So you’ve made the decision to sell your house or rental property in greater Cleveland! Awesome! Now you have to pick a strategy for how to sell it. Read on as we highlight literally every imaginable option for selling a house in Cleveland. This includes one easy option you probably don’t know about.
Determine what option is best for you by using our real estate selling pyramid
You have decided to sell your house! Now, how do you do it? You have many options for selling your house in Cleveland. The hard part is picking the right one for your situation.
The best choice for you specifically will depend on 1. your situation, 2. your desired level of involvement in the selling process, 3. your desired/necessary timing to close and 4. your end goals of the sale. When selling a house there are options that are better suited for you based on these factors.
It is helpful to understand that there are three levers every seller has when selling a house.
The first is price; how much do you want/need to get for your house.
The second is timing or how fast you want/need to close (not just get an offer). If you need to sell a house fast you might want to check out our previous article on options for a FAST sale.
The last is convenience or how much effort you personally want to put in to the sale process and how much hassle you want to deal with. These factors make up what could be referred to as the Pyramid of A Real Estate Sale.
When selling a house a seller can realistically expect to achieve one or two of these factors, but achieving all three is very hard to accomplish if not impossible.
What Are My Options For Selling a House in Cleveland Ohio?
Your options for selling your house in Cleveland include:
- Selling with a real estate agent
- Selling it yourself (via a For Sale By Owner sale)
- Selling it for cash to a cash buyer (a “we buy houses” firm).
Below we will discuss these three options in more detail.
Do note that there are two other options for selling your house, which are selling it with owner financing or as a lease option. These are outside the scope of this article, but it should be noted that you can use owner financing to attract buyers using options 1, 2 and 3 above.
Option 1: Selling a House With a Real Estate Agent
Selling a house with a real estate agent is your first option.
When it Makes Sense
If getting the highest price is your key objective when selling a house and timing is not an issue (you are in no hurry) then a realtor may be the right option for you.
To refer back to the Pyramid of a Real Estate Sale above, you would ideally achieve a higher agreed upon sales price (although maybe not that much higher in terms of the net profit), but sacrifice a quick sale (time to close) and some convenience.
Although a lot of people consider selling a house with a realtor as the most convenient method, this belief is not necessarily true unless the house is in excellent shape and if it is a rental then it is vacant. When the property is a rental with tenants living in it, selling with a realtor (or selling a house in general) can be a headache.
Role of a Real Estate Agent
The realtor will market the property for you, host the open-house and coordinate the showings with the buyers’ agents.
Your Role When Using a Real Estate Agent
When listing with an agent it will still be your responsibility to keep the house clean and in immaculate appearance at all times as you could get a call at a moment’s notice for a showing. If the house is a rental with tenants it will be your responsibility to coordinate showings with your tenants, make sure they keep the property presentable, and keep your tenants from not telling potential buyers every negative aspect of the property. Both cases can potentially take a lot of your time and possibly be a headache.
Financial Considerations When Using An Agent
When working with an agent you should be aware of the potential costs to achieve a sale and work that is required of you. If you want to sell a house for top dollar you are going to need to make repairs and updates to the property before the sale and/or as part of the inspection process. This will require you to manage the work and foot the repair/improvements bill.
In addition when selling a house with a realtor you will have to pay 1. the realtor’s commissions, which are typically 6+% of the sales price of your house. Second, you will have to pay your share (and possibly the buyer’s share) of the closing costs, which are typically $1200-1500 or up to $5000+ if you are paying theirs (including escrow credits). Third, you will need to make repairs both before you list your property and after the inspection when the buyers demand that repairs be made.
A Story to Detail Selling With a Real Estate Agent
To put the economics of selling with a realtor into perspective, consider the following example. This specific example uses an owner who is selling a rental property. This is very similar to an owner selling their primary residence minus the coordination with the tenants for showings.
John, a homeowner has decided he wants to sell his rental property, a duplex in a decent neighborhood with 2 less than stellar tenants currently renting it. Although he is fed up with the hassles of being a landlord he feels he can put up with the trouble until the property sells. He feels that he should get market value for the house and that the best way to accomplish that would be to sell it on the market through a realtor.
Before listing John’s realtor warns him that if he wants to get top market value he will need to paint both units and update both bathrooms, amongst other things before listing it. John listens to his realtor. He spends a total of ~$5,000 before listing.
