How We Sold Our Home and Paid No Commission
This is a post about networks. And about how one big industry is due for a big disruption. It’s a post about how I sold my house and paid zero dollars in commission. But first, we have to back up.
It was late in 2012, and we reached out to a realtor to see about selling our house. Our oldest child was in preschool, and it was time to think about finding a larger home (we added three kids since buying our home) and ideally getting moved so that she could start kindergarten in the school she would wind up in. We had bought our home right before the bubble burst, in other words, at the height of the market. The realtor confirmed our fears: The house still wasn’t worth what we owed. This story is, sadly, not unusual – especially for people our age who were buying their first homes in their 30s.
And then the housing market went nuts. The realtor called us in May of 2013 and told us that there wasn’t much like our house on the market, and if we moved fast, we could get out and maybe even make a few bucks.
So we did the crazy thing, made some repairs, painted, moved much of our stuff into storage and staged the rest. We’d list in July, sell in 30 days and hopefully be in our new home in time for school to start fall. Or so she claimed. We did our part, showed it a ton and come October, it was clear that she/we had misread the market. We pulled the listing so we could have a Thanksgiving and Christmas with decorations and without strangers tromping slush through on a moment’s notice. That’s just not any fun when you have three kids who are all on schedules for napping, eating and sleeping.
Holidays. Super Bowl. Worst. Winter. Ever. Slight thaw. We started to think about listing again. The plan was to put it back on the market at a lower price in March.
Then I was reading my Facebook feed and saw a posting from an old coworker. Not someone I had ever hung out with outside the office. Sociologists would say she’s a “weak tie” in my network and that those kinds of relationships are the ones that have a great impact on the fabric of society. But I digress.
Anyway, she posted a listing of a home she was looking at and asked for comments on the neighborhood. I replied, “You don’t want to live there. You should buy my house.” I was only kind of kidding.
But a couple of days later, there she was with her husband, kids and in-laws touring my house and falling it love with it. Six days after our Facebook exchange, we all sat around my dining table and signed the contract.
There were no realtors at the table, so no commissions were paid.
So yeah, now we needed to find a place. We knew where we wanted to look, more or less, and my wife reached out to a Facebook friend of hers. Again, working the networks. We asked her if there were areas she would recommend, and she proceeded to tell us exact blocks and then posted on her block’s message board on NextDoor.com to see if anyone was thinking of listing their homes. She got a couple of replies, we toured a couple of homes and within the week we, too, were sitting around a kitchen table writing up a contract on what will hopefully be our home for a long time to come.
Again, no realtors and no commissions paid. The net money saved on all sides of the transaction is considerable. That’s money that can be spent, for instance, on improving the houses. It also changes the economics of the sale itself.
If you look at the percentage of homes with underwater mortgages, the dearth of first-time home buyers and the crazy stats about all-cash offers being at an all-time high because investors now make up nearly half of all home sales, it’s easy to imagine that 3-5 percent of a home’s value being paid to third-parties can make a huge difference in whether families can afford to sell and who can afford to buy when they do.
As more and more families are researching online, real estate agents become more of a sanity check than a necessity – more of a Sherpa than a salesperson. At least, that’s how we felt. The bubble bursting should have shown the housing market a lot of things, but one of them should have been that many RealtorsTM don’t necessarily have any better read on the market than anyone else.
Your mileage may vary, but it seems like we’re not too far away from a time when our social networks make this kind of transaction much more possible and more frequent. After all, most moves are short moves within the same county. Most of our networks are local. You can start to see how the math works.
It was also just so civil. Everyone was pleasant and reasonable. Our attorney was even amazed at how we would just work stuff out and let her know instead of having her do the negotiation legwork for us.
Again, maybe a realtor is right for you. They’re certainly the gatekeepers of the all-important MLS listings. Already there are people working on creating an OpenMLS system where people can freely enter their information and sites can freely use that information to create new and better real estate search services.
It’s disruption time.
Perhaps that will come in a rethinking of the model from a percentage commission to a fixed-fee or hourly fee for services. After all, is it really exactly twice as hard to sell a $300,000 home than it is to sell a $150,000 home?
You’ve read why we loved our old home and why it was a best place for us for so long. You’ve also read why we needed to rethink that. This post was about the mechanism by which our move happened. Now I’m sure you’re wondering … Where did we choose as our next (sequentially, not runner-up) Best Place? Stay tuned.