Selling common stock shares is not a difficult process, but can be expensive for someone that has no understanding of how common stock is bought or sold. Common stock shares are shares in an individual company that is sometimes called voting stock. For each share that is owned, the shareholder is entitled to one vote.
Common shares are different from preferred stock in one important way: preferred shares do not give the shareholder voting rights but all dividends issued by the company will be paid out to preferred shareholders before common shareholders.
Selling common stock shares happens everyday that the stock market is open, in fact almost all trading taking place during the trading day are common shares. For the inexperienced, selling common stock shares may sound difficult, but is usually a rather simple process.
For example, say someone received a stock certificate that gave him or her ownership of one thousand shares in a public company. If the person decided they wanted to convert the stock into cash by selling the stock, they would first need to take the stock certificate to someone licensed to sell securities.
For someone that does not plan on buying or selling in stock in the near future, his or her local bank is probably the best option. Since almost everyone has a bank account and most banks, not all, have an employee that handles investments for clients, this person is usually licensed to sell securities, another name for stocks.
All the person would need to do is take the stock certificate to their bank in which they have a bank account, ask for the investment officer and have them place the trade to sell the common stock at the current price on the open market. Once the stock clears and is delivered three days later, the money is available to the person that sold the stock.
Another option for someone that has common stock to sell is to open a brokerage account. Brokerage houses come in many shapes and sizes with boutique type houses available catering to the different needs of the many types of investors.
Unless future investments are planned, a full service, living and breathing broker is not recommended. A full service broker is very expensive and commissions for one executed trade to sell common stock can range anywhere form a percentage of the total sell or hundreds of dollars.
Some brokerage houses charge by the total amount of shares sold or may charge for each five hundred 500-share increment, or lot of common stock sold. In either case, a full service brokerage account is not recommended for a one time stock sell.
The best option for someone that wants to sell common stock is an online brokerage account. Anyone with access to a computer can open a brokerage account. Once the account is opened online, the stock certificate is then mailed or sent over night by FedEx or UPS to the online brokerage house. Commercial carriers such as FedEx or UPS are preferred since they have a better reputation for guaranteed delivery.
Once the stock certificate reaches the brokerage house, the stock certificate is then checked against the transfer agents records that issued the certificate to confirm ownership and then the stock is placed into the shareholders online trading account. Once in the account, the shareholder is free to sell the stock at anytime during market hours.
Selling common stock shares is not difficult and with easy access to online brokerage firms, it is also inexpensive.
Author: Phillip Hatley
About the Author
Phillip Hatley has been trading the stock markets for eight years. For more information about trading and investing, please visit his blog.