Saving on Selling Agent Commission: 3% v. 1.5%

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Mr. FAF and I love our house and want to keep it long-term as an investment. But we have also thought about selling it at one point and move to another state.

If we keep our house as an investment, we plan to manage it ourselves to save on the management fee. If it proves too difficulty troublesome, we will hire a property manager.

The questions

If we sell our house, however, there’re a myriad of things that I’ve been thinking about:

— Do we need to repaint the house to make it clean and brighter?

— If we repaint the house, do we need to move our furniture somewhere else? How are we going to find a contractor we can trust?

— Do we need to fix the front walkway that looks a bit ugly at the moment to improve our curb appeal? How much will it be and will we be able to recoup the investment?

— How much is it to hire a professional photographer to take pictures of our house? Or should we even spend money on that at all?

The list goes on, but the biggest questions of all are:

— How much in commission and closing fees do we need to pay?

— Are there ways to reduce such costs?

The urge to save

Selling a house can cost us 7-10% of the house price in fees and closing costs, of which $5-6% is commission. Let’s assume commission is 6%: 3% will go to the buyer’s agent and 3% will go to our selling agent.

While we have no control over the buyer’s choice to work with agent, we seem to have some control over ours.

I have thought about selling the house myself. I like the money of saving thousands of dollars, but I’m also afraid of any potential lawsuits or legal battles that ensue from that decision.

Let’s face it, I no nothing about writing offers or protecting my rights as a seller.

The discovery

Mr. FAF and I just accepted the 5-6% commission as the standard in the industry, something we had to pay, until I discovered Redfin’s 1.5% commission for selling agents.

I just couldn’t believe my eyes. Is it a gimmick to lure me into signing an agreement and revealing all the hidden fees later? If I sell my house for $300,000, I can save 1.5% or $4,500 by working with Redfin’s agents?

And that’s not all. They will also send a professional photographer to take pictures and make a 3D tour of our house for FREE.

Why the discount?

My theory is that Redfin can take advantage of economies of scale — millions of houses listed on their sites and an extensive network of real estate agents — to reduce their costs while still making a profit.

Other than that, I just need to read their contract and talk to a Redfin’s selling agent to find out what the deal is. And that’s exactly what we will do if Mr. FAF and I decide to sell our house.


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