What real use are real estate agents if we can sell our home ourselves?
In: Economics
As with most things nowadays (because of the internet) you can probably just do it yourself. But a professional will likely be more efficient and provide optimal results.
I just hired a real estate agent to help me *buy* a house, and it was worth every penny.
What do they provide? Two words: expert knowledge.
Yes, I could buy my house myself. But first I’d need to:
* Analyze the local real estate market for reasonable pricing info.
* Set up mechanisms to track all local available houses.
* Develop strategies for what houses to prioritize, how quickly to make offers, what questions to ask, etc.
* Arrange visits to houses I’m interested in.
* Learn a whole lot about architecture, property damage, risk assessment, repair costs, building codes, etc.
* Choose a bunch of other specialized firms to hire: a title company, an assessor, an inspector, a separate termite inspector, a mortgage lender, possibly a surveyor, etc.
* Conduct negotiations with the seller about repairs, pricing, etc.
* Review all of the contract language in both the offer document I create, as well as the documents the seller creates, to ensure they meet legal standards.
* Arrange the final legal details, conduct the purchase closing, and maybe do some final negotiations with the seller concerning anything that didn’t get addressed to my satisfaction.
That’s all just off the top of my head.
A seller basically has to do all of those same things, except in reverse. Sure, they only have a single property to deal with instead of comparing a bunch of them, but there’s still a ton of details to work out.
So I could independently solve each of these problems, probably including hiring a good half dozen experts to work through specific issues.
Or I could hire a realtor, agree to pay her 10% of the purchase price, and watch the magic happen as she does all of this stuff for me with expert professionalism. Like she’s done it 200 times before (which she has). Like it’s her full-time job (which it is).
Is selling your house without a realtor easier now than it used to be? Absolutely. Are realtors useless? Absolutely not. Is it worth your money in your particular case? Only you can make that judgment. But if I ever sell my house, I’m definitely hiring a realtor.
As a home owner, always operate under the impression that the agent might not have your best interests in their mind, most of them are nice though.
What’s the purpose of an accountant when you can file your taxes yourself? What the point of a hair stylist when you can cut your hair yourself?
It’s about using somebody’s expertise to do something easier, with better results. Selling a home is something most people do only a couple times in their whole life. They don’t have the expertise to make house look its best for photos (decluttering, depersonalizing, staging) and taking those photos, know how to determine an appropriate price and evaluate offers, know all the legal/contract issues to make sure are explicitly agreed upon to prevent issues. Agents also know how to effectively write and publish the listing to the MLS and other places to advertise (newspapers, postcards, window of real estate office, etc). They also make themselves available to do showings.
These are all services that somebody who does this day in, day out can do much more effectively than somebody who has never done it before. Better photos can draw more attention. Recommending that the home be painted a neutral grey vs. it’s current yellow might increase the value. Knowing what the home’s actually worth, to best set pricing and determine whether offers should be accepted, can help insure that you don’t leave money on the table or sit on the market forever.
The bigger question is whether the current fee structure — 5-6% of the sale price, split between the two agents (and then further split between agent and brokerage) is in line with the value of the service provided, especially as home prices climb. How much more work goes into selling a $700k house than a $350k house? How different is it to sell a house in a low cost of living area vs. high cost of living area? The real estate agent provides valuable services, but should the agent selling the 2500 sq. ft. home in Silicon Valley make 4x what the agent selling the identical home in Oklahoma City makes?
They do the heavy lifting. Their marketing audience is vast compared to a FSBO listing. Zillow uses algorithms and public data, but a realtor can have a deep human understanding of your neighborhood. In today’s weird Covid sellers market, good realtors have a list of qualified clients who are depending on the realtor to find the right home quickly. They can then also professionally manage the open house and bidding process.
They also provide a lot of staging and preparation tips, things that help improve the perceived value of the home — which is always subjective.
You have to do the cost benefit analysis for yourself.
We just hired a realtor after two months of quietly exploring the “whisper” market. There are lots of bottom feeders out there, and in my experience a realtor provides a valuable filter to simplify the process, which can be overwhelming, and keep the focus on the right potential buyers.
Yep— my daughter just got a beautiful Victorian for a song by dealing directly with the seller and doing the pprwork herself. A lawyer was hired to double-check but it was actually a breeze and they saved many THOUSANDS this way. Realtors do take the pain and aggravation of pprwork and negotiation out of the equation— which is good and sometimes well worth it to ppl who hate hassle or hate dealing with other ppl— but they really are vastly overpaid considering the actual work or sweat put into the deal.
This isn’t to say that just anyone can do this with no problems. You have to research and know what you’re doing, know about the contracts, and how to navigate the real estate taxes and laws in whatever area you buy in, but technically— it can be done so much cheaper without an agent.
I bought a house within the past two years and used a real estate agent.
At first I was getting kind of mad because she wasn’t doing anything I couldn’t do. In fact, I was looking up the listings and found the house I ended up buying.
However, on the day of signing, she spotted an error in the paperwork that would have cost me more than 10x her fee. We had to close a day later because a new contract had to be drawn up, but it was something I never would have caught.
Sure, I could have done most of the work myself had everything gone right, but I was happy to have someone with experience when I was clueless that something went wrong.
It’s difficult to answer this question because Realtors vary in quality so widely that it would be difficult to make accurate statements about them as a group. The difference between an excellent Realtor and one who is barely competent is significant. Also, your utility of a Realtor is tied directly to your own level of knowledge and comfort as a client either buying or selling, which brings me to my other point:
Since many Redditors are generally tech savy to some degree and are accustomed to researching various topics (yes, really!), many of them aren’t likely to require a Realtor quite as much as those people who are less accustomed to utilizing internet sources. For many folks out there who are still mystified about opening a PDF or using basic Microsoft Word functions, a Realtor can be an invaluable resource.
What use is a lawyer if you can represent yourself?
In markets like this, some people like to use a realtor because they don’t want to deal with the 50+ people who might want to see the house.
There was a story in Canada about a home that went up for sale and had 700+ people who wanted to look at the house.
In a market like this, you’ll make more selling it yourself, but for some people, they’ll accept less money to not have to deal with all those people
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