If you live in a hot real estate market where homes are selling quickly, you may be wondering if it’s worth it to hire a real estate agent, or if you should sell your house as a for sale by owner (FSBO) property.
When you sell your home using a real estate agent, you’ll pay commission fees to the agent who represented you and to the agent who represented the buyer. The typical commission is 6 percent of the final sale price of the home, which is split by the two agents involved. On a $500,000 property, that can add up to $30,000.
One way to save money is to avoid paying a real estate agent the full 3 percent commission to sell your home (you’ll still need to pay the buyer’s agent a 3 percent commission fee, unless the buyer didn’t use an agent). You can pay less by using an agent from a brokerage like Redfin, which only charges 1.5 percent to sell your home. Or you can try to negotiate the commission down when you hire an agent.
To avoid paying 3 percent to a listing agent all together, you can sell your house by owner. Read on to learn what a real estate agent does to earn their 3 percent commission, and how to sell a house by owner, if that’s the route you choose.
What Does a Real Estate Agent Do?
To sell your home for the highest price possible, a good real estate agent will do a comparative market analysis (CMA) to determine the price at which you should put your home on the market. The agent will also tour your home and suggest any renovations or repairs you should make to sell your home for the most money, based on their experience selling similar homes. It could be as simple as a coat of paint in the living room, or as complex as a full kitchen remodel.
Once your home is looking its best, your agent will hire a professional photographer to take pictures of the home to put on the multiple listing service (MLS) in your area. Most people start their home search online, and first impressions make a big difference; according to a recent Redfin study, sellers who used a high-quality camera and lens for their listing photos got an average of $3,400 more for their properties. That’s why Redfin provides professional photos to all clients for free.
To market your home, your agent will upload photos and information onto the MLS and other real estate listing sites, put a “for sale” sign in your yard and send information about your home to buyer’s agents in the area. If you list with a Redfin Agent, your home is also featured on our website, in emails and in our mobile apps, tripling Redfin traffic to your listing.
When people are interested in seeing your home in person, they’ll have their agent contact yours to schedule the tour. Your agent will coordinate the details and be there in person to show them the home. They may also arrange an open house to allow people to see the home without scheduling an appointment.
When you get an offer, your agent will help you decide whether you should accept it or submit a counter-offer. They’ll negotiate for a better deal, and help you navigate the appraisal, title and inspection process. They’ll also help you get through the mountain of paperwork that you’ll need to close the deal.
How to Sell a House by Owner
You’ll need to do your own comparative market analysis to determine an appropriate price for your home. You’ll also need to decide which repairs you think will pay off in the form of a higher sale price for your home. When the home is ready, you’ll need to research and hire a professional real estate photographer, and arrange the details for the photo shoot. Prices for real estate photography generally range from $100 to $500 for 25-50 photos.
When the photos are ready, you’ll need to pay a company to put your home on the MLS. There are services out there that do this for a one-time fee. Many services will also send you a yard sign and flyers for an additional fee. Flat fee MLS services range in price from $95 to $500, depending on the number of photos you would like to include in in the listing, and other services you may require.
Once your home is online, (hopefully) potential buyers will start to contact you about seeing the home in person. You’ll need to be flexible and arrange to show them the home during a time that works best for them, otherwise you could risk having them fall in love with another home first.
If you receive an offer, you’ll need to decide if you want to accept it, or submit a counter-offer. At this point you should hire a real estate attorney who will work up a purchase and sale agreement, help negotiate the terms of the contract and review related paperwork and loan agreements. Some attorneys charge a flat fee for a package of services, while others charge by the hour. Prices for real estate attorneys range from $100 (for simple processing of the deed) to $1,000+ for all the services involved in the closing process.
Once the price and terms are agreed upon, you’ll need to complete the home appraisal and home inspection process, which means you need to be there to let the professionals into your home. If any issues arise with the appraisal or inspection, the buyer may try to negotiate additional terms, like making repairs or lowering the price of the home, which you’ll need to accept or reject. You’ll also need to work with the buyer’s title company to provide the required information.
Finally, you’ll need to be there for the buyer’s final walk-through, and for the signing appointment. All these appointments will take time out of your day, so if you’re working full-time, it’s wise to save up your vacation time in advance.
If your buyer used a real estate agent, you’ll need to pay them 3 percent of the final sale price of the home. Selling your own home saves you the 1.5 percent to 3 percent commission that you would pay your own agent, minus the expenses involved in MLS services, real estate photography and attorney fees.
One word of warning: some agents who represent buyers do not like to work with people who are selling their home as a for sale by owner property. That’s because it’s not guaranteed that they will receive a commission from the homeowner, and it usually means they’ll end up doing more work to make the deal move forward smoothly. They won’t be as motivated to show their clients your home, which often results in fewer offers on your home.
With an agent, you’ll receive pricing guidance, additional marketing, an expert negotiator, someone to attend all of the appointments and the peace of mind that comes with having an expert handle the transaction. If you work with a Redfin agent, you’ll only pay 1.5 percent commission. To find a Redfin agent in your area, visit https://www.redfin.com/blog/real-estate-agents.