agreed which put the final price back to 91%. Selling "as is" is easier said than done. They could have rejected our new offer, but by then they had taken the house off the market and 3 weeks had passed. So make sure the $380k is indeed the final agreed upon price. I would suggest having someone - RE lawyer, title specialist or knowledgeable realtor at least look at the forms prior to sale.

Also you listed at $409k, he countered at $380k (93%). I would come back with something - say $385k? Usually the buyer expects at least 1 counter-offer by the seller. This person has a vested interest in your particular property since it is next-door to his daughter's. An equal property several blocks away will not be as desirable. In fact if you should sell it to a problem owner or family, it could depreciate his own situation. You have some leverage here.

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Jebediah
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Re: Selling house without realtor - cash offer

Post by Jebediah »

I think you tell him the listing price is $409 and you two can split the 6% realtor savings. That means the selling price to this buyer should be $395. Or at least that's your counter. Maybe you'll settle at $390 but $380 is too low. The win-wins are splitting the realtor savings (win for both), you sell faster to a serious buyer (win for you), buyer doesn't have to compete against other buyers (win for buyer).

On the other hand, cutting the realtor out after they did the listing price analysis is dicey. Perhaps you pay for an appraisal and use that as your listing price and as a way to more legitimately distance yourself from the realtor. Same deal where the selling price is the listing price minus shared savings of the would-be 6% realtor fee.

Get an experienced Real Estate Attny to broker the deal, or at least your side of the deal. Use standard contracts for your state and customary splits of closing costs, title insurance, etc (in my state, seller usually pays title insurance). Let the attny guide you on these splits.
Millennial
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Re: Selling house without realtor - cash offer

Post by Millennial »

I purchased a house privately last year, though it was not a cash sale.

If both of you get real estate lawyers, it should be easy. I am not sure what closing costs he wants to split - in my area buyer pays everything except realtor fee (you have none) and title stamps (basically a transfer tax).

Make sure you're clear on his offer before you accept and get lawyers involved - sounds like it should have no contingencies. If he intends to have an inspection contingency, are you ok with that?

Overall, his offer seems like a good deal for both of you.
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Re: Selling house without realtor - cash offer

Post by Big Dog »

How hot is the market in Reno? (In a really hot market like Silicon Valley right now, houses are going for way over listing.)

Since the cash buyer is in no rush....

If there is a chance that your house would sell for say, $425k, is it worth it to list it and test the waters? You can always tell the agent that you have a cash buyer in the wings, and he would be excluded from any deal that the Agent brings in, and that if you accept the offer from your own buyer, Agent gets nothing. (Or, maybe negotiate a flat $500 for her trouble.) If the agent can sell for more, net to you, sign a listing. If the agent cannot, then perhaps a bird-in-the-hand could be the way to go, after countering like others have suggested.
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Re: Selling house without realtor - cash offer

Post by Gill »

Do you have this offer in writing? You don’t need a Realtor but you need an attorney.
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Re: Selling house without realtor - cash offer

Post by Jack FFR1846 »

If you'd be happy with $380k, then accept it. There is no guaranty that it will sell for over $400k. Much self butt kicking would ensue if you reject this offer, the house is on the market with an agent for 6 months and you end up getting $350k for it minus 6%.

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burgrat
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Re: Selling house without realtor - cash offer

Post by burgrat »

Jebediah wrote: Sun Jan 26, 2020 6:06 pm On the other hand, cutting the realtor out after they did the listing price analysis is dicey. Perhaps you pay for an appraisal and use that as your listing price and as a way to more legitimately distance yourself from the realtor. Same deal where the selling price is the listing price minus shared savings of the would-be 6% realtor fee.
The realtor lives in the neighborhood and stopped by while I was renovating the house. She's sold quite a few homes in this particular neighbor, so she is very familiar with this market and area. She was actually the broker that sold me the house in 2006. She is interested in listing the house for me. I have not signed anything with her, but I would use her if I do sell with a realtor. I bet she's spent maybe an hour or less of her time researching this price. Is it "dicey" if cut her out, as you say, at this point? I don't think so.
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Re: Selling house without realtor - cash offer

