Published by Bankrate

Written by:Erik J. Martin

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You might not technically need a real estate agent, but there are good reasons to feel you need one — especially in today’s metamorphosing housing market. While it’s still a seller’s market in many places, high interest rates and inflation are discouraging buyers and slowing sales in others.

A skilled real estate agent can help you sell your home more quickly, and for more money, than if you try to do it on your own. On the other hand, a majority of agents charge a commission, based on the home’s purchase price, which eats into your proceeds from the sale.

Let’s look into all the pros and cons of calling in a real estate professional to handle your home sale.

Do I need a real estate agent to sell my house?
Home sellers are not required by law to use a real estate agent, broker or Realtor (a member of the National Association of Realtors, or NAR). Depending on the situation, the services these professionals offer can, in fact, be accomplished by a savvy and resourceful seller.

That said, a for-sale-by-owner (FSBO) transaction requires time, know-how and confidence. If you’re not sure that you have all three, enlisting the services of an agent — a professional who knows the ins and outs of listing and selling homes successfully — pays off.

Why it pays to work with an agent
Working with an agent brings a lot of benefits to home sellers.

Optimal pricing
According to NAR’s most recent “Profile of Home Buyers and Sellers,” 86 percent of home sellers worked with an agent, and it’s easy to see why. NAR data shows that the typical home sold with the help of a real estate agent in 2022 went for $345,000, while homes without an agent on board went for $225,000.

“A good agent can help determine what your optimal list price should be,” says Rick Sharga, executive vice president of market intelligence for ATTOM Data Solutions, a real estate data company based in Irvine, Calif. In addition, agents can “advise on whether you’d be better off starting at the top of the market and having some room to negotiate down, or beginning at a lower price to entice more people to make offers and bid against each other to drive your price higher,” Sharga says.

Knowledge of disclosures
Importantly, agents are also fully versed in all of the disclosures sellers need to make in a real estate transaction. These disclosures are required by law, which varies by state.

For example, you may need to disclose the presence of lead paint in a home if you’re aware of it. You might also need to disclose the existence of water damage, oil leakage into the ground, whether the home is part of a homeowners’ association, or even if there was a recent death in the home. The nature, formality (written statement or not) and timing of the disclosures vary as well, with some states being more stringent than others. Part of the agent’s responsibility is to make sure that you’re in compliance with all the regs.

MLS access
Agents have access to the multiple listing service (MLS), too, a database that compiles the listings in a given area for other real estate professionals, as well as for online portals like Zillow. Along with promoting your listing through the MLS, an agent can help distinguish bona fide buyers from those who are “just looking” or not serious about making an offer.

“An agent can place your home in your regional multiple listing service, which will broadcast your home for sale to other websites with massive audiences,” says Chuck Vander Stelt, a Northwest Indiana–based agent and founder of the real estate website Quadwalls. “This gives you the best chance to get the offer you want.”

Advertising a home is something of an art form these days, often incorporating videos, drone photos and 3D technology. When you use an agent, you’ll have someone committed to performing the vast majority of the work involved in these marketing efforts, says Rajeh Saadeh, a real estate attorney based in Bridgewater, New Jersey. “You’ll receive professional advice on what to include and what to leave out of your listing, as well as what kinds of pictures and videos to take.”

Showing and staging the home
Agents also excel at staging a home for sale, either themselves or with a professional stager, ensuring your home will look its best to attract more buyers. Keep in mind, though, that if you hire a professional stager, you’ll shell out some extra cash to make your place look more appealing.

Your agent will also host open houses and private showings, and can coordinate with all of the other vendors involved in the selling process, including appraisers, home inspectors, title agents and notaries. Plus, they are available to answer your questions and address concerns promptly, and guide you through the reams of paperwork needed to sell your home.

“Real estate is often a very emotional transaction, but a good agent doesn’t let emotion get in the way of making a good deal,” says Bennie Waller, professor of real estate at the University of Alabama.

Drawbacks of working with an agent
Of course, none of these services are free. The biggest potential drawback to working with a real estate agent is that in most cases, you’ll have to pay them a commission based on the sale price of your home. This fee has traditionally been around 4 percent to 6 percent, but can be as low as 1 percent among a new breed of “discount” brokers or agents.

“Some agents offer discounted services,” says Sharga. “They’ll accept a lower commission, usually in exchange for the home seller taking on more of the agent’s responsibilities, like doing the staging and taking the photos.”

If you work with a real estate agent charging the typical rate, however, the commission can cost you thousands.

REGION HOME PRICE* COMMISSION RATE COMMISSION FEE
*Home prices based on National Association of Realtors regional statistics, October 2022
Northeast $417,200 4% – 6% $16,688 – $25,032
Midwest $277,500 4% – 6% $11,100 – $16,650
South $353,700 4% – 6% $14,148 – $21,222
West $603,700 4% – 6% $24,148 – $36,222
Other drawbacks to working with an agent
Exclusive right to sell. In addition to the commission costs, “you also have to sign a listing agreement with the agent,” says Saadeh. “That means you’ll be forced to work with this person for a set time, indicated in the agreement, unless the agent agrees to let you out of the contract.” It also means you have to pay the agent a commission even if you sell the house on your own, unless you negotiate specific exceptions or sign a less-restrictive exclusive agency agreement.
Less control. “Your agent may be aggressive about making the bulk of the decisions about your sale price, timing, marketing strategies, staging, negotiations and, in some cases, selection of third-party vendors,” says Sharga.
Doubts and dislikes. You could begin to dislike your agent or question his or her marketing, sales or negotiation tactics. Although some agents (primarily Realtors) have a fiduciary duty to protect your best interests, some may give poor advice or advice to the contrary. “For instance, the agent may secretly want you to sell your home quickly for a lower price than you may be entitled to so that [they] can get paid quickly and move on,” Saadeh says.

