Over time, owning your own home has proven to be one of the most reliable sources of increasing your net worth in America. It’s a dual-action wealth builder: as the value of your home increases over time, your outstanding mortgage balance decreases with every monthly payment. These two factors work together in a powerful way to build equity, and the actual portion of the home that you own free and clear.
However, despite feeling great about thinking that you bought a house for X and now it’s worth Y, if we take commissions out of that equity when we sell our home, it can have a drastic negative effect on our net worth and the equity we thought we had.
For too long, the industry has depended on an outdated model where agent-based assistance in selling your home was priced as a percentage of the sale price of your home. In any other professional service, this model would seem absurd. If you take a taxi to a $500,000 house, the driver doesn’t charge you more than if he dropped you off at a $200,000 house—the work performed is the same. Yet, in real estate, the “standard” commission scales with your success, often without any increase in the actual work performed.
Not only is this model outdated, but it’s also very expensive. For example, for a $350,000 home, a 6% commission is over $20,000, and that can take a significant chunk out of any equity you thought you had. Think about that $20,000 for a moment. It’s a significant amount of money—the kind of “Grand Prize” people win on TV game shows. But during the whirlwind of a home sale, the human mind plays a trick on us. When we compare $20,000 to a $350,000 sale price, it feels like a small “closing cost.” It isn’t. It is a massive chunk of your hard-earned wealth.
Now, to be clear, you actually do have that much equity, but if you decide to take the old-fashioned route and use a real estate agent and pay their hefty commissions, you are essentially deciding to give away a huge part of the equity in your home.
That means if you purchased your home a few years ago for $300,000 and it is now worth $350,000, you feel great knowing you have $50,000 in equity! In one afternoon, you have handed over nearly 40% of your total profit to people who didn’t pay your mortgage, didn’t mow your lawn, and didn’t take the risk of owning the asset. Your $50,000 is now less than $30,000, just like that. At closing, you will go from being excited to the reality of just how much commissions dented your equity proceeds.
You need to own your own home sale instead of handing the reins over to an agent, the way it used to be done – and you can do it! The digital age has leveled the playing field. The “secret” tools agents once used—like the MLS and massive buyer networks—are now accessible to everyone. You own the asset; you should own the sale.
With Homezena, it’s even easier and better than using the old-fashioned traditional method. We provide the framework and the support to help you skip the agent and keep your commission. Shift to owning your home sale and saving the commissions and keeping all that hard-earned equity in your home.
Once you decide to take control of your home sale, you will realize that you are intentionally securing your own equity. And that is equity that can be used to help increase your next down payment or secure your retirement. This is no casual decision. Choosing to take control and avoid traditional commissions will be a huge benefit to you and your family.
Your home equity is an asset that belongs to you; it is not a fee pool from which the traditional industry is going to feed to pay their outdated, expensive commissions. Take control and skip the agent. Sell your home yourself, with Homezena.
Author: Phillip Allen, Founder of Homezena