Post by 123 »

niceguy7376 wrote: Sun Jan 26, 2020 5:18 pm ...I dont see a need for you to get title insurance. it is on the buyer to protect the asset that should be getting the title insurance.
If I were the buyer I would want the seller to guarantee the title being sold to me. The customary way sellers guarantee the title they are selling is buy providing title insurance. Title insurance keeps the seller "off the hooK" for any title issue that may surface. Who pays for title insurance varies by local custom in different regions/communities.
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Financologist
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Re: Selling house without realtor - cash offer

Post by Financologist »

It is great you have this potential buyer. On the other hand, list price of 409k could mean a bidding war in a seller's market. You could get 429k for example (~5% above asking is not far fetched right?)

I'm all for avoiding hassle but are you selling the property short?

If it were me I would ask for 395, split closing costs and hire an attorney or realtor (depending in Reno custom) for a fee to execute the sale process (I've seen realtors do this in Colorado for 1%)
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Re: Selling house without realtor - cash offer

Post by quantAndHold »

I sold in a seller’s market once. The realtor told me it was worth $885k. His friend came over to give a second opinion, and said $895k. It sold in a week for over a million.

The only closing costs the seller typically pays are realtor fees and possibly local taxes. They buyer typically pays the rest. The low offer price then splitting closing costs seems like a bad deal for you.

Do you trust this realtor’s assessment enough to skip offering the house to to a larger pool of potential buyers?
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Re: Selling house without realtor - cash offer

Post by Jebediah »

burgrat wrote: Sun Jan 26, 2020 6:15 pm
Jebediah wrote: Sun Jan 26, 2020 6:06 pm On the other hand, cutting the realtor out after they did the listing price analysis is dicey. Perhaps you pay for an appraisal and use that as your listing price and as a way to more legitimately distance yourself from the realtor. Same deal where the selling price is the listing price minus shared savings of the would-be 6% realtor fee.
The realtor lives in the neighborhood and stopped by while I was renovating the house. She's sold quite a few homes in this particular neighbor, so she is very familiar with this market and area. She was actually the broker that sold me the house in 2006. She is interested in listing the house for me. I have not signed anything with her, but I would use her if I do sell with a realtor. I bet she's spent maybe an hour or less of her time researching this price. Is it "dicey" if cut her out, as you say, at this point? I don't think so.
I think it's dicey to use her analysis and not compensate her in some way. As you say, her experience and insight were brought to bear in her analysis, and that's worth something. You can't (ethically) just run with it and offer nothing in exchange. If you really want to use her listing price, why not give her the $500 you'd spend on an appraiser? Otherwise, forget her listing price, hire the appraiser, and use their price.
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Re: Selling house without realtor - cash offer

Post by shess »

Jebediah wrote: Sun Jan 26, 2020 7:16 pm
burgrat wrote: Sun Jan 26, 2020 6:15 pm
Jebediah wrote: Sun Jan 26, 2020 6:06 pm On the other hand, cutting the realtor out after they did the listing price analysis is dicey. Perhaps you pay for an appraisal and use that as your listing price and as a way to more legitimately distance yourself from the realtor. Same deal where the selling price is the listing price minus shared savings of the would-be 6% realtor fee.
The realtor lives in the neighborhood and stopped by while I was renovating the house. She's sold quite a few homes in this particular neighbor, so she is very familiar with this market and area. She was actually the broker that sold me the house in 2006. She is interested in listing the house for me. I have not signed anything with her, but I would use her if I do sell with a realtor. I bet she's spent maybe an hour or less of her time researching this price. Is it "dicey" if cut her out, as you say, at this point? I don't think so.
I think it's dicey to use her analysis and not compensate her in some way. As you say, her experience and insight were brought to bear in her analysis, and that's worth something. You can't (ethically) just run with it and offer nothing in exchange. If you really want to use her listing price, why not give her the $500 you'd spend on an appraiser? Otherwise, forget her listing price, hire the appraiser, and use their price.
IMHO, you should straight up tell her you're thinking of selling to the neighbor, and ask her if she considers you to be under contract. If she lives in the neighborhood, it's pretty likely she'll see that the house was sold, if she's going to be a problem I'd rather have it be up front where you can work things out rather than after the fact when everything is already nailed down.

