Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Should I get Licensed Just to Sell my Own House and Save Money?

Should I get Licensed Just to Sell my Own House and Save Money?

A couple of months ago, I was asked if it was worth getting a real estate license to sell your own house.  The short answer? NO!

This person's theory was they had a $500k house and commissions would be upwards of $30,000. What this person wasn't thinking about was that fee is, in some way, split with a buyer's agent who brings a buyer to her, so say that number goes to $15,000.

austin tx homes sellers save spendNow, to get licensed, you have to spend about $1000 to take the courses for the licensing exam. You have to spend a couple more just to register to take the exam. Many people fail the first time (I didn't), and you have to repay those fees to take the exam again.

Then, once you join a brokerage, you have to join the National Association of Realtors, the Texas Association of Realtors, and the Austin Board of Realtors. All these memberships will cost about another $1000. Oh, don't forget there might be brokerage fees with whatever office you join.

Then, once you're a member of all these associations, you need to obtain MLS access in order to list your property. You'll need to obtain a Supra Key in addition to a Supra Lockbox.  Our dues are about $450k a quarter. Each lockbox is $96 and some change.

Did you want a yard sign for your house? Did you want to hand out a business card to anyone so you could try to sell the house to a buyer also, and maybe save the additional $15k we talked about? Did you want to pay for any marketing or advertising for your listing?

So, you sell your house and you don't represent the buyer, so you couldn't save the extra $15,000. The commission is paid to your broker. Let's say it took 3 months to get a buyer and then close. You are either with a broker who charges a desk fee of about $1000 a month with a 95% take home OR you're with a broker who charges minimal monthly dues, but takes 30% of your money. (Yes, there are many models, but I'm just using 2 as an example.)

95% split:
$15,000- $1000 for 3 months - 5% split out - errors and ommisions insurance= roughly $11,000 take home

70% split:
$15,000- minimal monthly charges - 30% split out - errors and ommisions insurance= roughly $10,000 take home

Now, subtract all the fees I mentioned above... they equal about $3500 (not including your marketing and advertising because who knows how much you'll spend on all that)

In the end, this person might save $6500-7500. This is no where near the $30,000 she thought she would save. But also, what if the house doesn't close in the 90 days I calculated for? Each month, it's more and more fees and marketing expenses.

In the end, what is the time with your family valued at? If you spent weeks preparing to get your real estate license and not spending that time with your family, how much is that time worth?

The short answer is NO, and the long answer is also NO. If you're looking to save money with selling your house, hire a professional who has the experience to get it sold quickly and for the highest dollar. That's the only place you'll save money. Hiring someone who is medeocre, but charging less, is also going to net you less in the end.

 

**Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com
Donna@DonnaHomes.com
austin-texas-homes-for-sale.com

Austin TX Real Estate

and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way. 

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Copyright© 2013 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
*Should I get Licensed Just to Sell my Own House and Save Money?
* was first published on donnahomesblog.com.

Comment balloon 30 commentsDonna Harris • February 18 2013 05:49PM

Comments

Donna

When someone wants their home sold . . . . hire a real estate professional.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 5 years ago

That is a very bizarre question and the answer is an EASY NO Donna. Glad you netted it out with all the financial costs not to mention the cost of one's time. Wow. I would have thought no one would have even thought of this.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 5 years ago

It's easy to think of the monetary benefit-however, FEW consider the liability potential which could cost them that license and monetary damages.

Posted by Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900!) over 5 years ago

Not to mention that the New Licensee will have no knowledge, experience, or training.  Selling houses is more than a Sign in the Yard and a post on the MLS.

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) over 5 years ago

Lou, Exactly!

Gary, This wasn't the first time I was asked, and it's usually asked in a much lower price point, where they then are losing money and it makes even less sense...

Michelle, Liability is huge even with the small cost of errors and ommisions insurance.

Fred, Very true!!

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 5 years ago

Hi Donna, I love what you've done.  You broke it down and showed the folly of the thinking, very respectfully.  I've suggested this one.  I've heard the question before, so I'm sure others have too. 

Posted by Dan Tabit (Northstone Real Estate Inc.) over 5 years ago

There is also something else to consider.  A first time licensee may not have the experience to handle the transaction effectively.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 5 years ago
I am 100% in agreement. Why don't they become a dentist to save money on their kids braces while they are at it.
Posted by Ellie McIntire, Luxury service in Howard County & Catonsville (Ellicott City Clarksville Howard County Maryland Real Estate) over 5 years ago

Amen, amen, amen.  This clearly is a person that just didn't have a clue. But I'd say you spelled it out pretty clearly.  I'm "clicking" this one AND featuring in Bananatude.

Posted by Charita Cadenhead, Serving Jefferson and Shelby Counties (Alabama) (Keller Williams Realty) over 5 years ago

The biggest thing people don't take into account is the value of their time.  People need to sit down and put an actual dollar amount on the value of their time and then take that in account when planning out activities.

Posted by Marc McMaster, Putting my clients before myself (RE/MAX Centre Realty) over 5 years ago

Donna that is a question I've never heard before!  It makes absolutely no sense to get your license just to sell your own property. Hire a seasoned professional - end of story!

Posted by Anna Banana Kruchten CRB, CRS 602-380-4886, Arizona's Top Banana! (Phoenix Property Shoppe) over 5 years ago

Getting a license just to sell your own home doesn't make financial sense or timing sense!  (You need time to take the classes, pass the test, join a firm, etc.)   However, living through the sale of your own home and using that experience to decide selling houses might be right up your alley, does make sense.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) over 5 years ago

Dan, Thank you!

