Selling to a Real Estate Investor vs Other Home Selling Options

Pros, cons, costs, and timeline of each home selling option

So, you need to sell a house, and you want to get a fair price for it. Do you go the traditional
route and work with a real estate agent, or go with one of the other home selling options, like
selling it yourself (For Sale By Owner), or working with a real estate investment company, like
Laurel Buys Houses?


Each of these strategies has its own pros and cons, and each one works better in some
situations than in others.


This brief guide will walk you through the decision process to help you decide what’s best for
you. Take a look at these home-selling options, then make the decision that helps you get the
results you want the way you want to get there.

The 3 Options for Selling Your House

Like I mentioned above, there are 3 real home selling options. I’ll dive into those 3 options a bit
more below and spell out what’s great about each, the drawbacks of each, and who each
option is really going to help the most.

Home Selling Option #1 Working With A Real Estate Agent

The most popular way to sell a house today is by working with a real estate agent. This is the
general process of working with an agent:
You contact an agent and they visit with you about your house to determine what they feel it
may sell for.


You sign a listing agreement with the agent (normally 6 months) where they exclusively
represent and sell your property.


Agent lists property on the MLS, which is a private database for real estate brokers, markets it,
and takes buyers through your house for showings. (A house should show well to sell well,
which means you want it spic and span).


If a property sells, the agent takes care of the paperwork and negotiation with the buyer, and
the agent who sold your house and the agent that brought the buyer collect their fees.
Cost: Selling agent fees are usually about 3% of the total purchase price. The “buyers” agent
usually earns 3% as well (totaling 6% in agent fees). As an example, if your house sells for
$200,000, you could expect approx. $12,000 of that to be paid to the agents at closing. Many

retail buyers will ask you as the seller to pay for part of their closing costs, so this is an
additional expense in many transactions.


Something people forget about is carrying costs. Carrying costs are all of the costs associated
with owning and maintaining the house while it’s on the market. The mortgage payment, taxes,
insurance, utilities, HOA fees, etc. These can really add up. If your mortgage payment (including
taxes and insurance) is $1,500… and you work with an agent and it takes them 6 months to sell
the house at full market value… that means during the 6 months you paid $9,000 in payments
on that house during the time it was on the market.


Timeline: We all know this varies based on the current temperature of the housing market. In
2022, the average time it takes to sell a house in California is 68 days — 33 days to get an offer
and an additional 35 days to close. This is approximately 11.7% faster than the national
average. Keep in mind that these are annual averages and the numbers will vary by month
and/or season.


Pros: Agents know the market well, have access to the MLS to list your house to expose it to a
broad range of retail buyers, they’ll take care of the marketing,
showing the property, and putting together the closing documents.


Cons: It can be expensive. An agent’s commission is paid out of the proceeds of the sale at
closing. Most agents tend to do “traditional” marketing which often
takes 3-12 months to sell a house (in most markets the average time on “market” when listed
with an agent is 6+ months). This of course means you’re responsible for the costs of the house
while it’s trying to sell. Lastly, a real estate agent’s primary way to get buyers is by focusing on
“retail” buyers (people looking to live in the home). This requires showings of the house and
there’s always the chance that the buyer whose offer you accept has their financing fall
through, or that they delay the closing date..


Who Working With An Agent Is For:
People who aren’t on a time crunch and can wait however long it takes to sell, have room in the
transaction to pay the agent fees, are looking for full market value, can stage their home to
show its best face, and are willing to wait it out until a buyer comes along who is willing to pay
full market value.

Home selling option #2: Selling Your House Yourself (For Sale By
Owner)

In the last 10 years For Sale By Owner (FSBO) has become very popular. With sites like
forsalebyowner.com, craigslist.org, and others like it, it makes it easy to list a house online,
even get a “FSBO” sign for your yard—taking control of the sale process for yourself.
The general process of selling a house on your own is:


You determine the value of your home. Sometimes this can be tricky, but there are resources
out there. Usually paying for an appraisal is the most accurate and best way to find the true
value of your home (or ask a real estate agent who is willing to give you a value).
Take pictures of the house, gather all of the details about the house (sq. footage, etc.), and
create a listing on a FSBO website.

Advertise that it is for sale. Since marketing is your responsibility, you can do as much or as little
as you want. Many people list in the newspaper, online, and there are even “flat rate” MLS
services out there where you can get your house on the MLS for under $500 (with no agent
commissions).
You handle offers, showings, and putting together the paperwork for the sale.
You and the buyer show up at the closing table and complete the purchase.
This can be a very attractive if you’re familiar with the real estate sales process and are a good
marketer.


Cost: The only real costs are whatever fees there are to list on a FSBO site (between
$100 – $1000), if you choose to get it listed on the MLS with a flat fee agent (about $300-$500), any cost to fix your house up so it shows well, and potential closing costs that you may share with the buyer. Plus, if you decide to pay a buyer’s agent fee (usually about 3%) to entice agents to bring their buyers to see your house, you’ll want to figure that into the cost. Again, on
a $200,000 house, 3% is about $6,000. Add this to the other costs above and the total cost is
about $7,000 – $8,000.


And don’t forget the carrying costs. The mortgage payment, taxes, insurance, utilities, HOA
fees, etc. If your mortgage payment (including taxes and insurance) is $1,500 and it takes you 9
months to sell your house at full market value, during that 9 months you paid $13,500 in
payments on that house.


Timeline: This really depends on your ability to market and be available to show the property.
Usually, FSBO houses stay on the market longer than with an agent, simply because agents sell
homes every day and know the tricks to sell. But, you should budget 6-12 months to sell with
this strategy in most markets (some more, some less).