Or you could just tell her that the neighbor might be interested in buying, and ask if she can recommend any real-estate attorneys or title companies. Then she can respond with referrals, or with "Well, um, you see ...".

If you think commissioned real-estate agents think in terms of hours invested in a property, you are sadly mistaken. They'll want their same 3%+3% regardless of whether it took them two hours or twenty hours.
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Re: Selling house without realtor - cash offer

Post by DiscoBunny1979 »

Couple of issues . . first i would do some comps in the neighborhood to see what houses like Yours are actually selling for. Anyone can say it's worth 'x' just to get You interested in selling. Second, Selling to a 'neighbor' that knows you might be too close for comfort. I usually like selling to someone that doesn't now me. Why? Because if anything goes wrong with the transaction or something is wrong with the house after purchase, phone calls and angry letters in the mail are not appealing to me. Third, if this is an 'as is sale' it needs to be detailed in writing in an original contract . . . for instance if the neighbor offers "x" for the house, in the same offer, they should accept the terms of 'as is sale' with no conditions specified and that they accept responsibility to obtain their own inspector. Even if they are contractors, they could be of the 'worst kind' and therefore shouldn't be doing inspections themselves in the first place.
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Re: Selling house without realtor - cash offer

Post by Sandtrap »

Given that you have done further research at this point, and are satisfied with the numbers:
1. A title/escrow company can handle all your paperwork and transfers, deposit, escrow, etc. Find a good one. They are different.
2. Be sure to set deadlines and a speedy close. Do not let the deal hang up.
3. As the buyer is a contractor, great! Sell the home "as is" with no contingencies. He can sign a doc. to that effect.
4. A cash sale for the amount or near to what you want is worth gold. (bird in hand. . .thing) If you lag on things, the buyer might get cold feet or start coming up with contingencies. So, get it done or don't.

There are many ways to do these things. For myself, I've been on both sides of this type of sale many times, (as a contractor, R/E developer, and buyer). It can work out well for both parties. (paying a realtor that sum for paperwork is . . . interesting).

*You don't owe the realtor anything unless you signed a listing contract, etc. Look into that so you don't step on your feet.

Good luck on your sale.
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Last edited by Sandtrap on Wed Jan 29, 2020 9:34 am, edited 1 time in total.
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Re: Selling house without realtor - cash offer

Post by Sandi_k »

Make sure that your attorney and/or title company give the buyer all required disclosures. In California, they are a Very Big Deal, and you do not want to mess them up.

I also agree that I'd counter with the end price being one that split the realtor commission, rather than giving the buyer 100% of that savings.
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Re: Selling house without realtor - cash offer

Post by mbres60 »

You owe the agent nothing. All she did was give you her opinion of a listing price. I have always read that you should get comparative pricing from three different agents and pick the agent you feel would be the best fit for you to sell your house. You would not owe anything to the agents you didn't go with so why would you owe this agent if you don't go with her?

I agree with some others that $380,000 might be too low in a sellers market. Also, I wouldn't go 50/50 on closing costs because it sounds like the buyer would be the winner and not you the seller.
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8foot7
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Re: Selling house without realtor - cash offer

Post by 8foot7 »

The cash buyer’s offer has completely absorbed any savings for you of going without a realtor and also (unless NV is weird) generally increases your closing costs. In the states I am familiar with, the seller generally pays prorated taxes and a tax stamp/transfer tax and the buyer is responsible for everything else.

