The real estate market is complex and intimidating at the best of times. When selling property, it helps to have an experienced agent at your side.
Not everyone thinks so. In fact, FSBO (“for sale by owner”) transactions are fairly common as many sellers prefer to forgo the cost of hiring an agent in favor of braving the market on their own. The question is, do these people have the right idea or are they putting themselves at a disadvantage?
The truth is that there is no easy answer. Whether or not working with an agent is right for you is affected by a number of factors, not the least of which is your own knowledge of and experience within real estate, as well as your financial situation and how much time and effort you’re willing to expend on learning in the ins and outs of the market.
Some will say that a real estate agent can help you sell your home for a higher price, while others will say that going it alone allows you to make more money by cutting out the middleman. A study by researchers at Northwestern University, however, suggests that both FSBO and agent-facilitated transactions produce roughly equivalent profits. In other words, neither seems to really have an edge in terms of netting you more money.
The real cost of either approach, then, is found not in the bottom line but in the fine print.
Hiring a real estate agent costs money. That much is obvious. Most commonly, an agent makes 6% of the sale price for whatever property they helped you sell. That may seem like a lot, but that 6% is not set in stone. Different agents take different percentages, some more and some less, so it pays to shop around when looking for an agent.
What’s more, negotiation is always an option. An agent might be willing to lower their percentage considerably depending on the sale price of your property, or if you can guarantee them repeat business, either by having them represent you as a buyer or as a seller of another property.
The benefits of having an agent are, of course, the experience and resources that they bring to the table. Some of the services which agents provide, and which are covered by the percentage they make off the sale of your property, would cost you considerable amounts of money to undertake yourself. Listing a piece of real estate and advertising it in the relevant markets is not cheap and might not be something every seller has the knowledge, or the time, to do on their own.
Calculating the cost of selling a house can be surprisingly easy, but there are other obstacles that can trip up an inexperienced seller making a go at doing it themselves. From being familiar with the legal intricacies of real estate to keeping track of fluctuations in property values to setting up open houses to wading through piles of paperwork, there’s more to being an agent than putting a “for sale” sign out on the front lawn.
That’s not to say that any of these things are beyond the capabilities of the average seller. Rather, it’s to say that these are some of the things that selling any property requires. Determining whether or not you need an agent mainly comes down to determining whether you prefer a more hands-on role or a more hands-off one.
In other words, the only person who can truthfully answer the question “Is a real estate agent worth the cost?” is you.