Who can afford to buy a home these days? Who can afford to sell their home? Look at all the foreclosures! Bursting bubbles. Low prices. Fire sales.
You might think that all these problems have to do with the economy. That’s what the real estate industry says. Everyone knows how much impact this recession has had on America, so perhaps it’s easier to just leave it at that: the news stories will fade and the industry will be happy to let us forget about awful adjustable-rate mortgages, the excessive inventory from overzealous homebuilders, and the lenders who don’t know how to deal with foreclosures decently.
The real estate industry is certainly not going to bring up the fact that homeowners are left paying the same high commissions to their agents, even as they deal with declining home values. Yes, the economy has changed. Your 401K has dropped in value, and so has your home. The one dependable thing in today’s world is the real estate agent’s commission, which never seems to drop.
Unfortunately, when the economy has a cold, the real estate market has pneumonia. When the economy is in a recession, the real estate market is in a full-blown depression.
And while traditional methods for selling a house might have worked in a traditional economy, in a recession, all bets are off if you want someone to tell you we buy houses Gilbert. We are being forced to look at new ways of doing things.
We once thought we could depend on our jobs, the government, and our investments. Now we realize we can only depend on ourselves.
So why on earth would anybody try to sell their house right now? It’s simple, really. Sometimes life doesn’t give you a choice.
Let’s talk about being “house poor.” I have been there. I have had to sell a home for financial reasons, and let me tell you, when you’re under that kind of financial stress, even the dog is miserable. Your house becomes a symbol of all the stress in your life, so when you walk in the door at night, you don’t feel like you’re “home”-you feel like you’re standing in the middle of an albatross that you can no longer afford.
I’ll take a firm stand here and say I am 100 percent against the current loan modification programs for homeowners. They don’t just kick the can down the road-they can do far greater damage that can’t be measured in dollars. Independent research shows more than 85 percent of mortgage modifications end up in foreclosure. If you’ve had to renegotiate with the banks once, you will always feel insecure that it can happen again. That is the reality that the banks aren’t considering.
Trust me, and I mean this with all my heart: sell the house before you get to the point of desperation. Life is not about how many square feet your home is, it’s about living your life with peace of mind. Selling your house yourself will save you a commission you probably can’t afford to pay, and it will re-empower you, no matter what your bottom line is.
I’m upside down, and it’s turning my life inside out
There are many reasons to sell your own home. You may be coming around to the fact that you don’t need to put tens of thousands of dollars in the pocket of a real estate agent for things that you can do yourself. You may be attracted to the idea because you want to gain a little more control over such a personal transaction-or you may just want to try your hand at a different kind of business.
But here’s a pretty good common denominator: you could use the money. Who couldn’t?
The money you’ll save by selling your home yourself isn’t just a “bonus” for doing the work yourself: the fact is, selling your home yourself may save you from ending up in an ugly financial situation.
Mortgage applications are down by 65 percent. That means we have 35 percent of the buyers we had three years ago. Don’t be one of those sellers that get stuck in a place where there’s no more room in the deal after the brokers get their split, or you might ultimately be unable to afford to sell your home at all.
Maybe this has happened to you or someone you know. Maybe that’s why you’re reading this right now! Let me walk you through the two common equity problems that lead to this situation.
Equity Problem #1: The old homestead just isn’t worth what it used to be
Homeowners who bought their homes in the years when the market was stronger (a seller’s market) might have experienced too much market equity loss to make a profitable breakaway with their home.
Real estate value never goes down, right? That’s what we heard, over and over again. But in this decade, we have learned how wrong we were.
These homes become financial drains on the owners until they absolutely must sell-but because that profit margin isn’t there, they can’t afford to.
Equity Problem #2: The home as an ATM
Plenty of homeowners took out home equity loans. They have already spent what would have been the appreciation on their home’s value. They used their home as an ATM! This is a common scenario, but it almost inevitably creates a problem.
After they withdrew the equity they had in their home and spent it, that money was tied up in whatever they spent it on. In some cases, that equity would have been the difference between making a profit and breaking even on the house.
And then the house dropped in value. Now in order to sell, they would have to dip into their pockets-and those pockets are empty.
Many people have the misconception that people who took out home equity loans were irresponsible, spending their equity on Hawaiian vacations. Maybe that was true for some, but most of those who refinanced did so because they needed the money to finish their educations or to survive when they lost their jobs. They behaved honorably, but they are left to deal with the shame of coming home and finding a foreclosure sign in the front yard.
If either of these problems applies to your situation, you might not be able to stay in your home. But you don’t have to give up hope, and you don’t have to feel ashamed. Keep yourself out of a financial situation that could turn ugly and problematic by selling when you have to. Minimize your loss by handling the sale yourself.
Of course, there are other reasons that people might want or need to sell their homes. Life changes, like maybe now you have a bigger family or smaller family. Maybe you have to move to another state to take care of ailing parents or to accept the only job you could find.
Whatever your reason, remember that you’re not the only one in that boat. Get started by making the decision to handle your home sale yourself, and you’ll be turning your real estate situation around in your favor-and you won’t have to lose a big portion of your equity by paying it out as a commission to someone else.
The housing market may have pneumonia, but it’s not dead on arrival. Houses are still being bought and sold every day. Some people are taking a loss, some are breaking even, and some are even making a profit. You won’t know what you can do until you give it a try.
But you can be sure that you’ll do better on this transaction if you don’t have to pay commission to a real estate agent. Remember: The broker can only make you broker.
Have you already tried to sell your home by listing it with an agent-and the listing expired without an offer? I have studied many MLS listings in a variety of price ranges, and a huge number of them expire during the listing period-the house remains unsold.
In many areas, over half the people who listed their homes with an agent-willing to pay that agent a full commission-ended up not selling at all. Those agents were not able to make the sale happen, for one reason or another. An agent is by no means a guarantee of a sale.
If you’re in the half of people who listed your home with an agent and didn’t a sale, it is time to try selling it yourself.
1. Many people are upside-down or over-remortgaged.
2. You can sell your house if you want to and you might even get your price.
3. Selling might be worth it even if you don’t get your price.
4. You’ll come out of the deal better if you don’t have to pay a commission-especially when you consider what percentage of your equity that commission represents.
5. If your house was listed with an agent and didn’t sell, it’s time to try selling it again-this time without an agent.