As the economy slowly recovers, everybody is looking to save money any way that they can. As for homeowners, that may mean cutting the middle man – the real estate agent – out of the process of selling their home.
Initially, it makes perfect sense. The real estate agent’s commission is 6%, so for a typical $300,000 home, that equals $18,000. WOAH! That seems like entirely too much money to go to a realtor and for what? Selling a house? How hard could that be? Before I get into that, here is what you need to understand about real estate commissions.
Your realtor doesn’t actually pocket the 6%. More often than not, this commission is split between your listing agent and whichever agent brings the buyer. The split is 50%, so that cuts down your agent’s portion to 3%. He or she doesn’t get the whole 3% either. A percentage of this goes to the corporation with which they’re associated (Century21, ReMax, Long and Foster, etc). Then, a cut goes to the individual office in which they work. How big of a cut depends on how much real estate they have sold, and can vary from 50 – 70%. So, if the total commission is $18,000, your agent gets anywhere from $4,000 – $6,300. That is still a decent paycheck, but it is well earned.
Consider this:
Selling a house is hard work, and it can turn into a long and tedious process. An agent (a good agent) will be with you from the beginning to the end. An agent has access to market information and can help you price the house correctly. You can do it yourself, but you will need to do a lot of research. As an agent, it is my job to know the current market trends.
An agent can give you valuable insights on how to get your house ready to show/sell. If there are any minor repairs to be done to help sell the house, they can refer you to reliable people that can help.
If you decide to sell your house yourself, you also have to do all the advertising: yard signs, newspaper ads, internet ads, flyers, open houses, etc. And if you do all of the above, you still will only reach about 10% of what a realtor could reach using all the tools and experience available to them. This, in theory means that it will take about 10 times longer to sell your house without professional help. If time is a concern when selling your home, then you’re really doing yourself a disfavor by not hiring an agent, because it will cost you way more than that 6% commission to just have your property sit there.
Realtors have access to Multiple Listing Search, or MLS, which is a database containing more than 95% of the properties for sale and used by 1.5 million agents nationwide. So, when you list your house for sale with one agent, he or she will post if for all the other agents in your area to see and show to their clients.
Also, when a potential buyer sees a FSBO sign, they know you’re trying to cut costs, therefore they may see your house as a cheap bargain. Chances are, you will get a lot of unqualified buyers. If you work with an agent, they will bring you only pre-qualified buyers (they are supposed to, anyway).
Another aspect of selling a house is all the legal paperwork associated with it: contracts, title transfer, mortgage details, etc. Real estate is a paperwork heavy industry. It is also a litigation heavy industry. You have to be prepared to be on top of all the required paperwork and make sure it is filed properly. If you are unsure, hiring an agent will give you peace-of-mind, knowing that the legal documents are handled by an experienced professional.
A lot of articles talk about having “more control” over the sale of your house as an advantage of doing it yourself. But a good agent will keep you in the loop with everything. It is not in their best interest to not keep you informed about everything. And you generally don’t have to worry about being inconvenienced about people walking into your house at any and all times. When an agent lists your property for sale, they can request an advance notice to show the property from other agent. They can even put on a lockbox with a special code to make sure that nobody walks into your home unannounced.
Here are some other facts to consider:
• 88% of all the real estate transactions are done with a help of a realtor, according to the National Association of Realtors (NAR).
• The average price for homes sold with the help of a real estate agent is 21% higher than for those sold FSBO.
• 18% of FSBO sellers indicated that preparing the home for sale was the most difficult task when selling without the assistance of an agent, followed closely by understanding and performing the paperwork (16 %), and selling within their desired time frame (15%) according to NAR.
• And, you only pay the commission if your agent sells the house. You don’t pay for any of the advertising or other expenses they use to market your house.
So, can you sell your house yourself? Certainly! Just understand what is involved, and understand what it is that we real estate agents do for living….
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I am not a dude, but thanks!
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