Why Hire a Real Estate Agent?

Selecting a real estate agent is one of the most important decisions you will make during the home buying process . One of the key questions that accompany this decision is: “Do I really need an agent?”

Let’s examine this question more closely:

Do I really need an agent?

The short answer to this question is: No. But there is a big BUT. There is no law against individuals buying or selling homes on their own, without any real estate agent (although some jurisdictions require a purchase contract to be written by a real estate attorney). A little more than 10 percent of all real estate transactions are handled this way (which means that nearly 90 percent of all real estate transactions are conducted with the assistance of a real estate agent).

Individuals can search for homes on their own, arrange for a showing and engage in negotiations without an agent. Some people go this route in order to save the real estate sales commission fees, which usually amount to thousands of dollars — usually 6 percent or more of the transaction is charged to the seller — and can easily run to five figures or more depending on the value of the home. (Six percent of $200,000 is a $12,000 commission, for example.)

First-time buyers (who have no home to sell) are not subject to paying a sales commission (in most cases). The seller of the home they are buying is responsible for paying the agent a sales commission.

A small percentage of sellers opt not to use an agent. Most experts agree that these FSBOs (for sale by owner homes) are limiting the number of potential buyers, because agents will often steer their clients away from these properties. There are several reasons for this. As a buyer without an agent, the only homes you can buy without the assistance of an agent — and avoid paying commission fees — are FSBOs. FSBO home owners often go on their own because they could not agree on a price with an agent. They are often unrealistic in estimating the value of their home and price themselves out of the market with an asking price that is too high, thus scaring off agents (and potential buyers). Or maybe they wish to avoid paying a sales commission. But buyers agents are skilled in price negotiation and they possess a wealth of knowledge that can help buyers get the best price. You should think twice before you try to do it by yourself.

Many buyers who look at homes for sale without an agent soon become frustrated with their limited choices and resort to contacting listing agents, responding to newspaper advertisements or attending home showings (open houses). But this is a flawed strategy because the listing agent will still charge the seller a commission, so the buyer won’t help the seller save any money.  Any savings that a buyer hopes to reap by circumventing the system are compromised. And a buyer who enters negotiations without an agent is at a distinct disadvantage attempting to negotiate with a seller who has an agent, an agent who is obligated to represent the seller and not look out for the buyer.

In addition, real estate agents have many connections in the housing industry. They can refer buyers and sellers to trusted home inspectors, appraisers, mortgage professionals, title companies and closing agents.

It’s advisable to do your homework before buying a home. It’s doubly advisable to make sure you do some extra credit work if you are considering going without a real estate agent.

If you're new here, you may want to subscribe to our RSS feed.

You may also Subscribe to New Homes Real Estate Listings For Sale by Email Thanks for visiting!