Do I need a real estate agent to buy or sell a house, or can I get away with doing the work on my own?
This is a question that comes up occasionally among buyers or sellers looking to save money or think they can swing it on their own. While it is permissible and not unheard of for someone to complete a real estate transaction without a realtor, we strongly recommend against this for several reasons.
Even if you are able to get through a transaction without a realtor, there’s a good chance handling it on your own could yield a worse result. It doesn’t make sense to jeopardize your transaction for short-term financial savings.
According to statistics from the National Association of Realtors, FSBO, “for sale by owner,” sellers represented 10% of all home sales in 2021.
In general, realtors will help your transaction run smoother and more efficiently because they have knowledge of the process – the sequence of steps, the necessary paperwork, regulatory requirements, deadlines, etc.
If you’re buying a home in Connecticut, there are many benefits to working with a realtor, but the most important one is you usually don’t have to pay for it. In Connecticut, it’s customary for the seller to pay for the realtor fee for both their realtor and the buyer’s realtor. So taking the free expert advice and help is an easy decision.
On the seller’s side, there is a bit more to consider. As mentioned, sellers typically foot the bill for both realtors, which amount to roughly 5-6% of the total purchase price. (On a $500,000 sale, that would cost $30,000).
This is not a small cost, but itis worth it in the end. Let’s go over why hiring a realtor is a good idea.
1. A realtor could help you get a better price
Understanding the real estate market and how to maximize a home’s value is a skill that comes from experience. At every step, a realtor will put you in the best position to get the best deal for your home — from initially evaluating the home, putting it on the MLS, showing it, and negotiating sales terms.
The additional sale proceeds you can gain from working with an agent could entirely offset the cost of a realtor, and may even exceed what you pay for.
Collateral Analytics, a provider of real estate analytic products, performed a study looking at real estate sales that occurred in 2016 and 2017 in 13 counties across the U.S. and controlled for factors such as home age. The study found that FSBO homes sold for 5.5% less on average than comparable homes listed on the MLS.
Another study performed by the National Association of Realtors that used different methodology found a difference in sale price of 26%.
While these figures are just averages and do not guarantee anything, the evidence suggests you can make some of the money back when hiring a realtor.
2. Access to the MLS, connections
A realtor will list your home on the MLS (multiple listing service), which is a huge advantage as it gives your listing much more exposure to buyers far and wide.
Beyond the MLS, a good realtor will have a rolodex of contacts available to quickly get the word out that your property is for sale.
A realtor’s connections will also come in handy if you need professional assistance to handle different hurdles that may arise. Say you need a plumber to fix a water leak you found before the home inspection is performed. A realtor will likely know someone to refer you to so the problem gets fixed as soon as possible.
3. You’ll be a more attractive seller with a realtor
In some cases, realtors representing a buyer will be reluctant to even show your home if it is FSBO, or “for sale by owner.” This is because FSBO sellers are often viewed as difficult to deal with because they may have an unrealistic view of what their house is worth and may have been rejected by other realtors.
Fair or not, you could be at a disadvantage when marketing your home as a FSBO listing.
4. They will make the process efficient, run on time
Realtors have knowledge of what steps need to be taken and can keep a transaction moving along quickly and without hiccups.
In our experience working with sellers who don’t hire a realtor, they are understandably more likely to be disorganized, make mistakes, and miss deadlines as they move through the process.
5. There’s a lot of paperwork involved
Real estate transactions are notorious for involving a lot of paperwork, technical jargon, and regulatory requirements. If you don’t feel comfortable drafting a legally compliant purchase offer or interpreting an inspection report, it’s best to get a realtor’s assistance.
6. A realtor can help weed out unqualified buyers
With years of experience negotiating with buyers, a realtor will be able to anticipate warning signs with an unqualified buyer faster than a layman. You can save a lot of time differentiating serious buyers from people who are just curious.
7. It’s better that a realtor show your home
As you can imagine, it’s not ideal that a seller would tour a potential buyer through their own home rather than an agent. Buyers will be less likely to ask questions and envision themselves living in the home if the current owners are touring them. Nothing is more likely to make a buyer uncomfortable and it’s likely they would rush through the tour and not become interested.
Need help buying or selling a home in lower Fairfield County?
At Pederson Real Estate Law, attorney Charlene Pederson has over 25 years of experience guiding Connecticut clients through residential real estate transactions. If you need an experienced, attentive attorney for your closing, reach out today for a free consultation.