One of the biggest questions we get from sellers is “Should I List With an Agent or Sell to a Cash Buyer” in the Kansas City Metro. We are going to give you a very honest answer because we are agents and sometimes listing with an agent is a better option and sometimes selling to a cash buyer is the way to go.
For a very long time, the most traditional way to sell a house has been to list it with an agent. I mean, come on, why would you call up some random person and sell them your house? Who does that . . . a lot of people actually.
When You Should List With an Agent and When You Might Not
You have the 2 to 5 months it takes to get a house listed, marketed, under contract, and closed.
You can pay the 2 to 5 months of holding costs (taxes, insurance, lawn care, maintenance, etc.)
Your house is already in almost perfect condition – inside and out – so it shows well.
You’re not in a hurry and working against a deadline.
You’re ok with making the house available for random strangers to walk through your house.
There you have it. If you are ok with all of these things and have the time and money to back it up. Then you might want to list your home. Generally, your house will sell for more money, and although you still have the commission to pay the agent, you will, statistically speaking make more money.
BUT & it’s a big one!
When You Might Not Want to List, is Not As Cut and Dried
The best times to list a home for sale with a real estate agent is when they can sell your house for a price that makes you happy, even after all the agent commissions and closing fees are deducted AND the work and effort you must put forth is factored in. So those with new or almost new homes in great locations or people who have recently had a complete remodel probably should list with an agent. We list ours with an agent once we have completed renovations.
But what if The House is Not Brand New?
What if your house does need repairs and maybe updating? Should you still list it?
Possibly, but you need to think about the repairs.
How hard is it to make the repairs: If it is as simple as hiring a contractor to replace the roof or install a new furnace, these repairs don’t take a lot of effort. But if there are major repairs like fixing a foundation, most buyers would be totally scared off. And if it needs a lot of updates, most buyers might be ok with replacing some carpet, but living in a construction zone for months after they buy it and they go on to the next house.
How much will these repairs cost: Even simple repairs can be costly. So your potential buyers either need to have the cash available to pay for these repairs after they buy it from you or they need to jump through a bunch of hoops to get a special loan that will pay to buy the house and pay to fix the house.
Pricing a house that needs repairs: Even if you have a buyer that is ok with a little sweat equity, just how much will you need to lower your price to make it worth their time and effort?
Consider a Tale of Two Houses
Imagine if you will that you are a typical home buyer looking to buy a house. You have two houses to pick from:
House A: Worth $200,000 that needs no work. All that have to do is buy it and move in.
House B: Also worth $200,000 but the seller is asking $170,000 because it needs $30,000 in repairs to make it in comparable condition
to house A.
Which one would you pick? House A Right – No wants to put in $30,000 worth of work to get to the same $200,000. Who wants to do all that work, deal with finding and managing contractors they can trust, and live through all the work, unless they can get a deal?
So as an average home buyer, how much of a price cut would you need to make it worth your time to deal with all that hassle of a home renovation, plus the uncertainty that might come with it?
As you can imagine, all the time and effort it takes to renovate a house has a cost associated with it. It’s not just how much will it cost to buy the materials and pay someone to do the work. Other things factor in . . . the risk of other things going wrong, or the risk of it taking longer than planned, all the hassle involved, uncertainty . . . this all affects the value of a home that needs repair.
But that’s not all . . .
Just what else is wrong with the house beyond what can easily be seen? What if there are problems inside of the walls or in the attic where you can see? And consider, banks will not approve a loan when there are too many repairs. They don’t trust the average home buyer to do what we do when it comes time to fix up a house, so they will not lend on a home in need of major repairs.
So when you have a house in need of repairs, be sure to work with an agent knowledgeable in this type of home. Many are not well versed and some will not even attempt to list a home that needs major repair.
Which Brings Us to Holding Costs
If you are going to get all those repairs done first it takes time to do them and money to pay for them. Or you have time to try to find the right price and marketing, and getting it sold. All that time can add up as well . . time you could have spent doing other things for sure, but also the Holding Costs you have to pay while all this work gets done. Pull out your checkbook (do people still use those) and add up what you pay each month in utilities (which might be higher with contractors working in your house), what about homeowners insurance (which is much more expensive if your house is vacant). Then factor in agent commissions, closing costs at the title company, your time and effort.
So back to our initial question . . . “Should I List My House With an Agent or Sell It to a Cash Buyer?”
Answer – it depends.
It depends on how quickly you need to sell. It depends on how much money you have for repairs and selling costs. It depends on the condition of your house. It depends on if you want to make the repairs or lower your price.
Listing your house in the Kansas City Market is not for everyone. Even if you have a newish house, some people have deadlines they are working against or might be in a situation where a lot of strangers walking through their home for several weeks or months may not be ideal.
So rather than sit there wondering, take a day or two to find out how much a cash buyer like us might offer for your house in Kansas City before you make a commitment to an agent to list it. Then you can know exactly what you could get in cash in your hand in about 10 days or two weeks. And can compare that to what the agent tells you they can “net” you after commissions and fees, after doing the things they suggest to make your home more sellable, and after the time on the market, getting through buyer inspections, making the buyer requested repairs, and then waiting through the appraisal, which right now in 2023, is not always panning out. In fact on the last two houses we renovated, listed, and sold. We had to reduce our sales price by $5,000 on each because they did not appraise high enough.
We look forward to talking with you. Give us a call at (816) 408-3600 or fill out one of the forms here on our website and we will call you.
On top of the process!
Scott was on top of the process every step of the way, making sure I was informed and knew what was going on and when we had some paperwork issues at the title company, helped me work through that as well.