I agree that you should be indifferent in general to a list-6% offer vs a 94% offer as at closing that’s the same money to you. The realtor for you is unlikely to provide much of any service worth having (to sellers the realtors generally try to advocate for concessions in order to get a deal done; they rarely create a better financial outcome than their cost and don't generally handle the real hassles that might come up.) That ought to be the end of the negotiating though, and a 6% discount on a 409k house is a nice basis improvement for the buyer.

I would not let the buyer have his cake and then eat it too. If he wants your realtor savings then he needs to pay the costs of acquiring the property. Otherwise you would be better off in a traditional deal.

You owe that realtor nothing.
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Re: Selling house without realtor - cash offer

Post by Freetime76 »

I am replying because this always irks me: As long as you didn’t sign anything, you owe the realtor exactly 0. (Neither owe contractually nor “owe” morally.) Before listing a house, I would be interviewing multiple agents for their comps and opinions on list and selling price...so a mere conversation doesn’t give a person commission on the sale. That’s the business, and the really good agents do quite well. :D

- when can he to close? is he doing an inspection or will it be as-is?
Zero hassle is worth dollars to me....though I might counter a tad higher - he’s getting a steal, you’re getting less hassle factor. He’s also getting a “done” house that *he* doesn’t have to fix up for mom :D I think it’s sweet.
Bottom like for me is I would likely find a way to take the neighbor’s offer, before some other neighbors’ house gets the same offer from him. Just talk with your RE attorney for any questions you should be deciding on.
Please spell out new acronyms. Thank you.
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Re: Selling house without realtor - cash offer

Post by SuzBanyan »

As has already been posted, real property sales — both law and custom— are very state specific. If someone is not posting based on familiarity with NV law, it really doesn’t help you.

With that said, I have only a little experience with Nevada property purchases and sales, as my parents bought and sold a condo in Reno within the last 10 years.

My recollection is that in NV it is not common for buyers or sellers to hire real estate attorneys to document a transaction. Instead, the state association of realtors has a form that is used in almost every transaction. As a result, most real estate attorneys are fairly clueless about documenting a residence sale. They just don’t do it that often. So when hiring an attorney, you may need to find one who is also a realtor but will charge by the hour.

And while you are certainly will need a title company to issue title insurance to your buyer, you will also need an escrow company to handle the logistics of closing. Often, the escrow company is affiliated with a title company. While they will prepare the escrow agreement, most will not prepare a sale agreement.
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Re: Selling house without realtor - cash offer

Post by shess »

Freetime76 wrote: Wed Jan 29, 2020 9:16 am I am replying because this always irks me: As long as you didn’t sign anything, you owe the realtor exactly 0.
At least for myself, that's why I said "Ask the agent". If they say "No, you don't owe me anything", you are 100% set, everyone is in agreement. But if they say something else, then my question isn't whether you owe them something or don't owe them something, it's not whether you are right or wrong, it is whether you'll be able to make a clean sale without the agent jumping in to blow things up. I know that if I was purchasing a property and got a threatening letter from a random agent, I wouldn't be all "Oh, this cannot stand, we need to fight", I would likely move my focus elsewhere. Maybe you can offer them consideration in exchange for their time, or otherwise negotiate closure with them, but either way, I'd rather get that done up front.

I mean, sure, there's a certain satisfaction to being proven right after spending a couple years in court, but I doubt that's your starting goal.

I don't fully understand what the goal is, here. Original Poster was perfectly fine with calling the agent up to make use of their expertise. So call them up to verify that you aren't under contract. Done.
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Re: Selling house without realtor - cash offer

Post by adamthesmythe »

SuzBanyan wrote: Wed Jan 29, 2020 9:32 am As has already been posted, real property sales — both law and custom— are very state specific. If someone is not posting based on familiarity with NV law, it really doesn’t help you.

