What real use are real estate agents if we can sell our home ourselves?
In: Economics
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.
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.
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?
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.
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 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.
Especially now, when homes sell within weeks not months due to the purchasing climate of investors looking for safe investment storage for their capital. Housing should never be used like this, slum lords for wealth pushing the rest of us out into the street.
To keep to the spirit of the sub: Real Estate Agents will likely do a better job selling your house than you do. Thats basically the idea. House sales can be complicated and though marketing isn’t way easier nowadays, the ins-and-outs of bank loans, mortgages and title exchanges are pretty involved and it helps having someone in service that can handle/consult with on these matters.
One thing I pointed out to my coworker when she was asking this question.
They have the time to actually deal with potential buyers. They are the ones who deal with offers and counter offers. If you try to do it yourself, if you can only answer the phone 3 or 4 hours out of the day, you are going to lose lots of potential buyers. I read somewhere that the difference between selling your home yourself and using an agent is a $60,000 difference in sale price.
Their job is to sell your home and get you the most money possible. And they want to get the most money possible because their commission in based off of your sale price.
I think they’re great for first time buyers because they know all the inspections you should do and have resources if you need a second opinion. Also good if you don’t have time to look yourself or need your options narrowed down. They definitely make too much though. Our realtor spent a lot of time because we were looking at rural properties so there was a lot of driving. Still made too much. If you can live 6 months to a year on one week of part-time work there’s something wrong.
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