Decide which is right for you
Every situation is different, and you might still find yourself wondering, “Do I need an agent to sell my house?” If you’re weighing whether to sign on the dotted line versus going it alone, consider these key questions:

Do you have a solid grasp of what your home is worth? A real estate agent will look at comps — similar properties in your neighborhood — to get a sense of an appropriate list price. However, there’s nothing stopping you from doing the same. If you have an understanding of what other places like yours have commanded on the market, you have a good starting point for selling your home without an agent.
How much time do you have on your hands? Selling a house requires a lot of work. Taking professional-quality photos, advertising the property online and screening and welcoming homebuyers for tours are just a few of the many duties you’ll need to handle if you decide to do it yourself. If you have an open calendar and some marketing expertise, you might be able to put in the work that a real estate agent would do.
How comfortable are you with uncomfortable conversations? A home is a very valuable asset, and you might be proud of the work you’ve put into it. Remember, though, that a buyer wants to score a good deal, and they probably have an agent in their corner advising them. Without your own agent as a buffer, you have to deal with the back and forth, and if you’re not a great negotiator, you could lose out.

Alternatives to using an agent
Instead of listing your home with a real estate agent, you could list your home as a FSBO and sell the property yourself. In 2021, 7 percent of home sales were sold by their owners, according to NAR.

“You can list your property for sale on publicly accessible mediums and online platforms centered around real estate purchases and sales,” Saadeh says. “The success rates of finding a buyer using these platforms, as opposed to using a traditional real estate agent, largely depends on the marketing skills of the seller, their availability to respond to interested buyers and their flexibility to work with buyers who have real estate agents that expect commissions.”

With the FSBO route, however, there’s the potential for your home to not make a splash on the market, either due to a lack of marketing prowess or an inappropriate pricing strategy. This can hurt your chances of selling fast and for maximum dollars. You might also encounter some logistical challenges: According to NAR, some of the most common hassles for FSBO sellers include trouble fixing up the home and difficulty understanding and preparing the paperwork.

“There’s some risk in trying and failing at FSBO,” says Sharga. “Agents and buyers often notice when a property has been offered by the owner and pulled back from the market. That can sometimes lead to the home being more difficult to sell at full market value.” You might even have a hard time getting an agent on board later if you decide to switch up your strategy.

Going with a discount broker to save some money is another option — “but most discount brokers will place your home on the MLS and not much more,” says Vander Stelt. “Some offer additional services à la carte–style or based on an hourly rate. This gets your home in front of a large audience, but you are left on your own to manage everything else.”

iBuyers and cash-for-homes firms
A third option is to sell your home directly to an iBuyer, like Offerpad or Opendoor. These companies make a sale fast and easy — you simply complete an online form and the iBuyer will provide you with an instant cash offer for your home — but they come with a caveat.

“The benefits are speed and certainty: There’s no need to go through the hassle of staging, listing and hosting open houses,” says Sharga. “However, iBuyer offers are always below full market value since they need to buy, repair and resell the home at a profit. So you won’t get top dollar for your home.”

You could also work with a home-buying company, aka a “cash-for-homes” company. These businesses — some are local, some are part of national chains — specialize in purchasing homes quickly, with all-cash deals. You can avoi, listing and showing your home, lengthy negotiations and realtor commissions, which make these useful if you need to sell quickly. The firm handles all the paperwork and closing formalities.

However, like the iBuyers, home-buying companies probably won’t offer top dollar. You may have a little more bargaining power, since you’re dealing with them in person, but basically, theirs are take-it-or-leave-it offers — since they are planning to fix up and flip your home.

How home sellers can cut costs
If you’d prefer to work with a real estate agent but are hoping to limit costs, there are still opportunities for you to save:

Negotiate your agent’s commission: Try bargaining with your agent on the commission ahead of time. “Many agents will negotiate commissions, possibly saving you 1 to 2 percent on the sale of your home,” says Sharga. “Other agents will reduce their commission if there’s not a buyer’s agent involved in the transaction.”
Don’t go overboard on home improvements: If you’re not careful, it’s easy to spend too much on snazzy staging or expensive upgrades that don’t offer a sizable enough resale return on your investment. Talk to your agent or an appraiser to learn which improvements, if any, might actually yield returns.
Close ASAP: Sellers may save on closing costs if they move quickly. “Try to expedite your closing, which may minimize the real estate taxes, homeowners insurance and mortgage interest charges that will accrue until closing,” Saadeh suggests.
Bottom line on whether homesellers need an agent
A real estate agent’s commission fee can cut into the money you make on the sale of your home, and it’s entirely possible for well-prepared sellers to successfully sell their home without the help of an agent. But as is true of many things in life, you get what you pay for.

“During [the height of] COVID-19, I thought hard about cutting my own hair — but I sure was happy when the barbershop opened up again,” says Vander Stelt. “Just because you can sell your home yourself doesn’t mean you should.”

“You need to honestly decide if you have the time and the knowledge necessary to accurately price, expertly stage and market your property, as well as effectively negotiate with buyers and their agents,” says Sharga. This includes knowing the disclosures your state requires — an area you likely won’t be an expert in unless you’re a very experienced seller.

Ultimately, Saadeh says, “It is understandable that sellers want to avoid paying a commission. But a good agent is supposed to increase the sale price to make up for the commission, so that the seller nets more money from the sale with an agent than if they tried to sell without one.”

And no matter what route you decide to take with selling your current property, you can always choose to buy your next home without a real estate agent, as well.
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https://www.bankrate.com/real-estate/do-i-need-an-agent-to-sell-my-house/#cut-costs

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