Do I Need a Real Estate Agent?

Dated: September 30 2021

Views: 192

Even if you don't stay in the know regarding Real Estate, you probably have heard terms like "seller's market," "record-low inventory," and "bidding wars." The market right now is one of the hottest and fastest-moving markets in many years. The inventory is often changing due to quick sales. 

 

This sounds great to a seller and can be a bit overwhelming for those looking to buy. This hot market may lead some sellers to wonder why they even need an agent? They may ask themselves, "Why not do it ourselves and save some money on commissions?" Buyers may wonder if their offer may be better received if they go in without an agent themselves, giving the seller a discount on commissions and therefore getting a better price for the home. 

 

We all want to try and find a way to save some money, right? However, your home is your most important financial asset, and having a professional represent you is still your best way to protect your interests. When your home gets to closing, you should always feel 100% confident that everything is taken care of, both legally, and financially as you sit down to sign those papers. 

 

SHOULD SOMEONE SELL THEIR HOME WITHOUT AN AGENT?

 

When someone decides to sell their home without an agent, they usually do what is called "For Sale by Owner" or FSBO. In other cases, they may sell to what is called an iBuyer. Let me explain what each of these things means and how they may affect the sale of your home. 

 

For Sale By Owner (FSBO)

 

When going the FSBO route, sellers will price their own homes and handle all aspects of the transaction. This includes filling out and filing documents, taking pictures, showing the home, and negotiating any offers that come in. They will also handle all details to get to closing. 

 

With the market being so strong for sellers, it may seem like an easy choice to sell it yourself and avoid any listing commissions. You may be surprised to learn that only about 8% of homes are sold by the owner (National Association of Realtors). 

 

Why is that, you may ask? Well, one of the biggest problems FSBOs have is knowing how to price their home. Unlike Real Estate Agents, they do not have access to the same information about comparable properties and how to use that information to price their home. They also may not fully understand the importance of pricing the home right and the problems overpricing or underpricing may cause. For instance, days on the market often affect what someone offers for a home, and underpricing may cause you to lose out on money. 

 

With that in mind, it is worth noting that last year's FSBO homes, while in a very strong seller's market, sold for 10% less than the homes sold with a professional real estate agent. In more balanced markets, FSBO homes typically sell for 24% less. (National Association of Realtors). So while you may be thinking you can save money, the truth is you may end up making less from the sale of your home by doing it yourself. 

 

When it comes to marketing your home in today's market, it may feel like you can just put a sign in the yard and post it on social media. Easy right? One of the biggest obstacles sellers face when taking this approach is doing the right type of marketing. They want to get people in the door and make their home look appealing enough for buyers to want to put in the highest offer they can. Buyers expect to be able to get a lot of information on a home before seeing it. A professional description, and professional photos highlighting the best features, are crucial. Sellers may also need to print and distribute marketing materials that look appealing and give the right information. 

 

During COVID, sellers will need to know how to offer virtual showings and be able to show the home often in person, taking all safety precautions. With so many buyers trying to find a home, they may be showing their home to many potential buyers, which may take up a lot of time. 

 

When offers do start coming in, sellers are on their own to evaluate those offers. There are many things other than price that a seller needs to be evaluating. Things like who pays for inspections and how and when financing will be obtained. These are legal contracts, and both parties should fully understand what the terms are. 

 

Even after doing and paying for everything mentioned above, sellers often still have to pay a commission to the buyer's agent. 

 

If someone is considering selling their home themselves, they need to weigh all the potential costs and risks involved. Using a real estate agent to list a home will greatly reduce the time, effort, and risk of liability. Typically, the increased profits more than make up for the agent's commission.

 

WHAT IS AN iBUYER?

 

 Since 2015, there has been something called an iBuyer. These are investment companies that purchase homes directly from sellers in a quick process. This get-out fast approach may appeal to some, but it is important to understand the risk of this type of transaction. 