With that said, I have only a little experience with Nevada property purchases and sales, as my parents bought and sold a condo in Reno within the last 10 years.

My recollection is that in NV it is not common for buyers or sellers to hire real estate attorneys to document a transaction. Instead, the state association of realtors has a form that is used in almost every transaction.
The no-lawyer thing seems to be common in the western states. Certainly this is the case in mine (AZ). I've bought two houses with no lawyers involved. I wonder whether hiring a lawyer would mark me as "this guy's gonna be trouble."

Agree completely, real estate advice must be state-specific.
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Re: Selling house without realtor - cash offer

Post by knightrider »

List it yourself on the MLS for $300 and skip half the standard realtor commission. Now you will be sure you are getting fair market value and saving 2-3% by not having your own realtor. See:

http://www.mlsyourway.com/
paulinkansas
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Re: Selling house without realtor - cash offer

Post by paulinkansas »

I've sold 3 properties with just a quitclaim deed. Google search will give you one. The buyer takes the quitclaim deed to the register of deeds.
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Re: Selling house without realtor - cash offer

Post by Katietsu »

burgrat wrote: Sun Jan 26, 2020 6:15 pm
Jebediah wrote: Sun Jan 26, 2020 6:06 pm On the other hand, cutting the realtor out after they did the listing price analysis is dicey. Perhaps you pay for an appraisal and use that as your listing price and as a way to more legitimately distance yourself from the realtor. Same deal where the selling price is the listing price minus shared savings of the would-be 6% realtor fee.
The realtor lives in the neighborhood and stopped by while I was renovating the house. She's sold quite a few homes in this particular neighbor, so she is very familiar with this market and area. She was actually the broker that sold me the house in 2006. She is interested in listing the house for me. I have not signed anything with her, but I would use her if I do sell with a realtor. I bet she's spent maybe an hour or less of her time researching this price. Is it "dicey" if cut her out, as you say, at this point? I don't think so.
Not dicey at all, IMHO. Part of doing business as a realtor.
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Re: Selling house without realtor - cash offer

Post by Freetime76 »

shess wrote: Wed Jan 29, 2020 12:31 pm
Freetime76 wrote: Wed Jan 29, 2020 9:16 am I am replying because this always irks me: As long as you didn’t sign anything, you owe the realtor exactly 0.
At least for myself, that's why I said "Ask the agent". If they say "No, you don't owe me anything", you are 100% set, everyone is in agreement. But if they say something else, then my question isn't whether you owe them something or don't owe them something, it's not whether you are right or wrong, it is whether you'll be able to make a clean sale without the agent jumping in to blow things up. I know that if I was purchasing a property and got a threatening letter from a random agent, I wouldn't be all "Oh, this cannot stand, we need to fight", I would likely move my focus elsewhere. Maybe you can offer them consideration in exchange for their time, or otherwise negotiate closure with them, but either way, I'd rather get that done up front.

I mean, sure, there's a certain satisfaction to being proven right after spending a couple years in court, but I doubt that's your starting goal.

I don't fully understand what the goal is, here. Original Poster was perfectly fine with calling the agent up to make use of their expertise. So call them up to verify that you aren't under contract. Done.
Not sure if understanding your issue - did this actually happen in your experience? I can only imagine equivalent scenarios... such as having a contractor out to bid a job on our house. He doesn’t get the job for whatever reason (say we change our minds or maybe use someone else). He doesn’t get paid for bidding to do the work... Maybe not the best analogy, but hopefully that makes sense.

It’s already Done. In general, I’ve found that sometimes if you ask a person a question, it can sound like you’re asking permission, when you’re actually not. Any agent worth their salt would be too busy to bother messing with blowing up a deal...I’m not even sure how that would work- slap a lien onto the OPs house? File a restraining order or injunction to prevent the sale? Sorry, just sounds ludicrous to me.
Please spell out new acronyms. Thank you.
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