Kathy, Nope, and they'll probably lose more oney on the negotiations.

Ellie, Exactly!!

Charita, Thanks!

Marc, Makes sense!

Anna, Really? I've heard it many times, even from a couple of friends...

Kat, Right...

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 5 years ago

I just got my license last fall and although I also passed on the first try, it was 4 weeks of a full time job getting through all the material and preparing for the test not to mention the financial breakdown you presented so well.

Posted by Scott Larson, Park City, Utah Real Estate News (BHHS/Utah Properties) over 5 years ago

The paperwork alone...I mean all those forms will derail you let alone what they mean....You need time to familiarize yourself and then you need to KNOW what to do with it all....Experience and savvy cannot be substituted or ignored.....Unless you like to gamble...good post and thank you

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 5 years ago

Given all of the comments indicating that a first time licensee won't have the knowledge to handle the transaction effectively, does this mean buyers shouldn't ever hire new agents?

Posted by Invisible_Hand over 5 years ago

If I had a quarter for everytime someone said casually, "Oh I'll just get my real estate license..."

Posted by Jonathan Bane (Home City Real Estate) over 5 years ago
All of us who are real estate professionals know that its a no-brainer but just saying to someone that it does not make sense might be viewed as a subjective opinion because of vested interest. You have backed it up with the things involved and more importantly the financial breakdown which drives the point across convincingly. Good job Donna!
Posted by Mihir Gandhi, Real Estate in Placentia - North O.C. CA (First Team Real Estate) over 5 years ago

Scott, And how much did your previous full time job pay for a month?

Richie, Exactly!

Invisible Hand- That's not what we're saying. With a typical "new" agent, they usually have a broker and office manager who can help them through things and offer additional real world training in real estate. They can go to them with any and all questions and help. In the scenario I've written, this is an agent who isn't looking to actually learn about real estate and to continue with it as a career, but to solely sell their own property and move on. Is this person really going to spend more time with training and learning what to actually do once they get an offer?

Jonathan, I know, I know...

Mihir, Thank you!

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 5 years ago

Hi Donna,  If the question were stated differently I might agree.  It might make sense if they wanted to buy multiple properties for their own account but not so  much for just one.

Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) over 5 years ago

I have been licensed 23 years, and in those 23 years we have bought and sold five homes.  In each case, I hired an agent to list and sell my homes, paying full commission.

Would a surgeon save money by extracting his own appendix?  Of course not.  He would want the best surgeon in the hospital to do the job.

Would an attorney represent herself in court?  Of course not.  She would hire the best counsel.

Should a REALTOR sell FSBO?  I don't.  I need someone who can be there when an offer comes in on our listing, or when we are negotiating to buy a house.  I need someone who will prevent me from folding in negotiations like cheap lawn furniture.

Erick Blackwelder
Washington DC suburbs
703-677-1120
Equal Housing Opportunity 

Posted by Erick Blackwelder, Text or call Erick now at 703-677-1120. (Cell: 703-677-1120) over 5 years ago

Donna - The phrase "Penny Wise and Pound Foolish" immediately comes to mind.  Above and beyond the obvious expenses that you outlined, the theoretical new agent is at a huge disadvantage to the likely buyers agent that knows the market and has experience with the local contract & negotiation process... this concept has the potential to be a loss well above the "saved' commission at any step through the entire process.

Posted by AJ Heidmann ~ CRS, YOUR Alexandria & Arlington, VA Real Estate Expert (McEnearney Associates, Inc.) over 5 years ago

No logic from that person at all.  You made great logic however, in explaining the fees involved in getting your license.  Unless she was going to buy and sell a lot of real estate, why bother?

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) over 5 years ago

You mean that obtaining a license does not make you an instant expert listing agent? Who woulda thunk?

 

Fred Griffin, #4 took the words right out of my mouth.

Posted by John Juarez, ePRO, SRES, GRI, PMN (The Medford Real Estate Team) over 5 years ago

Donna - I have a friend that did pretty much the same thing except to buy her own house.   I think she might have sold one or two other homes but she didn't stay in the business very long.   Just a few months ago I listed and sold her home for her as a short sale.  So my answer would be a very emphatic NO. 

Posted by Jim Patton, Realtor - Stanislaus & Merced county Realtor. (Century 21 M&M - 209-404-0816) over 5 years ago

I am so glad you wrote this article.  In our market, where routine sales easily top $2 million, many well-educated folks would quickly get their broker's license in an effort to save the $50,000 or more in commissions. Fortunately, state licensing regulations changed and it is no longer that easy for people to get a license.

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) over 5 years ago

There's a lot more to selling a house than just getting a quick license. Seems penny wise and pound foolish.

Posted by Schuylkill Appraisal Services (Schuylkill Appraisal Services) over 5 years ago

Donna-Great analysis and reasoning. Those one time costs to become an agent seem like money not well spent.

Posted by Wayne Johnson, San Antonio REALTOR, San Antonio Homes For Sale (Coldwell Banker D'Ann Harper REALTORS®) over 5 years ago
Donna - There's the costs of doing business, and then there's the cost of not knowing what you're doing.
Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 5 years ago

Also there probably will be some problem with the house and the buyer will sue you, and since you are the owner and the agent you should have known about the problem.

Posted by Richard Weeks, REALTOR®, Broker over 5 years ago

Participate