Profile picture for martinhouse3

Prospective buyer offers to purchase my home w/o real estate involvement. Any pricing guidelines?

  • April 16 2014 - US
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Answers (9)

I think those are the only three "independent" studies, by the way. What we don't have is a study of how accurate appraisals are . . .
  • April 17 2014
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Profile picture for SteadyState
Sell at the appraised value - the deal is no commissions to the agents which helps both the buyer and the seller but not the agents.

Economic studies that have concluded that hiring a REA does NOT net the seller more money over FSBO:
1. Levitt and Syverson (University Of Chicago)" Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate
Their Conclusion:  "Home owners are induced by their agents to sell too quickly and at a price that is too low"
2. Hendel, Nevo, and Otarlo-Magne (Northwestern) , "The Relative Performance of Real Estate Marketing Platforms : MLS vs. FSBOMadison.com"
Their Conclusion: "After controlling for differences in house and seller characteristics, we find that the MLS delivers no price premium (even before netting commissions)"
3. Bernheim and Meer (Stanford), "How much value do Real Estate Brokers Add"
Their Conclusion: "We find  no evidence that the use of a broker leads to higher average selling prices or that it significantly alters average initial asking price"

So enough with the Agents "will net you more money"  fiction that agents are fond of repeating on these boards

  • April 17 2014
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Price it higher than they're offering?

I presume this was an unsolicited offer, which means that they're trying to get a deal - which means, they probably want to pay you less than its worth.

Last year, I listed three properties where the sellers had received unsolicited offers, and each time we netted them significantly more than any of the offers - on one property, one of the unsolicited offers resubmitted (but not high enough to buy the property).

The chance that you will know the person most likely to net you the most money is slim; marketing the property properly is the way that I sell my own properties, and I think other people should, too.
  • April 17 2014
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Profile picture for SteadyState
Please do not fall for the doom and gloom of selling your home FBSO that come from agent self-interests  and not your best interests.. Know the following:

1. Every economist who has objectively (i.e., not from the NAR) evaluated the benefits of selling with and without a REAs has concluded that the services of an REA do not net the seller more money! (there are several threads on this board that have published the references - check Stanford and University Of Wisconsin, Madison for such studies)
2. Get an appraisal, use that as the selling price, and use a attorney that both of you can cost share to perform the transaction.  If the home appraises for $500K - you get to keep about $490K ($10K in total closing costs). If you hire an agent you will get to keep only $465K ($30K commission + $5K closing costs)
3. Buyers who will get financing to buy the home will only be funded the appraised value - $500K.

Keep more of your own money. Sell to your neighbor without an agent.
  • April 16 2014
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Profile picture for hpvanc
Get an appraisal. The buyer either thinks they know the market or are planning on getting an appraisal, if you don't know your market get an appraisal.

You will have to pay for the appraisal, you could get a CMA or several, but I would be wary of agents providing inflated CMA's to get you to list it instead of going through with the transaction in hand. If the buyer is offering a fair price and you want to sell, it will be much easier transaction for both you and the buyer.
  • April 16 2014
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Most people think that if they sell by owner they'll realize more profit. But NAR statistics show that even after paying commissions, homeowners who use a realtor sell their houses for 13-16% more than those who go it alone. I'd be asking the question, "Why does this buyer want to purchase my house without the assistance of a realtor, since it's the seller who generally pays commission?" Your potential buyer may be a stand up guy/gal. But not everyone in the world is fair and honest. Having a realtor on your side helps insure the process follows state laws and helps protect you against future legal action. Realtors price properties based on tools available only to them as well as their experience on the job. And unfortunately those things can't be shared in a blog post. I do hope your home sale goes smoothly.
  • April 16 2014
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Profile picture for faridabadi
Get an appraisal done.
  • April 16 2014
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Profile picture for Outer Banks N C
No, you are allowed to sell at any price you want. You can sell it for $1 if you want to. You must pay off any loan and the buyer must jump through a lenders hoops if they want to get the loan.
  • April 16 2014
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Hello - The only true way to know if you are pricing above, below or at market value, and getting you the maximum possible, is to speak with a local real estate expert.  It is not a matter of picking numbers, but a science of taking many different factors and outcomes into consideration.  Best of luck and every success!!
  • April 16 2014
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