It's no secret that real estate agent commission comes out of your net proceeds when you sell your home. According to the National Association of Realtors, 8% of home sales are For Sale By Owner. 63% of those homeowners sold on their own because they wanted to avoid paying commission. The question is, was it worth it?
Let's pull back the curtain on what a real estate agent does to earn their commission.
An agent helps avoid emotional sales. By being on step removed, your agent will help you avoid making costly mistakes such as overpricing your home, refusing to counter a low offer because you are offended, or giving in too easily. Agents take the sting out of rejection when potential buyers leave negative feedback or don't make an offer by turning into constructive criticism or putting a positive spin on it.
The most skilled agents work full-time as realtors. If you don't use a realtor, consider how you will rush home from work to show your home, answer calls from potential buyers at all times of the day and night, market your home on multiple platforms every day and tap into networks to reach more potential buyers. If you aren't able to do all of things every day, you need a realtor.
Agent's have huge networks. You can list your home by yourself on Zillow, Redfin, Craigslist, etc. but that won't be enough. You need someone that can spread the word as far as possible that your house is for sale through relationships with clients, other agents, a brokerage, technology and personal networks. Reaching the largest pool of buyers possible can translate into more offers for your home and a higher price point.
Weed out unqualified buyers. Agents are trained to ask qualifying questions to determine the seriousness, qualification and motivation of potential buyers. They know how to review offers and identify which buyer is offering the best overall package and is most likely to close. The highest price offer isn't always the best choice, often the type of financing, closing date preference and ability to pay the difference between the appraised price and their offer is the winning bid.
Negotiation skills are a necessity. To keep more money in your pocket, you need an agent that knows which terms to negotiate for each situation, the signs of a nervous buyer that might not follow through, when to counter and when to hold firm, alternative levers that can be pulled to bring a deal together and how to counsel you through each step of the process. Negotiating occurs when you get an offer and often after an inspection, make sure you have a skilled negotiator with superior communication skills in your corner.
You no longer see all the flaws. Agents are experts in what makes a home sell quickly and at the highest price. They can walk through your home and point out changes you need to make to attract buyers and get better offers. They see the flaws you are oblivious to. They can counsel you about the costs and benefits of making repairs and home improvements and refer you to trusted, reliable contractors and repair people.
Project manage all the details. There are a ton of steps involved with selling. In a nutshell, an agent will: assess your home and advise on necessary repairs and improvements, advise you how to stage the interior and arrange for professional photos, list your home on multiple websites and market your home with mailers, social media ads, to email lists and other agents, answer calls from potential buyers and agents, show your home to interested clients, turn lights on in your home before showings, conduct open houses, summarize offers and counsel you about their pros/cons, negotiate the offer, coordinate appraisals and inspections, negotiate inspection repairs and offsets, coordinate with lender and title to ensure closing documents are in order, work with title to resolve transfer issues, attend final walk through with you and attend closing with you to ensure everything goes right.
Minimize your legal risks. There is a LOT of paperwork involved in a home sale that needs to be completed correctly by an expert. Seller disclosure forms are the most frequently litigated document in any deal and sellers can be held liable for fraud, negligence and breach of contract if not done properly. Your agent knows these laws and can answer your questions about completing this form so that it is done correctly. Agents have insurance to protect themselves for mistakes, you don't. If nothing else, this is one of the most important reasons to get help listing your home.
It's a hot market, why not sell it yourself?
Statistics show that homes sold without a realtor or with discount real estate brokerages, sell for significantly less than homes represented by agents at full-service brokerages AND the seller is on the hook for all of the work and the legal risk. Add to that the fact that realtors avoid showing their clients a For Sale By Owner home since they know they won't be paid a commission. However, should you decide to go it alone, you can hire realtors on a flat fee basis to facilitate the documentation side of your deal. You won't get any marketing assistance or a lockbox for showings, but at least you can avoid some legal risk.