The Pros and Cons of Hiring a Real Estate Agent
By Ted Ricasa
VIDEO: Does Your Real Estate Agent Have Your Best Interests at Heart?
Once you have decided to sell your home, you then have to consider how you want to go about selling it. Especially if you have never sold property before, you may be a bit confused about what to do next. Is selling your home as simple as calling a local Realtor and letting him or her take it from there? How do you find the right real estate agent? Do you even need to hire an agent?
The answer to these and most other questions regarding the sale of your home is "it depends." It depends on how quickly you want to sell your home, how much time you have to devote to the sale of your home, how much you want to sell your home for (not to mention, how much of that sale price you are willing to pay to your agent as commission), and many other factors.
It is worth noting that approximately 93 percent of home sales involve an agent to some degree. In many cases, hiring a real estate agent is absolutely in the best interests of home owners. In others, it isn't. As in all stages of home selling, it is important that you understand all of your options, as well as the advantages and disadvantages of each, when it comes to hiring - or not hiring - a real estate agent.
What Are the Advantages of Hiring a Real Estate Agent?
As with any other profession, there are great real estate agents and not-so-great real estate agents, with the vast majority residing somewhere in between the two extremes. Before you agree to hire an agent, be sure to do your homework. Trulia, Zillow, and Yelp are just three online resources you can use to find reviews on agents in your local area. Doing a bit of research on the Internet can save you a lot of time and frustration, helping you to weed out professionals with poor reputations in your community and zero in on those who have earned the trust and respect of their clients.
The advantages of hiring a real estate agent are plentiful - if you find the right agent. Bear in mind that many of these advantages depend on your hiring a full-service agent, which will cost you more in commission than a discount broker. Possible benefits include:
- The avoidance of a lot of paperwork and red tape - A highly trained and educated agent will be able to sort through the dozens of pages of mostly fine print and make sure that your sale is done absolutely by the book. You are far less likely to have to worry about errors and omissions; if they do occur, a licensed real estate professional will have insurance to cover them, limiting your risk.
- The saving of a lot of time and energy - Unless you want to devote your evenings and weekends to tours of your home, not to mention the staging of your home to make those tours worth your time, hiring an agent who will take care of it for you is a good idea.
- Not having to coordinate repair and upgrading efforts on your own - A good agent will have a network of professional contacts, including inspectors, attorneys, landscapers, contractors, and other agents, to call on if necessary to getting your home into sellable shape.
- Having an expert in your local real estate market on your side - No one will know your local market better than a qualified real estate agent. He or she will know the market trends, how to set appropriate price points, and the best avenues for advertising your home's availability.
- Not having to conduct negotiations yourself - Negotiation in selling a home is an art, and most of us have little experience with that art. A good agent will negotiate on your behalf, which could end up maximizing your profit in the end. In fact, having an agent in your corner will encourage potential buyers (or their agents) to bypass the lowball offer and cut straight to a reasonable offer, as they know they aren't dealing with an amateur negotiator.
In order to find an agent that will provide all of the above advantages and more, there are certain questions you will want to ask as part of your vetting process:
- How many homes have you sold for more than your original list price? How many have you sold for less? Overall, what is your list-price-to-sales-price ratio? (The closer to 100 percent, the better.)
- How do you intend to market my home? How will you use the Internet as part of that marketing strategy? (A good agent will know how to use social media outlets such as Facebook and Twitter, as well as video sharing sites and other online resources, to your advantage.)
- Do you have any references? Are any of your former clients available to provide feedback on your services?
- How extensive is your network of professionals?
- Do you have Errors and Omissions Insurance?
- How many homes do you currently have to sell? (An agent with a large number of homes to sell might be more likely to prioritize speed over getting the best price for your home, regardless of your priorities and goals.)
- What are your policies regarding cancelled agreements? How will working with you limit my monetary risk?
- How familiar are you with my local community?
- Are you a Realtor®? (Although many people believe that "Realtor" and "real estate agent" are synonymous terms, they are not one and the same necessarily. In order to become a Realtor, an agent must be licensed by the National Association of Realtors, which requires extra training and education, as well as adherence to a stringent Code of Ethics.)
What Are the Disadvantages of Hiring a Real Estate Agent?
If you hire the right agent, you won't encounter many disadvantages. However, if you hire the wrong agent, you'll learn more about the following disadvantages than you bargained for. That's why it is vital that you carefully research and thoroughly interview any agent you consider hiring. If you don't feel comfortable with a certain agent for any reason, even if it's just a gut feeling, move on to the next candidate.
Possible disadvantages of hiring a real estate agent include:
- Having to pay commissions - Hiring an agent, especially an experienced, full-service agent, is expensive. Prepare to pay an agent up to 6 percent of the price for which you sale your house. That's 6 percent of the total sale price, not whatever profit you make on the sale, if you make any at all. You can reduce the commission you have to pay by hiring a discount broker, but you will most likely also have to do without some of the benefits described above.
- Being just one of many clients - Depending on how busy your agent is with other clients, your home may not get the attention it requires. You need to be assured of having an agent that will do his or her due diligence at every stage of the selling process. The busier your agent is, the more likely you will experience the frustration of not having your calls returned in a timely manner, deadlines being missed, and deals falling through.
- Having at least one "middle man" - Depending on whether your prospective buyer is also represented by an agent, any potential deal will have to go through possibly two intermediaries. This could facilitate a deal, or it could get in the way of its progress, depending on the skills and abilities of the agent or agents involved.
- Being at the mercy of someone else's timeline - You have your goals and priorities. You've established your ideal timeline. Hiring an agent introduces someone else's timeline into the mix, one that may or may not conform to yours. If your agent does not devote the necessary time and effort, your home may sit on the market much longer than it needs to. Conversely, if your agent is eager to unload your home for whatever reason, he may make decisions that conflict with your goals in order to sell it faster.
Unfortunately, some people don't realize that they've selected the wrong agent until they are in the thick of the home selling process. That's why you cannot base your decision on whether to hire an agent solely on his or her pitch to you. Remember, agents are generally excellent salespeople, and they know how to sell themselves. By gathering as much information as you can on an agent, you at least minimize the chances that you will be caught by surprise by a bad experience.
Of course, you may ultimately determine that you don't want to hire an agent at all. In such cases, there are other options available to you, such as selling your home on your own or selling it to a cash buyer.
For further information about the options available to you, please feel free to contact Fast Home Help today.