 

So how does this work? A seller will fill out an online form about their home, and the iBuyer will then make them an offer rather than listing it to the public. Typically, iBuyers are looking for good-quality homes in good neighborhoods and are easy to flip and make a profit when they sell them. 

 

This option may be appealing to some because of the speed and convenience as well as the exclusion of having to do any repairs or make accommodations for a buyer. 

 

Although this may seem quick and simple, sellers who go this route usually get a much lower price than the market standards. In addition, fees can sometimes add up to more than a real estate agent's commission. Marketwatch did a study and found that, on average, people using iBuyers made 11% less than homes sold in a traditional way. It has also been found that some iBuyers are charging up to 15% in fees and costs, which is far more than someone would pay for a real estate agent, all while taking a lower sale price to begin with. 

 

If someone is still interested in the quick and convenience that an iBuyer may offer, they can still explore that option while working with a real estate agent. In this scenario, they can take advantage of a fast sale while ensuring they can negotiate and be protected. 

 

BUYING A HOME WITHOUT AN AGENT 

 

Recent statistics have shown that 88% of home buyers are still using a real estate agent. (National Association of Realtors) Buyers will likely find that working with an agent gives them the best chance at finding their perfect home for the right price. A real estate agent can use the tools available to them to search and find homes that meet their buyer's criteria as well as set up showings. They can set automated alerts to the homes that fit what a buyer is looking for, saving a buyer a lot of time searching online due to quickly changing inventory. Often, when a buyer sees a home on the internet, it is already receiving offers. That can be frustrating to someone looking for a home. 

 

Once a real estate agent helps their buyer find the home they want, they can help guide them to making the best possible offer. Real estate agents know how to negotiate things like inspections, closings, and other costs. Carefully considering these things can greatly increase a buyer's odds of winning a multi-offer situation. 

 

In addition, a real estate agent is not emotionally invested in the transaction and can use that to a buyer's advantage by knowing they are avoiding paying too much or missing red flags in the contract. 

 

All of this is done without any commissions paid by the buyer, as the seller pays all sales commissions!

 

 Suppose a buyer is still set on not using an agent. In that case, they will have to write, submit, and negotiate offers on their own. They will need to schedule inspections and negotiate repairs. They will have to be diligent in preparing all the necessary documents while constantly contacting the seller or seller's agent, the lender, the title company, and any other people involved in the process. All this can be a full-time job, which is why many real estate agents have assistants to help with the process. 

Choosing to work with a real estate agent allows buyers to get financial and contractual guidance on the biggest purchase they will likely ever make.

 

SHOULD YOU USE A REAL ESTATE AGENT?

 

 There is certainly a lot of options out there to buy or sell a home. It is important that people fully understand all these options and consider each situation's pros and cons. If someone is experienced in real estate transactions, legal contracts, marketing, negotiations, and has a lot of free time; it may be in their best interest to do an FSBO or buy without an agent. 

 

But, if like most of us, you have a job or family to take care of and you want to be sure you are protected and getting the best deal while keeping your time to yourself, the expertise of a real estate agent may be what you need. 

 

The National Association of Realtors has found that 91% of buyers and 89% of sellers are happy with their agents and would recommend them. When dealing with time, money, and expertise, most buyers and sellers have found that using a real estate agent is well worth the commissions. 

 

After all this information, you may find yourself asking how a real estate agent can help you? At Moxy Real Estate and Design, we pride ourselves on providing helpful information to our clients without any pressure. We want to guide our clients to make the best decisions for THEM and help make the buying and selling process as simple as possible. 

Please take a few minutes to browse our website. You can do a quick analysis of what your home may be worth and browse currently available homes. When you are ready, let us know, and we will answer any questions you have or help you start your journey!!

Blog author image

Holly Montilla

Holly understands that buying or selling a home is more than just a transaction: it's a life-changing experience. That's why her team of highly-seasoned real estate professionals is dedicated to provi....

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