Whether you’re planning to buy or sell a home, you’re likely wondering if you should use a real estate agent. Maybe a friend or family member enlisted one, gaining a fabulous outcome. They speak highly of the agent’s knowledge, guidance, and helpful services.
Still, you’re unsure what to do. Is the idea of paying a commission snagging your progress?
Many prospective buyers and sellers share your ambivalence. This post will help you judge the best road to take, working independently or with a real estate professional. Then you can navigate your promising venture with confidence!
So, let’s discuss some pros and cons of using a Real Estate Agent for both home buyers and sellers.
Types of Real Estate Agents
A real estate agent is a professional licensed to arrange real estate purchases or sales. They can serve a buyer, a seller, or even both. Following are five categories of real estate agents.
Certified by the National Association of Realtors (NAR). As a member, the agent must conform to the highest ethical standards.
Assists potential home buyers in all phases of the purchase process.
Markets a property, striving for the optimal purchase price.
Represents both the buyer and seller in real estate transactions.
An agent licensed to own a real estate firm.
For writing convenience, I’ll use the terms real estate agent and realtor interchangeably.
Whom to Choose?
If you opt to use a realtor, be sure to choose an “exclusive agent.” As your staunch ally, they’ll be laser-focused on achieving your goals.
While a dual agent has a legal obligation to be impartial, there’s still a conflict of interests.
As such, the agent is a transaction coordinator, not your sole representative. In turn, they can’t give you the personalized service of an exclusive agent.
Note – Next, I’ll speak to those of you aiming to purchase a home. Conversely, if you’re selling property, scroll to the section reading, “ROLE OF A SELLER’S AGENT.”
Role of a Buyer’s Agent
This real estate professional gives you the know-how to buy a home within your financial means. Moreover, the agent bargains on your behalf in seller transactions.
Advantages of Using a Buyer’s Agent
According to the National Association of Realtors, 87 percent of recent home buyers report using a real estate agent. Below are six benefits of doing so.
1. A buyer’s agent targets your priorities.
First, they find properties matching your wish list. In turn, you don’t waste energy chasing after homes that won’t fulfill your needs.
Next, the realtor arranges tours of properties likely to interest you. As you stroll through each home together, you’ll learn about its layout and features. The agent may also know relevant facts about the neighborhood.
2. An agent can help you skirt financial pitfalls.
One way is by steering you to houses you can afford. Secondly, the realtor eliminates unfairly priced homes, those well above market value.
Furthermore, an agent knows the legalities of buying property. Hence, they can sniff out any financial scams.
3. A realtor can save you considerable time.
You won’t need to spend hours combing the Web for suitable properties! Instead, the agent does all the legwork for you.
They can also refer you to a “preferred lender.” This is a mortgage company known to expedite loan pre-approval. Moreover, there’s no referral fee for this service.
Meanwhile, the realtor can link you to other vital professionals, sparing you of searching for them. Among their contacts are real estate attorneys and home inspectors.
4. The agent will facilitate your home purchase.
For instance, they’ll:
- coach you in bidding for the property
- make counter offers to the seller on your behalf
- coordinate the home inspection
- negotiate home repairs with the seller
- help you understand and complete the closing documents
5. An agent can spot any stumbling blocks in your sales contract.
Here are common hurdles that can arise.
Unmet Conditions Precedent
Did you know you can request tasks for the seller to complete before closing the sale? For instance, you could ask the homeowner to remove their washer and dryer, making room for yours. If the seller agrees, the duty is a “condition precedent.”
Then, before contract signing, your realtor will note whether the seller completed each job. If not, the contract isn’t binding.
A contingency is an action that must occur by a certain date. Here are three mandatory contingencies:
- you must secure a mortgage
- the house must be appraised, either at the sale price or higher
- the home must pass inspection
Does your contract have multiple contingencies? If so, they can delay your progress.
** Crucial Step **
Once you’ve studied the contract with your agent, consult a real estate attorney. The lawyer will:
- translate the complex legalese
- clarify your obligations
- address any unmet conditions and contingencies
- protect your buyer’s rights
After signing the contract, you and the seller can modify it. Any change to the original agreement is an “addendum.”
Your agent and lawyer will review each alteration, advising whether to give your consent. Multiple addenda can hinder the closing process.
Note – Beware the “As-Is Addendum.” It means you agree to buy the house in its current condition, including any needed repairs. Consequently, you must pay to fix them.
