How to Sell Stock Without a Brokerage Firm
If you are a long-term investor who doesn't trade frequently, you can save some money by selling your stock without a broker. Selling stock this way is a slower process, and you have less control over the selling price. But if you've held the stock long enough to earn a substantial capital gain, or if the stock’s price is fairly stable, you might not be concerned about nailing down a specific price. Some alternatives are free, while others might not save you any money at all.
Sell Shares to Transfer Agents
One way to avoid a broker is to contact the investor relations department of the corporation whose shares you own and identify the company’s transfer agent. You can sell your shares directly to the transfer agent. If you have possession of the stock certificates, you’ll need to sign them and send them to the transfer agent, along with whatever paperwork the agent needs. You’ll probably have to include a fee, although some agents may perform this service for free.
If some institution is holding your shares for you, have it send you the certificates. The agent normally assigns a selling price based on the recent average share prices.
Consider Direct Purchase Plans
Many corporations, especially blue chips, will buy and sell their own stock through a direct purchase plan or dividend reinvestment plan. Frequently, the plans pick up all the expenses, and you don’t have to spend a penny to buy or sell shares. The plan keeps your shares on account and can automatically reinvest your dividends, even if it needs to create fractional shares. You can sell shares through the plan website or by contacting the plan administrator.
While this can be a penny-pincher’s delight, you have to want to own the company’s stock for the plan to be of benefit. Plans use recent average prices to peg the selling price you’ll receive. Independent companies that centrally manage the enrollment of a variety of plans might assess membership charges that rival brokerage fees. Others are free.
Sell Shares Directly to Others
You can sell your shares directly to friends, neighbors or total strangers at the local coffee shop. You’ll need the stock certificates, and the buyer will need cash or a certified check. You might accept a regular check if you’re trusting or if the buyer is willing to accompany you to the local bank branch. You simply have to endorse the shares to the buyer and sign them.
If you know that the corporation’s transfer agent requires it, you can also complete an accompanying letter of transmittal and a substitute W-9 form, available from legal document providers or from the transfer agent.
Getting Signature Guarantees
If you are signing a stock certificate in preparation for selling it, you’ll need to have your signature guaranteed by a bank or broker dealer that participates in a “medallion” program. The Securities Transfer Agents Medallion Program hosts more than 7,000 financial institutions that can guarantee your signature. Although institutions might charge a fee for this service, they frequently don’t.
If your shares are registered electronically in "street name" – the name of a brokerage or bank – you might be able to avoid the bother of physical certificates and have a willing transfer agent accept the electronic shares.
- ABC News: Outrageous Brokerage Fees – How to Protect Yourself
- U.S. Securities and Exchange Commission: Transfer Agents
- Direct Stock Purchase Plans: a Viable Alternative to Online Brokerages? - ValuePenguin
- Fidelity: Send in Stock Certificates
- U.S. Securities and Exchange Commission: Signature Guarantees -- Preventing the Unauthorized Transfer of Securities
Eric Bank is a senior business, finance and real estate writer, freelancing since 2002. He has written thousands of articles about business, finance, insurance, real estate, investing, annuities, taxes, credit repair, accounting and student loans. Eric writes articles, blogs and SEO-friendly website content for dozens of clients worldwide, including get.com, badcredit.org and valuepenguin.com. Eric holds two Master's Degrees -- in Business Administration and in Finance. His website is ericbank.com.