Should I use a Realtor when Buying and Selling Homes?
Using a Realtor when buying and selling homes is an investment. You're going to pay them a commission, and statistics show you are going to see a GREAT return on your investment. It's also a great way to avoid being sued.
Some people don't want to use a Realtor when buying and selling homes, and this is because they want to try and save on the commission normally paid to an Agent. This is easy to understand. Ask the Founder of ForSaleByOwner.com how trying to sell his home without a Realtor worked out for him. He tried to sell his New York City Condo for 6 months before asking the help of a Real Estate Agent... who sold it in a few weeks for $150,000 MORE.
Craig Newmark the founder of Craigslist, as well as, Al Bennati, owner of buyowner.com both use agents to buy and sell homes. Keep in mind these are great business people with access to the best resources for selling homes without a Realtor, and they still use an Agent. This is because Real Estate Agents save you money.
If you're buying a home than you're NOT paying an Agent's commission, the seller is. Why wouldn't you want an expert on your team for free?
A few of the common questions that will be answered within this article include:
- Why Should I use a Realtor?
- Should I use a Realtor to build a house?
- Should I use a Real Estate Agent when buying a home?
- Should I use a Realtor to sell my house?
- Should I use a Realtor for new construction?
- What are the benefits of using a Realtor to sell your home?
- How do I Find a Real Estate Agent?
What Role does a Realtor Play when Buying and Selling Homes?
If you spent the day in the life of a Real Estate Agent you'd have a better understanding of just how vital the role they plan in a real estate transaction is. Since you probably don't have time to spend a day in the life of a Real Estate Agent, here is a quick guide to how Realtor's earn their commission.
A Realtor is your team's Quarterback. They are responsible for knowing the 'plays' and where everyone is on the field. From home inspectors, to lenders, attorneys, title companies, etc. your Realtor will be the one driving the transaction forward and relaying information to all necessary parties throughout.
Expert Real Estate Guidance
Whether you're buying or selling a home, having a top local Real Estate Agent assist you with the transaction is going to be one of the best decisions you make. If you're buying a home, they will guide you through every step and if you're selling your house, they will implement the best marketing strategies so that your home sells fast and for the most money.
Realtors pay large fees to gain access to proprietary data. This data is crucial in making educated real estate decisions. Agent's will share this information with clients and this puts you in a great position to make educated decisions when it comes to making an offer on a house or determining list price. Zillow does not have access to this data so when you are looking to find the value of what your house is worth stay away from Zillow's Home Value Estimator (Zestimate).
To go back to the Quarterback analogy, your Real Estate Agent knows what to expect BEFORE it happens in the same way a Quarterback reads the defense before they snap the ball. This allows clients and Realtors to strategize before calling the next play during negotiations, which could mean thousands of dollars in savings for you!
Negotiations Make Realtors Crucial
By way of nature, humans are emotional creatures and more often than not we are driven to make decisions based on our emotions. Especially when it's something we are emotionally invested in and care a lot about. Negotiating is a game of give and take and it's easy to become upset during this stage - when you're working with a Realtor you have a buffer, and they understand the goal of negotiations is to see if there is a win-win scenario for both buyer and seller.
It's crazy how many people try to buy and sell real estate without a Realtor. All goes well until the slightest, tiniest little thing goes wrong (and there are always problems in a real estate transaction) and then the negotiations blow up. Anyone who has had a successful real estate transaction better have made sure they did everything correctly, or they could end up in court
Agents are able to keep emotion out of the negotiations which is critical when buying and selling homes and other than expertise, this is the best reason to use an Agent. When you're selling a home, or buying one, you're going to need to brace yourself for an emotional roller coaster ride. Your Agent is going to be your rock.
Net 25% more Money using a Realtor
Here are statistics direct from the NAR that reflect working without a Realtor:
These statistics an average sale price of $46,000 more when you use a Realtor to sell your home. Yes, you'll be paying a typical commission of 6% to both the Listing Agent and Buyer's Agent, just as you would with any investment you're going to see a 25% higher return based on statistical averages. That is an incredible return when you consider the statistical averages you would see in the stock market or anywhere else. So if your goal is to save money, it's easy to recognize that you will save yourself more money by working with a Realtor .
Aside from netting more money on the sale of your home, you're a lot less likely to fail working with a Realtor than without one.
90% of For Sale By Owner's Fail
It's not as easy to sell your home for sale by owner as it was in the days before the internet. Before the internet selling your home for sale by owner was easier because shopping homes for sale was not convenient for buyers. Today, people can search homes for sale with ease. In a few seconds you can view every home for sale in Raleigh, giving buyers many more homes to choose from, from the convenience of their living room, or anywhere in the world thanks to their mobile device.