Above are three examples of contractual concerns. Other red flags are:
- Kick-Out Clauses
- No Disclosure Record
- Appraisal Below Market Value
At this point, I won’t elaborate further, but your agent can. Thus, feel free to raise questions about anything confusing, vague, or unfamiliar to you.
Disadvantages of Using a Buyer’s Agent
1. You might pay more, reflecting your agent’s fee.
Does the seller have a realtor as well? If so, the two agents will split the commission 50/50. Currently, this fee ranges from 2 to 6 percent.
Most sellers include the buyer agent’s commission in their purchase price. In that case, you’re funding it by default.
Some online real estate firms show the fee for the buyer’s agent on their websites. This way, you know precisely what you’re paying. One company with this policy is Redfin.
2. In rare cases, having a realtor could be more time-consuming.
Are you an expert at buying properties, knowing everything involved? If so, forgoing a realtor might be more efficient.
Still, always hire a real estate attorney. Otherwise, you’ll likely omit a crucial step or make a regrettable decision.
Conclusion of the Pros and Cons of Using a Real Estate Agent for Buyers
So, let’s take stock of our evaluation, comparing the pros and cons of using a buyer’s agent. We’ve discussed six pluses and two minuses. Thus, in most cases, it’s good to have a realtor on your side of the fence.
Role of a Seller’s Agent
Are you gearing up to put your home on the market? In that case, consider hiring a seller’s agent. They’ll orchestrate each phase of the deal, aiming to leave you smiling!
For starters, they calculate a competitive home purchase price. Then, they market your property, bringing potential buyers to view it. Since the realtor advertises your home online, they’re also called a “listing agent.”
* For Sale By Owner
Advantages of Using a Seller’s Agent
1. A listing agent has marketing expertise.
First, your realtor conducts a market analysis, comparing property listings in your area. Based on their findings, they set an attractive price for your home.
Then, they gauge whether to:
- raise the figure somewhat, leaving room to bargain downward
- begin lower, hailing more buyers to the bidding forum
Next, the agent posts an impressive description of your property online. They also create alluring sale materials, amassing buyer interest.
2. A realtor will draw more bidders than an FSBO listing.
Did you know that some buyer’s agents ignore FSBO properties? Instead, they want a listing agent involved in the sale transactions. This way, they can bank on getting a fair commission and professional negotiations.
When you hire a seasoned realtor, they come with a broad network of marketing contacts.
Your agent will use various means to advertise your property, such as other brokers. By this, they’ll reach a larger audience than you can, beyond the Multiple Listing Service (MLS).
So, without a realtor, there could be less interest in your home. Hence, it can take longer to sell. Moreover, you might feel compelled to accept a low offer.
3. You’ll save substantial time and effort.
An FSBO project is a full-time job! For instance, you must be available to:
- take calls from realtors and independent buyers
- conduct tours of your home
- counter low offers
- negotiate transactions with the parties involved
- handle problems that arise expeditiously
- keep a checklist of required tasks while staying on schedule
Conversely, a realtor can take responsibility for all the above. Plus, they’ll give you a lockbox for your house key, enabling them to show your property when you’re unavailable.
Hence, with a realtor, your time isn’t consumed by marketing your home. Meanwhile, the agent expedites finding an appraiser, title agent, and home inspector.
Here’s an eye-opening point! Did you know it’s best to be absent when a realtor shows your property? This advice comes from industry professionals.
If potential buyers see you on the premises, they’ll be distracted. Since they’re more conscious of you, they won’t focus on the features of your home! Thus, they’ll rush through the tour, remembering little of it.
4. The realtor will showcase your property zealously.
They’ll “stage” your home to its best advantage. Such styling includes professional photography, presenting your house appealingly, both inside and out.
Some realtors go the extra mile, designing a “listing video.” As the camera pans the rooms, your viewers are captivated!
Plus, a video can include aerial images taken by drone technology. Is your property expansive? If so, an overhead view can wow buyers with its spaciousness!
Next, the realtor plans and conducts open houses, giving engaging tours. They’ll talk up your property glowingly, striving earnestly for a lucrative sale.
5. The agent will find well-qualified bidders.
As the realtor takes offers on your behalf, they’ll pursue the best prospects. Hence, you’ll avoid involvement with folks who would fail to close the deal.
