5 reasons you still need a real-estate agent
You might think buying or selling on your own will save money, but it could be more costly in the long run.
The proliferation of services that help homebuyers and sellers complete their own real-estate transactions is relatively recent, and it may have you wondering whether using a real-estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commissions that many real-estate agents command, for many, flying solo may not be the way to go — and could end up being more costly than a commission in the long run. Buying or selling a home is a major financial and emotional undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet. (Bing: When is a real-estate agent a Realtor?)
1. Better access/more convenience
A real-estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents and will know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real-estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.
Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.
2. Negotiating is tricky business
Many people don't like the idea of doing a real-estate deal through an agent and think that direct negotiation between buyers and sellers is more transparent and allows the parties to look after their own interests better. This is probably true — assuming that both the buyer and seller are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.
What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real-estate agent can convey your concerns to the seller’s agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.
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A real-estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that sellers can reject a potential buyer's offer for any reason — including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real-estate agent who will represent his or her interests without turning off potential buyers who want to niggle about the price.
3. Contracts can be hard to handle
If you decide to buy or sell a home, the offer-to-purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale — and you aren't approved for the mortgage — you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract. (Keep in mind that the details of any contract may vary based on state law.)
An experienced real-estate agent deals with the same contracts and conditions on a regular basis and is familiar with which conditions should be used, when they can be removed safely and how to use the contract to protect you, whether you're buying or selling your home.
4. Real-estate agents can't lie
Well, OK, actually they can. But because they are licensed professionals, there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real-estate agent under an agency agreement, such as a conventional, full-service commission agreement in which the agent agrees to represent you, your agent will be bound by law to a fiduciary relationship. In other words, the agent is bound by law to act in his clients' best interest, not his own.
In addition, most real-estate agents rely on referrals and repeat business to build the kind of client base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.
Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker or professional association or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.
When a buyer and seller work together directly, they can — and should — seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.
5. Not everyone can save money
Many people eschew using a real-estate agent in order to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets to keep the percentage of the home's sale price that might otherwise be paid to the real-estate agent.
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However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
The bottom line
While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn't as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.
I disagree with everything in this article! Even if some points were valid (like having the realtor negotiate for you, or, having an agent to field contacts and showings), these services are NOT worth 3-6%!!! The realtors "do" the same amount of work, whether it's a 100K house or 500K house - yet the commission difference is HUGE with a 500K house (15K)! Why? Why don't they institute a "ala carte" flat-fee rate for certain services, regardless of the price point of the house? That would make more sense, and appeal to house sellers in particular.
With the current accessibility that the internet provides (advertising your home), sellers can easily advertise their homes both on their own web site as well as MLS for a very reasonable flat-fee.
I sold my 500K house by myself, for full asking price 3 months ago! It was EASY...got a flat-fee MLS listing for $800, got an attorney to draw up the contract and finalize it ($1500), and and showed the house myself, pointing out the nuanced qualities that some "buyer's agent" wouldn't have known about!!! I read 2 books on FSBO techniques, updated and staged my house myself, did a few hour's research on what houses were selling for in my area, and priced it very competitively, making sure I advertised that the listed price was 2-4% BELOW what a listing agent would have listed it for...thus, making the house more affordable to prospective buyers, and keeping it just under the 500K range to appeal to more buyers. Fortunately for me, the buyer who purchased my house saw my ad and sign in my yard, and approached me without a buyer's agent. Bottom line? For a few days work on my part, and for $2,300 total for both my advertising costs and attorney's fees, I saved $30,000 in commissions paid out to the listing and buyer's agents!!!!!!! I had a net profit after all of my updates, as well as listing and attorney's fees. I would have been 30K in the hole had I gone with a realtor...
Realtors are becoming obsolete, if not so already. Now, I might have considered hiring a listing agent if they offered a flat-fee -for -service menu, as well as if they were at the house for every showing, to point out the features of the home. They used to do that, but most don't anymore. So, basically, I would have paid a listing agent 15K to put my house on MLS, Realtor.com, and draw up a copy of a sales contract. Absolutely ridiculous and a no-brainer, as these services are NOT worth 15K in my book!!!
I plan on doing any future buying/selling a home by myself from now on. The real estate brokerage business is a rip-off.