If your home isn't being seen it may as well not be for sale. Without a Realtor your house is not being listed on the MLS and it is not being syndicated to tens of thousands of real estate websites around the world.
Additionally you're far more likely to end up in court or worse when selling a home by yourself.
To summarize selling a home for sale by owner, you have a 10% chance of actually selling and if you do... you are going to net 25% less on average, you will not reach the maximum number of buyers, you're going to spend your own money on marketing materials, you're far more likely to end up in court. Oh, and the founders of three for sale by owner marketing companies all use a Realtor.
With so many mistakes made be sellers these days, you really want to work with a professional.
Trying to save a few thousand dollars isn't worth it.
88% of Buyers use Realtors
Would you rather be be the first person or the last person to know about a home for sale in a highly sought after neighborhood?
When you're buying a house you're competing against other buyers. Chances are 9 out of every 10 buyers you're competing against is working with a Realtor who is (if their MLS allows) instantly notifying their clients the second a property comes on to the market. So not working with a Realtor will put you at a significant disadvantage when buying a house.
When it comes time to make an offer on this house, and there are three others next to yours all with Realtors, which offer do you think the sellers are likely to accept?
Deals are far more likely to go south when there is no buffer for both sides, so it makes sense the sellers would want to take the offer that is most likely to reach the finish line.
Your Emotional Rock
Unless you're been in a real estate transaction before, you probably don't understand just how common it is to become overly emotional and make bad decisions based on your emotional state. This is one of the most common home buyer mistakes.
Too often a buyer misses on a house with multiple offers and settles for the next property they see, even if it isn't one they want! This is because they become emotional after missing on a house, and this causes the buyer 'pain.' Your body has a self defense mechanism to protect you from these types of feelings, and naturally, you want to feel better. So you draw the conclusion that buying anything will make you happier than being patient.
The same logic applies to the best stock traders in the world. They refuse to buy a stock based on emotion, and instead purchase based on intrinsic value, or a computer algorithm. Want to know who loses money in the stock market? The people who buy at the top, and sell at the bottom... this is because they allow their emotions to dictate their decision making.
The same logic applies to selling a home without a Realtor.
Understanding the Process
Chances are you are not buying and selling homes every day, or constantly surrounded by real estate lingo, questions and different scenarios. This is where your Realtor comes in.
If you're selling a house there are home improvements you can make to add value to your sale. Chances are you will have some competition and there are ways in which your property can stand out to be far better than the rest. Here in Raleigh, NC homes sell FAST when they are priced correctly. If your home stands out you will attract the maximum number of buyers to your property and if priced correctly, a very likely multiple offer situation
When buying a home there are certain things that need to happen in order for you to reach your goals. You're going to want to ensure you receive the best possible deal from your mortgage lender so make sure you talk to at least three, and let them all compete against one another. I've had clients go from a 4.0% interest rate to 3.5% simply because they let them compete vs. one another.
Keep You Protected
With hundreds of thousands of dollars at stake you're not going to want to make any mistakes when buying or selling real estate. Buying and Selling with a Realtor decreases the chances of any mistakes significantly, especially since there are so many checks and balances in place for Agents and firms. If there is even the slightest thing wrong with the paperwork the firm will request that it be fixed. This is going to protect you big time in your transaction.
Some do it yourself real estate people assume the attorney will take care of everything. For someone who doesn't live and breathe real estate this makes a lot of sense. However there have been a lot of instances where my firm says 'I can't believe the attorney didn't have this!' Whether it's missing signatures or forms, everyone makes mistakes.
Final Thoughts on Using a Realtor to Buy and Sell Homes:
Buying and Selling homes without a Realtor is a mistake.
If you're buying a house, you do not pay a Realtor's commission. So anyone buying new construction who is not using a Realtor is missing a great resource to help with their purchase. Do you know what to look for when buying new construction homes? Are you prepared for every step along the way when buying a house? How about what happens after a seller accepts your offer?
Selling a home without a Realtor is one of the riskiest decisions a seller can make. To be blunt, it's a mistake. Not only are you risking making less money on the sale of your home, you're putting yourself in harms way as far as legality issues, and other problems you cannot anticipate. There is a reason the people with the best marketing resources for sale by owner are still selling with a Realtor and for more money! That's because Realtor's know the best strategies to get homes sold, FAST and for the most money!
If you have any questions drop us a line in the comments section below, we would love to hear from you!
Hi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!