Moreover, a seasoned agent knows the pointed questions to ask bidders. They’ll learn what buyers want in a home and whether yours is a good match for them. Plus, the realtor will favor those with mortgage pre-approval.
6. A seller’s agent helps you stay even-keeled.
With an FSBO project, there’s a tendency to get emotional, clouding objective thinking. In turn, you might:
- overprice your home
- refuse to counter low offers, finding them insulting
- feel dejected if promising buyers lose interest
- grow impatient, settling for less than your home is worth
On the other hand, a realtor fosters resiliency. If selling your home is taking longer than you’d like, they’ll pump you with encouragement.
Meanwhile, the agent keeps a cool head during buyer negotiations. Such composure helps you secure a mutually agreeable sale price and contract terms.
7. A listing agent can save you money.
In your eyes, certain home improvements may seem crucial for buyer appeal. Actually, they may not be necessary. A realtor can advise which upgrades are worth making to promote your home. Doing so can boost your budget.
Furthermore, the agent can expedite closing on the sale. Consequently, you could save money on your:
- property taxes
- homeowner’s insurance
- monthly mortgage payments
- mortgage interest
8. A realtor knows the legal requirements of closing a sale.
They have a detailed seller’s checklist, including the complex paperwork you must complete.
For instance, you’re legally obligated to submit a “seller’s disclosure.” This is a record of potentially harmful property defects and unfavorable conditions. The agent will know the laws dictating what to report. Examples of mandated disclosures are:
- human hazards, such as asbestos and lead-based paint
- underground instability
- your home repair history
- evidence of water damage
- governance by a Homeowners Association (HOA)
- existing liens on the property
If a seller purposely omits the property disclosure required by law, here are the possible backlashes.
- The seller might pay a penalty, deducted from the home purchase price.
- The buyer can cancel the contract.
- If an issue arises after closing, the buyer can sue the seller.
WARNING – With or without a realtor, always consult a real estate attorney. They’ll make sure you include all the necessary disclosures, wording them properly.
Disadvantages of Using a Seller’s Agent
1. You’ll sign a binding agreement.
You won’t be able to cancel it unless the agent releases your legal obligation. Still, your chances of voiding the contract are slim.
Sometimes, listing agents and home sellers butt heads. Let’s say you end up disliking the agent’s style of marketing or negotiating. Maybe they’re too aggressive or controlling for your comfort level.
Even so, for the sake of a good outcome, try to stay respectful and harmonious.
Thus, be sure to interview several agents before making a commitment. Speak with each realtor at length. This way, you can better assess their personality and communication skills.
2. You’ll pay a commission.
As mentioned, the current fee is 2 to 6 percent of your home purchase price. Still, there’s an honorable way to pay less.
You can hire a “discount broker,” a listing agent offering fewer services. In exchange, you agree to shoulder more of the broker’s tasks, such as styling and photographing your home.
While you can haggle with a seller’s agent for a lower commission, it’s both insulting and degrading.
The realtor has worked diligently on your behalf, handling your marketing, negotiations, and closing. Even so, they get meager compensation. Here’s why their piece of the pie is only a sliver.
- First, your listing agent splits the commission with the buyer’s agent.
- Next, the brokerage takes a cut, ranging from 50 to 90 percent!
- Then, your realtor must cover their operating costs.
Such overhead includes fees for licensing, insurance, online advertising, and using various technologies. Add to this the costs of printing flyers, making signs, traveling to your home, and hiring photographers.
Hence, most listing agents are likely underpaid. By the same token, so are buyer’s agents.
Conclusion of the Pros and Cons of Using a Real Estate Agent for Sellers
So, we’ve discussed eight pros and two cons of using a listing agent. We’ve seen how they streamline a sale and work to protect you legally. Therefore, I recommend hiring a realtor to sell your home.
Whatever your position on the “playing field,” using a realtor is a strategic move. Whether you’re buying or selling property, may you have winning results.
Meanwhile, I’m cheering for you!
- 7 Companies Like Divvy Homes (Alternatives) for Rent-to-Own a Property
- The Most Important Factors for Real Estate Investing
- 13 Opendoor Competitors – Best Companies Like Opendoor to Sell Your Home
- What You Need to Know About Luxury Apartments in 2022
- 38 Interesting Real Estate Fun Facts and Statistics You Should Know
- 15 Different Types of Jobs in Real Estate Industry – Some Very Lucrative Positions