Listing with an agent or selling as-is: how to compare them

A cash buyer will almost always offer less than the price an agent says the house could list for. That is not the comparison that matters. What matters is what you walk away with at the closing table, and how long it takes to get there. Here is how to work that out honestly for your own house.

Compare what you net, not the prices

Two numbers are not comparable until each one has had its costs taken out.

Listing with an agent. Start with a realistic sale price, then subtract:

• Commission. It is negotiable. Ask what yours will be, including anything you agree to pay toward the buyer’s agent.
• Repairs before listing. Whatever it takes to get the house photographed and shown: paint, flooring, the obvious fixes.
• Repairs after inspection. Most buyers inspect, and most inspections produce a list. Expect to fix things, give a credit or lower the price.
• Seller-paid closing costs. Buyers, especially first-time buyers, often ask for help with theirs.
• Holding costs. Mortgage, taxes, insurance, utilities and lawn care for every month the house is on the market and under contract.
• Your share of the closing costs. Deed preparation, any liens or payoffs, and the prorated taxes.

Selling as-is for cash. Start with the offer, then subtract your share of the closing costs and your holding costs until the closing date. There is usually no commission, no repair list and no financing to fall through.

Now compare the two remainders. Sometimes listing wins by a wide margin. Sometimes the difference is small enough that it is not worth months of showings. Sometimes, once the repairs and the holding time are counted honestly, the as-is sale comes out ahead.

When listing usually wins

• The house is in good shape and needs little more than cleaning and paint.
• You can afford to keep paying for it for a few months.
• The house would qualify for a normal mortgage, so the whole market of buyers can bid on it.
• You live nearby and can deal with showings, the inspection and the repair negotiation.

If that describes your house, list it. We will tell you so if we look at it and think listing will net you more.

When an as-is sale usually wins

• It needs work a lender will not finance. A bad roof, a failed system, foundation trouble or missing flooring can rule out most mortgage buyers. The buyers who are left are cash buyers anyway.
• Time costs you money. Mortgage payments on an empty house, a foreclosure date or a tenant who has stopped paying make every month expensive.
• You cannot manage the house from where you are. Heirs in other states and landlords who have moved away often cannot handle repairs, showings and inspections from a distance.
• Certainty matters more than the last dollar. A retail buyer’s loan can fall through a week before closing. A cash sale does not depend on anyone’s financing.

Questions to ask any cash buyer

• Are you the buyer, or will you assign the contract? Some “cash buyers” sign a contract and then try to sell it to someone else. If they cannot find anyone, the deal goes nowhere. Ask directly, and ask whose money closes.
• How did you get to your number? A serious buyer can show you the comparable sales behind the finished value and give you a repair estimate you can question.
• Who is the closing attorney? In Georgia a real estate attorney handles the closing. You should know who it is before you sign.
• What comes out of my proceeds? Ask for it in writing before you sign.
• What happens if you find something at the walk-through? Know whether the price can move, and why.

Do the arithmetic before you decide

Get a written number from a cash buyer and a price opinion from an agent, and put both through the net calculation above. It takes an evening and it is the only honest way to compare them. Our net sheet lays both columns out for you, and every default in it can be changed. If the as-is number is the better one, we would like to be one of the buyers you ask.