Should You Use a Real Estate Agent?
- If a home is listed with an agent, it means the seller has decided that you pay a commission. To prevent doing so, you can limit your search to ‘for-sale-by-owner’ properties, but you will drastically limit your selection of available homes in the process. It is a proven fact that 80 % of all homes are listed with a real estate agent.
- When selling by owner, there may be more flexibility on the price of the home, but the sellers are not likely to give away all the commission savings or they would have listed their home with an agent. The seller’s motivation is to keep all or part of what she would have paid in commissions.
- For example, let’s say a typical commission in your market is 6 %, and you save half the commission, or 3%, by purchasing a By Owner listing. Let’s also say the homeowner expects to sell for $150,000. Then she’s saving $9,000 on commissions by not listing the property and may be willing to sell the house for $145,500, splitting the commission savings with the buyer. Translation: You save $4,500.
- However, know that you will spend at least some of that savings in additional time and effort needed in searching for and finding a home. Additionally, you must do your own research to learn what costs are customary for a seller to pay in your market and what cost the buyer usually pays. You must also be able to select a home and termite inspector, both of which usually come recommended by an agent. A real estate agent would also ensure you close on your home in a timely manner.
- Regardless of whether you use an agent or not, you will need a real estate attorney to review the closing transaction, because an agent cannot provide legal advice. However, if you don’t use an agent, you will need many more hours of the lawyer’s time, at a much higher cost than if an agent had done much of the services.
- A first-time homebuyer is well served by selecting a buyer’s agent to represent the buyer’s interests in a real estate transaction, as long as the buyer takes the time to sign a buyer’s contract with the agent. Otherwise, the agent will always represent the seller, even if the buyer brought the agent into the transaction!
- While the listing agent and the buyer’s agent will typically split the commission, you need to ensure your agent is paid in that manner and won’t come to you for any part of the commission. The written contract you sign with a buyer’s agent should stipulate that the buyer’s agent’s commission is to be paid solely by the seller from the sales transaction proceeds. A real estate attorney should read the contract before you sign.
- In conclusion, it is preferable to hire a real estate agent to guide you through the perilous task of buying a home. It is also best to have an exclusive buyer’s agent rather than a dual agent who represents both seller and buyer. As a homebuyer, you want to know ‘your’ agent is working for you.