Pros: You can save a big chunk of money by not paying agent fees. And, you have control and
full responsibility over the whole process.


Cons: It’s a lot of work to sell your own house, and if you’re not comfortable and experienced in
the process of selling a house, the paperwork, valuing your
house, etc. you could end up in over your head and it costing you more than working with an
agent. The largest drawback with going the FSBO route is the amount of time it could take to
sell.


Who The FSBO Route Is For


Selling your own house is really great for people who don’t need to sell quickly and who have
no urgency to get out of the house. Also, people who have a certain comfort level with
negotiations, working with offer documents, etc. usually like this route. If you need to sell
quickly and/or don’t want to hassle with everything that goes with listing and selling your house
yourself, this isn’t the strategy for you.

Home Selling Option #3 Selling Your House to a Real Estate Investor

A third option for selling your house is to work with a local real estate investor who buys houses
(like Laurel Buys Houses!). In virtually every city there are independent real estate investors
who buy houses and either: fix them up and sell them, hold onto them as a rental property, or
sell them to other real estate investors who will hold them as rental properties.

This is the general process of selling your house to a real estate investor:
You connect with the investor and submit your information about your house and situation to
them.


Investor will evaluate the house, come up with a value for it, determine if any repairs are
needed, find out what your goals are, and make an offer that fits their buying criteria and helps
you reach your goals. You look at the offer and decide if it works for you.
If it’s a fit, closing happens at a title company and the title company prepares the documents.
The investor buys with all cash so it’s a quick close and you get your cash quickly.
The house sale is complete.


The process can take from 7-30 days (many times investors can close within 7 days if you need
it to). It is the option that many sellers go with when they need to sell their house fast with little
hassle.


Cost: The cost to sell your house to a real estate investor is very low. There are no commissions
or fees and often times the investor will actually pay for 100% of the closing costs as well. This
immediately eliminates thousands in costs that you would have to pay when working with an
agent or selling the FSBO route.
The main cost with working with a real estate investor is the fact that an investor can’t pay full
retail value for a house. They usually look to buy houses at discounts that allow for them of
course to turn a small profit on the deal, just like any other business turns a profit. But, for
many people, selling at a lower price makes sense in return for the elimination of commissions
and fee and the much faster timeline to sell your house.
Because of the carrying costs we mentioned above, in the end, you could net in your pocket
less if it takes a long time to sell your house with an agent for full retail value, versus selling very
quickly to an investor at a discount today.


Timeline: The timeline to sell your house when working with a real estate investor can be very
quick compared to other home-selling options. Since investors buy with all cash (they don’t use
conventional banks which take more time) they can close very quickly. Frequently, you can
have an offer on your house in less than 48 hours and can close in less than 7 days from the
time you accept it (sometimes it may take a week or two).
Pros: It’s less headache, you can have your house sold this time next week if you want to, you’ll
pay no fees or commissions, many times the investor will pay all closing costs as well. With a
reputable buyer, the closing happens at a title company just like with an agent, making sure it’s
done correctly. In addition, most investors will buy your house “as-is” and won’t require you to
repair anything, clean anything up, or even remove everything from the house. They’ll pay for
those costs themselves after the sale is closed.


Cons: Just like with anything, there are drawbacks. The main drawback may be that you are
selling at a discount in return for the speed and convenience that a real estate investor is able
to offer. If you’re able to work with an agent and the agent is able to sell your house for full
market value within 3 months (and you can wait 3 months) you may wind up ahead going that
route. But, if it takes longer than 3 months for the agent to sell it, the “carrying” costs we
mentioned earlier start to eat away at any gains you may have working with an agent.


Who Selling to a Real Estate Investor Is For

This strategy is mainly for people who are willing to sacrifice a bit on the sales price in exchange
for a fast convenient sale with no hassles. If you need to sell quickly (days or weeks rather than
months), investors can close quickly. If you don’t want to hassle with repairs or cleaning up the
house, investors actually will take care of that for you. Investors are able to get a good house at
a fair price that leaves them room for a profit, and you are able to get out from under the
house and the payment and can move on more quickly.

Conclusion

In the end, there’s no one-size fits all solution. If you have lots of time and aren’t in a hurry to
sell, seriously consider going the FSBO route first to see if you get any bites. Then, if you still
have lots of time, you may work with an agent.
However, if you need or want to sell quickly, maybe you’re in foreclosure, or you inherited the
house and don’t want to mess with the hassle, or you’ve moving, or you already bought a new
house and can’t handle two payments anymore, or any other situation that calls for a fast and
no hassle sale, working with a local real estate investor may be the way to go.
We look forward to helping you as a resource and working with you on the sale of your home if
there’s a fit.

Home Selling Options Summary

Laurel Buys HousesReal Estate AgentSale By Owner
Listens to your home-ownership problems and helps you find solutions.Does not buy your property.Requires that you find potential buyers.
Buys your property for cash.Lists on the market in hopes that it will sell.You can purchase an MLS listing.
Does not charge commission or fees. It’s 100% free.Brings potential buyers through your house to “show” it.Can take a long time to sell, 6-12 months or more, based on your availability to show the house.
Can close on your timeline — Days? Weeks? We can make it happen.Can take 6-12 months to sell. This means you will not receive your payment for the home for at
least half a year.
Relies on your own understanding of the real estate marketplace and value, or money to pay
for an assessment.
Doesn’t parade strangers through your home.Charges commission. You will pay them a percentage of the final sales price, which is usually up
to 6%.
You will be negotiating the deal and responsible for the financial and legal paperwork.
Repairing and cleaning is up to you.
Buys your house AS-IS in any condition. Leave unwanted items, clutter, and needed repairs.Repairing and cleaning is up to you.
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