It is most likely that your home is one of your largest assets, if not your largest. So when you go to sell your home, the decisions you make can make a huge difference in the amount of money you end up with. One of the first and most important decisions you must make is whether or not to involve a real estate agent in the sale of your home.
Deciding to eliminate real estate agents can potentially save home sellers the traditional 6% commission. That can mean tens of thousands of dollars in money in a seller’s pocket. That is, if they are able to sell it on their own.
I’m the first person to walk the other direction when a real estate agent approaches us at an open house. I always send my husband to talk to them. I just want to look at the pretty open house, not talk to a sales agent. Yet, believe it or not, I do believe real estate agents do add value to the home selling process.
According to a study done in 2017, homes that were listed for sale by owner sold for a median of $190,000, whereas homes that were sold by a real estate agent were sold for a median of $250,000. Add in the 6% commission and the agent-sold homes netted $235,000. That’s $45,000 more than the for sale by owner!
Agents have access to so many more resources than sellers realize. For example, they have access to the majority of buyers on the market. Last year 87% of buyers purchased their home through a real estate buyers agent. These buyers agents won’t look at for sale by owners for their clients, they look at other agent listed properties. Buyers agents find other agent listed properties through a real estate broker system called the Multiple Listing Service (MLS). This MLS is not open to the public, you must be in the real estate industry to have access to it.
There are many websites out there that offer services to sellers to put their home on the MLS for a flat fee. Sounds like a great deal, right? There’s a catch. Often times these companies will charge a few hundred dollars for your home to be listed on the MLS, plus you must still pay a competitive commission (often 2.5% to 3%) to the buyers agent, if you want them to sell your home to the buyers.
What if you did go the route of putting your home on the MLS yourself and pay the buyers agent a competitive commission to sell the home? Take a minute and think who is the buyers agent representing? Who does the buyers agent have a fiduciary duty towards? When negotiating and filling out lengthy contracts and paperwork, who’s the buyers agent looking out for? None of those answers involve the seller.
The listing agent has a fiduciary duty to represent the seller’s best interest in all dealings. Which means not only would they be looking out for you to get the highest and best price, but they would also get you the best terms. Listing agents don’t work for the buyer, they work for the seller. That’s super important!
So how can you get your home sold and save money on the commission you pay. It’s all about negotiation. The commission you pay a real estate agent is always negotiable. Traditionally, the seller pays 6% and that is generally split between the listing agent and buyer agent, 50/50. However, it is not uncommon for sellers today to negotiate the commission down to 5%, which on a $250,000 sale, can save a couple thousand dollars.
Selling your home can be one of the most stressful events in your life. Don’t make it more stressful on yourself trying to sell it all by yourself!
What has your experience been with buying and/or selling real estate as either a home buyer or seller? I’d love to hear your experiences (both positive and/or negative) in the comments section below.
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