Should I Hire A Real Estate Agent?
Now that the real estate market is finally starting to pick up some positive momentum more people are going to be buying and selling homes. That means buyers and sellers are going to enlist the services of real estate agents to assist. The question is, what does a real estate agent do for you that you can’t do for yourself? Real estate agents aren’t a cheap date as you’ll pay around 6% of your home’s sales price in commission. On a $500,000 purchase that’s $30,000. Here are my thoughts;
I’ve bought and sold 11 homes so I speak from considerable experience. I have many good friends that are or have been real estate agents. I hope after this article they’ll still be my friends because I don’t think their value is in line with what they offer. Here’s what they’ll argue…
- We Have Access to Listings – True, but not so true. Yes, agents have access to the listing service database and can tell you when homes in certain areas go on the market. Pre-Internet this was clearly their domain..but not any longer. I can get access to listings using websites like Redfin and Zillow. In fact, Redfin notifies me of listings faster than my agents ever did. You can tour homes online without ever leaving your home. And, if you’re selling a home you can list them yourself on these sites as well and anyone searching your area will see your home just like they’d see homes listed with real estate agents. I get the idea real estate agents don’t like these sites.
- Only The Seller Pays The Commission – True, but that’s not necessarily good for the buyer. If I were to sell a home for $500,000 I would have to pay a $30,000 real estate commission to be divided between the seller and buyer’s agents. That money clearly comes out of the seller’s proceeds at closing and NOT from the buyer. That’s all true. But, if I didn’t have an agent then I could negotiate a better sales price from the seller because he/she would only be responsible for half of the commission.
- I Have Local Knowledge – Okay, this is one in the agent’s column. If you’re moving from San Francisco to Atlanta you may not know the benefits of living in the city limits verses not. Or, whether you’d like to live in the northern or southern suburbs. Or the best and worst places to live relative to traffic patterns. Agents are somewhat restricted from being TOO honest about the pros and cons of certain areas so don’t expect the full unvarnished info. And, if you’ve lived in the city for some time you are likely to know just as much about the area as they do.
- You’ll Need Help Negotiating the Purchase and Sales Agreement – No, I don’t buy it. Anyone can write a purchase and sales agreement and there are many free templates available online. You’re not writing a contract, you’re filling in fields of a preexisting agreement…like address, sales price, etc. If you’re comfortable doing this then you may not need an agent. Once the closing is set the real estate closing attorney takes over regarding directing the signing of paperwork.
- I Offer Convenience – Yes, having an agent is definitely more convenient for the buyer and seller than not having one. They will do all of the scheduling of visits so you don’t have to deal with it. The don’t get paid unless you buy or sell a house and a good agent will fall all over themselves to market your house. A bad, or lazy, agent will have their younger real estate agent quasi “interns” do most of the work, including hosting open houses. And, get ready for “You should consider lowering your price” as their #1 strategy if your home isn’t getting a lot of visits. Remember, they don’t get paid unless your house sells.
- I’m Honest, or Maybe I’m Not? – You’d like to believe that everyone is being honest when you’re involved in a real estate transaction, but that’s simply not the case. Sellers in most states are required to fill out a “Seller’s Disclosure” which provides answers to many invasive questions about their home to prospective buyers. Look at this picture…that’s a basement wall leaking water onto a basement floor after a rain storm. I took this picture myself. The seller’s disclosure said that there were no basement leaking issues. When this was brought to the seller’s agent’s attention he said that I was misinterpreting what I was looking at and that was not actually water. I couldn’t walk away fast enough because it was clear I was dealing with a dishonest seller and a dishonest seller’s agent.
- Most people will end up using a real estate agent because the prospect of finding or selling a house can be overwhelming. But, if you’re willing to do some legwork and are comfortable using online tools you may be able to buy or sell on your own and save a boatload of cash.
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. You can follow John on Twitter here.