Essay on How to Sell a House Fast in a Slow Real Estate Market
When there is a need to sell a real estate property, there are two ways the seller can choose: sell the property on one’s own or hire a real estate agent. Selling the property personally might be more efficient in terms of price and profit; however, this process will likely require a lot of time and effort. Hiring a real estate agent will increase sale costs, but this decision will help save time and resources (Bronchick & Cooper, 2008). In addition, real estate agents have access to a wider pool of potential buyers compared to sellers selling on their own (Bronchick & Cooper, 2008).
The decision on whether to hire a real estate agent or not depends on personal preferences: the need to save money, the need to save time, real estate market awareness, awareness of legal regulations pertaining to real estate and experience in performing all necessary procedures associated with the sale. Assuming that the relocation will take place in 3 months, it is reasonable to suggest that the key priority will be time and the second priority will be money. Therefore, in the considered case it will be best to hire a real estate agent. However, it is necessary to remember that real estate agents might not always work in the best interests of a seller since their commission is often weakly related to the final sale price and timing (Levitt & Syverson, 2007).
In order to motivate the real estate agent to act in the seller’s best interest, it is necessary to introduce appropriate incentives (Levitt & Syverson, 2007). These incentives should be economically aligned with the seller’s goals. In the considered case, the key objective is to sell the property within maximum 2.5 months (since time is also needed to prepare the documents and complete the sale). The second objective will be getting maximal price that can be achieved in the current situation.
Therefore, the proposed incentives are the following. The agent’s commission should be divided into 8 parts: 2 parts are paid when the sale is completed (regardless of sale conditions), 3 parts are paid if the sale is completed within 2.5 months (so the agent is motivated to sell the house in time) and the remaining 3 parts are paid if the price exceeds a pre-determined level (which should be chosen slightly above average market rate) and takes place on time. In this case, the agent is strongly motivated to sell the house on time and is also quite motivated to sell the house at a high price, so he or she will act in the seller’s best interests identified in this case.
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