John only had $5,000 to spend so the finishes in the bathroom aren’t exactly premium and the paint isn’t the cleanest job. Neverless, he has taken $5,000 out of his savings to complete the work.
The house is listed on the MLS for $85,000. Unfortunately, the market isn’t exactly sizzling hot. His realtor holds an open house, but only a few potential buyers show up. After the open house potential buyers schedule showings on multiple occasions. As a result John is left to coordinate a suitable time for the showing between both of his tenants and his realtor.
The showings become an ongoing hassle that compounds John’s stress level on top of the normal, ongoing issues that he experiences with his tenants. The tenants are aggravated and making it hard; John is aggravated and just wants it to be over.
Three months after listing John receives an offer for $75,000 with John agreeing to pay $1,500 of the buyer’s closing costs. Fed-up with his tenants and the hassles of the sales process John just accepts the offer. He just wants to sell his house as fast as possible.
The inspection is held, and the report comes back with a lot if issues that the buyer is demanding John either fix or give a credit for. All said and done, the roof and furnace are both on their last limb. The buyer demands that John replace both; John refuses as he doesn’t have any more money in his bank account after spending the $5,000 on repairs before listing. He agrees to give the buyer a $5,000 concession out of his sale proceeds at closing in order to close the deal.
To compound the inconvenience level the buyer, like mostly all buyers buying on the MLS is using conventional financing. As a result the loan approval process takes about a month and a half. All said and done the total time it took from when John first met with his realtor, made the repairs, listed the house, got an offer and closed took over 6 months. All the while John incurred holding costs (mortgage payments, insurance, taxes, etc.).
At closing John’s net profit is not what he expected. The house sold for $75,000, which is 12% under his asking price. Further decreasing his net profits John spent $5,000 on repairs before even listing, paid a $5,000 repairs credit to the buyer at closing, paid $1,250 for his closing costs, paid a $1,500 closing cost credit to the buyer, and had to pay his realtor $4,500 for their 6% commission. The total costs John incurred to sell his property was a whopping $17,250.
At the end of the day (not including the taxes he had to pay) John takes home a rough net profit of $57,750. This is far less than John expected with far more hassle than he had hoped for.
Now let’s explore another option you can consider when selling a house or rental property, which is to list the house as a for sale by owner (FSBO).
Option 2: Selling a House via For Sale By Owner
Selling a house yourself as a for sale by owner on a classified or self-listing site is fairly similar to the option of selling with a realtor, but more involved for the seller.
When it Makes Sense
This is a good option if your goal is to get the highest price, timing is not an issue (you are in no hurry), you don’t want to pay or deal with a realtor, and you believe you can deal with the inconveniences and hassles of managing the entire sales process yourself.
Referring back to the pyramid, an owner selling a house as a for sale by owner would theoretically achieve a higher price at the sacrifice of convenience and speed.
As in the case of selling a house with a realtor unless the house is in excellent shape and if it is a rental property it is vacant the sales process has the potential to be a headache.
Your Role When Selling a For Sale By Owner
When you sell a house as a for sale by owner you don’t get the services and help of a realtor. This means you will have to do at a bear minimum the following activities:
- market the property
- host the open-houses
- coordinate the showings with buyers and their agents
- keep the property in pristine condition
If the house is a rental property you will also have to coordinate showings with your tenants , make sure the tenants keep the property presentable, and keep your them from telling potential buyers every negative aspect of the property, etc. In other words, in a for sale by owner you are doing absolutely everything. The for sale by owner process will take a lot of time and will test your project management abilities.
Financial Considerations When Selling as a For Sale By Owner
Your net profit will be a similar number as a sale with a realtor, just minus the realtor commission and fees cost. The costly repairs both before and after listing, as well as your closing costs and your buyers closing costs, etc. are the same as selling with a realtor.
Another way to look at it is that you are trading paying a realtor’s commissions and fees for potentially a lot more work, hassle and inconvenience. You have to look at the sales pyramid and determine what is important to you.
Option 3: Selling a House To a We Buy Houses Cash Buyer
The last option is to sell a house directly to a cash buyer (a we buy houses company).
What is a We Buy Houses Cash Buyer?
This one is probably new for most sellers and people in general. Most people aren’t aware that there are investment companies who buy houses for cash and close on the house fast. These firms buy for investment purposes and have cash which allows them to close fast. This option allows you to sell a house without putting it on the market and close quick.
