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Selling Your First House? -- Here's the Scoop! Part 1

You don't have to look too far to find lots of information for "First Time Home Buyers" -- but what about First Time Sellers? 

Meeting with many first time sellers in the Indianapolis area over the last several years, we've discovered they have lots of questions.  They're ready to move, but often don't understand how the process works, how long it takes, what to expect and how much it costs.   Often, after chatting for awhile, they come to the conclusion that it's not the right time for them.  Maybe they owe more than their home is worth.  Maybe their credit score isn't adequate to qualify for a new loan to purchase their next home.  Many don't realize the impact of Indiana's pro-rated property taxes which bill one year in arrears.  Yes, one year..... and unfortunately, several central Indiana counties, like Marion (Indianapolis) are currently billing as much as 2 years behind.  This can make a dramatic impact on the seller's bottom line.

 So this is the first blog in a series dedicated to answering the questions of the first time seller.   Maybe you're thinking you won't be ready to sell for another year or so.  Don't stop reading!  Now is exactly the right time to learn what it takes to effectively prepare not only your home, but also your finances. Sold Sign

Today's blog answers the question "What are brokerage fees and how much are they"? 

Brokerage fees are the amount a Brokerage Company charges you, the homeowner, to sell your home.   Each Brokerage Company may charge whatever the market will bear.  In Indiana, it's not unusual for the fee to be between 6 -7% of the sales price.  For example, if your property were to sell for $250,000, and the fee were 7%, the charge by the broker would be $17,500. 

Wow!  That's a lot of money!  Where does that all go? 

Well in a typical Indiana listing contract a large portion of it, usually at least half, or $8,750 in our example, is paid to the broker & agent representing the buyer of your home.  Your listing agent cooperates with not only other local companies in Indianapolis, Greenwood, Center Grove, Whiteland, etc., but also brokerages and relocation companies from around the country to find a buyer - any buyer - to purchase your home. After all, you don't care who brings the buyer, or where they come from -- as long as someone does!   Providing a full share of the brokerage fee to the buyer's agent insures that agents from all companies are incented to show, and sell, your home.

Where does the other portion go?  It funds all of the marketing and advertising used to promote your property - signs, flyers, on-line advertising, print media, newspapers, Open Houses, virtual tours, photography, etc...  It also compensates your listing agent who has been working diligently to promote the sale of your home and who will guide and represent you through the entire transaction from putting the sign in the yard to the closing, or as the Hoagland Team prefers to call it....The Celebration Table!

An interesting thing about brokerage fees is that they are never paid if the home doesn't sell.  They also don't change if the home sells in 2 weeks, 2 months, or 2 years.  Imagine going to the doctor and not paying until you were cured!

So all of the expenses of selling are brokerage fees - right?  Well, not quite.   Future blogs in the series will delve into some of the other costs like Title Insurance and pro-rated taxes along with other topics like staging, pricing, marketing and.....

Posted by Steve & Tonda Hoagland, www.PerfectPlaceForYou.com

 

 

Unless otherwise noted, blogs are authored by Tonda or Steve Hoagland

 

 

Comment balloon 4 commentsTonda & Steve Hoagland • August 13 2009 04:53PM

Comments

Tonda and Steve,   Good Post!  I think it's great that you are writing to First Time Home Sellers.  I've done that recently also trying to make sure that they have all of the information that they need. Things are probably a little different where you are than where I am in Oklahoma.  I have many first time home sellers and first time home buyers.  It's truly an honor and responsibility when people entrust the sale of their home to us or the purchase of their home.  It is so very important that we tell them everything that they need to know and be true professionals in every aspect of the transaction.  I am so glad that your integrity stands out to those that need to sell their home so that they can call you without hesitation. Idabel is a very small town where I am. I'm not sure how big Greenwood is but honesty, integrity, and professionalism are always appreciated no matter the size of the market.  Keep up the good work.

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) almost 9 years ago

Hi Judy,

Thank you for the positive comments!  You're right -- honesty, integrity and professionalisam are always the best ways to do business!  Greenwood is a burb of Indianapolis.  We also tend to work with many first time buyers and sellers who look to us for guidance.  It's so discouraging to meet with sellers who think because they've been in their home for a few years, that they will be able to sell and at least "break even", even though many purchased with 100% financing.  Our prices haven't plunged like many parts of the country, but homes here are selling near 2003 prices, which means for many homeowners it's difficult to sell without bringing a significant amount of money to the closing table.  We thought it would help to make more sellers aware of how the process works several years BEFORE they're ready to sell.  Then they have time to put financial strategies in place so they're ready to sell when the time is right for their families. 

Posted by Tonda & Steve Hoagland, Real Estate - Greenwood Homes for Sale - Central I (Keller Williams Realty) almost 9 years ago

On the other side, sellers sometime complain when we do our jobs quickly, like we should be penalized for doing the job faster than expected, whatever that is.  They don't think about that buyer's agent who has shown his buyers 40 houses before they make an offer on your listing.

Posted by Alan Kindsfater (Tri-State Realty, Inc.) almost 9 years ago

Alan,

You have a good point.  Sellers appreciate not having to pay more if a home takes 12 - 18 months to sell, yet, when we are fortunate enough to get a quick sale, some feel like they're being penalized instead of thankful that all of the stars aligned right for them!  It all evens out in the end.  Some transactions are smooth as silk, others are slow and time consuming.   I'm convinced if we got paid by the hour, it would be more expensive for all of the sellers! 

Posted by Tonda & Steve Hoagland, Real Estate - Greenwood Homes for Sale - Central I (Keller Williams Realty) almost 9 years ago

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