Real Estate Agents are a Crock in the General sense ...
As a rule their paid FAR too much for often doing nothing more then a sales clerk at walmart does for you.
Starting in 2012 under ObamaCare ... there will be a min 3% sales tax on houses .. add up to 6% for agent and other little cost and 10% of the sale price of a house is going to outside people.
Take a 300k house .. honestly .. for a agent to drive over with you and BS about a house that you decide on your own to buy ... well for them to make 10k, 12k, 18k is idiotic.
I am a Realtor. Have been for more than twenty years. I do not advertise myself. My business comes from referrals from satisfied clients. Some years back, when my buyer (a referral himself) and I did our final walk-thru on the day of closing, the house was in shambles. I'm talking leaking porch roof, loose, dangling electrical wiring in the basement and formerly concealed plumbing problems. When we first toured the home, it appeared in good shape. It was obviously a ruse. At the walk-thru, the house was a mess. The house was in such bad shape, in fact, that even though the loan was approved and ready to close, I recommended the buyer not close the deal unless things were made right. I always do the final walk-thru on the way to the closing. That way, if there's something wrong with the home, it's too late for the seller to send some drunken uncle over to the home to do a bad job of the work. The only way the seller can make my buyer, and myself happy at the closing table, is to give the buyer cash money to use to correct the problem. Sellers are NEVER more motivated to concede and hand over some dough to the buyer than they are when they're sitting at a closing table staring across at that fat title company check with their name on it. It's quite the motivator for them to do the right thing. Anyway, at the closing table, I offered the seller the opportunity to compensate the buyer monetarily for the homes deficiencies at what I know was a fair amount but the seller refused. Amidst loud threats and promises from the seller to keep my buyer's earnest money, I first made sure that the closer had witnessed what transpired and then my buyer and I walked away. I told my buyer that I didn't care how many times we needed to appear in front of a judge together with me as his witness, I would make sure he got his earnest money back. It took two court appearances. During the second one I even got to loudly call the seller a big liar right in open court! Cool! When all was said and done, my buyer got his earnest money back with a court order signed by the judge. I subsequently did sell that buyer a different home and have done several other deals for his friends and family members over the years. To quote Kasey59 above, "What this article does not make clear is that the fiduciary responsibility of BOTH agents is to the seller only, because the commission is felt to come from the seller." Allow me to assure you, Kasey59, what you're saying could not be any further from the truth. Perhaps some agents do lie. Perhaps some agent's allegiances lie elsewhere from where they should. Believe this last part as you believe that the sun will rise tomorrow in the east. I am not one of those agents.
This is not brain surgery, people. All real estate agents need is a GED to get a license in most states. You are WAY smarter than they are and would have no trouble handling your own home sale. And, yes, they do lie. All the time.
I think one of your 5 reasons was, "brokers can't lie". Are you that stupid to believe that? My experience has been, a broker says about anything to get your name on the dotted line (buyer or seller), then he has his hook in you. Have you read the fine print??? I am talking about the 8 +/- pages of fine print? And, most brokers contracts list's so many things tin order to cover any circumstance so "one size fits all". Therefore, perhaps 90% of the fine prine may not even pertain to your particular property. Does a broker ever go over each and every word and line, explainning what the reprecussions would be in all events? Does a client go over the entire listing, selling or purchase contract with ""their"" attorney?
We sold our home seven years ago by listing it as a FSBO. I had done a lot of research prior to listing it, had two friends who had sold their homes themselves and had good experiences, and listed it thru the Help-U-Sell office in our city. I paid Help-U-Sell five hundred dollars to list our property in the MLS, and they also installed a professional (large) for sale sign for our use until the property sold. They also provided me with the necessary legal sales contracts for our state. I held 3 open houses and we sold the property within 60 days. We also stated on the listing that we would pay a buyer's agent a 2.5% fee. The going rate for our area at the time was 3%. The buyers were using a real estate agent and everyone involved was courteous and professional and the transaction went very smoothly. I estimate that we saved seven thousand dollars by selling our home ourselves. I would do it again in a heartbeat.
My advice - Be sure you get lots of information about how to do this before you list your property. Properly stage your home if you want to get the best price for it. Get current information from several sources. Be sure to list your property thru the MLS.