To better understand what a cash buyer is read our article on What is a Cash Buyer in Real Estate?
When it Makes Sense
If your priorities are speed and convenience this option is by far the fastest and easiest of the three options we have discussed.
Selling a house to an experienced we buy houses firm is definitely the most convenient option for landlords with tenant-occupied properties. If you need to sell a rental before the lease is up and don’t want to deal with scheduling showings with tenants this is a good option to consider. You don’t have to worry about showing your home (and the scheduling nightmare that goes along with it), making repairs, problem tenants driving away potential buyers or honoring the tenant’s current lease, holding onto the property and selling in the future.
Also, if you are at risk of losing your house due to a fast approaching deadline (think mortgage foreclosure or tax foreclosure) and don’t have time to sell on the MLS with a realtor to a conventional buyer this may be your only option. Again, speed is one of the major reasons why you would sell to a cash house buying company.
Lastly, selling a house to a we buy houses company may be the best option if your house needs repairs or deferred maintenance that you cannot afford to pay for. This is true even if the house is in disrepair. These companies will buy houses in very bad condition.
We buy houses companies will buy your property directly from you, the seller, very quickly, in “as-is” condition and for cash without any realtors involved.
Referring back to the Pyramid when selling a house to a cash buying firm you would achieve maximum convenience and the fastest speed. The catch is that you would be sacrificing a little bit on price (though not as much as you would think considering the earlier examples above).
You Will Need to Sacrifice on Price In Order to Get Speed and Convenience
Cash house buying companies do not pay top dollar for a property. This is because they pay for all of the costs that you would have to pay in a realtor or for sale by owner sale. They pay all the closing costs. They don’t make you make any repairs (they pay to make all the repairs after closing). Also, they have to buy properties in a way that they make a profit for their investors and stay in business.
With that being said, reputable we buy houses firms will make a fair offer based on the current market value of your house. This means they will pay what the house is worth in its current state and condition, not the value after all repairs have been made and it is completely remodeled.
A Story to Better Understand Selling to a Cash House Buying Company
When considering the price trade-off it helps to remember back to the example of John, the seller who sold his house with a realtor. Using a realtor these items cost the seller $17,250 total for a house that sold for $75,000. This $17,250 seller cost doesn’t account for the time he spent on the sale (he worked for free) or the holding costs he incurred (mortgage, insurance, taxes, etc.).
If John had sold his house as a for sale by owner he still would have incurred costs of $12,750, again not accounting for even more of his time he spent (he worked for free again) or the holding costs.
Now consider the economics of selling to a we buy houses firm. If John had sold his house to a cash buying firm the sale would have happened 5-6 months faster (meaning he would have been back to life that much faster), he would have incurred $12,750 – $17,250 less in costs, and he would experienced a heck of a lot less inconvenience, hassles and days of pulling his hair out.
Of course, selling to a we buy houses company doesn’t make sense for all home sellers. It makes the most sense for people that don’t have the time or energy to deal with getting their house fixed up and put on the market. It makes sense for motivated sellers who want to or need to get on with their lives. This is also a good solution for sellers that don’t like the idea of having dozens of complete strangers going through their house. It’s helpful with tenant occupied properties. It is also the best solution when you need to sell quickly and don’t have 5-6 months time to wait.
Does Selling for cash seem like a good fit?
We would love to talk to you. Sesa Properties is a local and trusted cash house buying investor. We buy houses for cash in greater Cleveland, OH. As a company we are dedicated to making the selling process as expedient and painless as possible for those who need to sell a house in Cleveland. We buy houses 100% as-is and aim to make the entire selling process as fast and easy for you as possible. We are one of the best because of our dedication to integrity, professionalism and fairness. If you want to find out what we can offer for your house click here to get your confidential, obligation free offer started.
The information presented in this article is for educational purposes only and should not be considered legal, financial, or as any other type of advice.
About the Author:
My name is Dan Sarao. I am the Co-Owner and Managing Partner of Sesa Properties, a cash home buying and real estate investment company operating in Cleveland, OH. In my former life I was a marketing and product executive at a US based coatings company. I left that role to pursue my passion for real estate. I am motivated everyday to find and help homeowners who are in stressful situations and need to sell their houses quickly outside of the traditional sales process.
I love meeting and talking to new people and finding solutions, no matter what the situation. If you are a homeowner, investor, etc. and would like to work together or even just talk feel free to contact me personally at Dan@webuyhomescle.com.