Should You Hire a Real Estate Agent?
A real estate agent is a trained professional who manages the selling of your home from start to finish. Most real estate agents earn a commission of about 3% of the sale price in exchange for their services. Though most sellers tend to work with real estate agents, there are two other ways to sell a home:
- On your own: Most often known as for sale by owner (FSBO), selling on your own saves money but requires you to do all the legwork involved in listing, marketing, showing, and selling your home.
- With a discount real estate company: These companies offer specific services to sellers, but without the full-service support that a real estate agent provides. For instance, a discount real estate company might supply you with the marketing materials and legal paperwork that you'll need, but it probably won't help you run your open houses. These companies charge lower fees than traditional agents do—some offer one-time flat fees, while others charge commissions equal to 1-2% of the sale price.
Which Selling Method Should You Choose?
There are a few reasons why you might want to avoid selling FSBO or with a discount real estate company and work with a real estate agent instead:
- The buyer's commission: Even if you choose to work on your own or with a discount real estate company, your buyer will almost certainly be working with an agent whose commission you'll still have to pay. Since agents' services are 100% free to buyers, nearly all buyers work with agents. That means your "savings" from working with a discount company or on your own will be closer to 2-3% than the 5-7% that most first-time sellers assume they'll get by not hiring an agent.
- Time, effort, and aggravation: Even if you can save money by forgoing a real estate agent, you'll likely compensate with your own time, effort, and aggravation. Most real estate agents earn their commissions by doing many hours of hard work—work that you'll be doing yourself if you don't partner with an agent.
- Expertise: Selling a home is a highly complex legal transaction that you have not been trained to manage. Real estate agents have been professionally trained in all aspects of these transactions. In addition to knowing how to prepare the contracts and related paperwork needed to sell a home, most agents have expertise that can help you avoid various legal and financial pitfalls of selling a home. This expertise alone can be worth much more than the 2-3% you'd save by working FSBO or with a discount company.
If you really don't want to work with an agent, discount real estate companies can be a fine compromise between selling FSBO and hiring a full-service agent. However, you should consider selling with a discount real estate company only if you're comfortable handling different aspects of selling a home on your own. If you become very familiar with the home-selling process over time (and a few real estate transactions), using a discount company might make sense for you. If you're a first-time seller, your best bet would be to hire a traditional agent.
What Real Estate Agents Do for Sellers
A real estate agent's job is to make the process of selling your home much easier. Real estate agents typically handle the following tasks for you when you sell:
- Develop a profile of your property: Your agent will prepare a summary of your home's basics "stats," including the number of rooms, square footage, location, bathroom details, and special amenities.
- List your home in an MLS database: MLS (multiple listing service) is a general term that refers to regional databases of for-sale properties that real estate agents maintain. Your agent will create an MLS listing for your home—including photos and all relevant details—that other agents and potential buyers can view.
- Set an asking price: Agents have access to databases of comparable sales (also called comparables or comps) that include pricing and property info of recently sold properties in your area. Your agent will use this data—along with your input—to come up with an asking price for your home.
- Create marketing materials: Your agent will create and distribute a fact sheet that includes all the information about your property that buyers will want to know, as well as photos of the home's interior and exterior. Agents also supply "For Sale" signs and often place ads for your home in newspapers and online.
- Manage your home's open houses: Most agents will organize an open house once every few weeks, usually on a Sunday. The agent will also attend the open house in order to answer questions and relieve you from having to interact with buyers.
- Advise you throughout the dealmaking process: Your agent will work with the buyer's agent to negotiate terms that you and the buyer agree on, and to draw up all the necessary paperwork once you've finalized the main points of the deal.
- Represent you at the closing: Your agent will arrange and attend the closing with you to help resolve any last-minute questions or issues that might arise.