When putting a home on the market using a realtor, you will likely pay a form of commission. The fee is calculated as part of the sale price –
it is paid at closing from the proceeds of the sale, and is distributed across the listing agent and the buyer’s agent and their firms. Understanding what the fee covers will help you better understand the value of having a qualified, experienced partner in the selling process.
Expertise: A sellers agent brings valuable expertise to every decision, including price, home prep, marketing, negotiation and closing. Getting any of these things wrong can cost you time and profit at several milestones along the way.
Experience: An advisor who helps you clear hurdles and coaches you to closing is worth paying for.
Marketing Resources: A successful firm supports its selling agents with the resources to effectively market your home. Inclusion in the Multiple Listing Service (MLS) is essential to getting maximum exposure for your home; likewise, getting your home listed on sites like realtor.com, zillow, trulia, etc, gets it out in front of buyers actively researching homes that match their criteria. The agency’s website, magazine (if they have one), personalized marketing materials, and network all become your tool kit. An agent taking a lower commission is likely to offset the shortage by shorting you on resources. Most of these tools cannot be accessed by private individuals, but where they could, would cost you thousands. Choosing to go it alone would require you to try to find alternative methods of raising awareness of your property among realtors and home seekers, few of which are likely to be as effective as the several channels listed above that put sellers’ homes directly in front of their market.
Exposure: Both the selling and buying agents take great pains to get exposure for your home. Your selling agent focuses on getting your home in front of as many agents and buyers as possible. The buyers’ agents, leveraging their expertise, cull through thousands of listings to find the ones that best match their clients’ wish lists. Their showing your home is a vital to the sales process as any other step.
Professional Network: From listing through closing, there can be several reasons to need a professional’s services: attorney, contractor, cleaning service, home stager, landscaper, mover, tax expert, and more. Access to an agent’s contacts can save you time and money many times over.
Attention: Many people who choose a discount agent find themselves underserved as their home sits on the market while others sell. When their contract expires and they move on to a new partner, they discover that their contract still requires them to pay the first agent a fee even when the house does not sell.
Skillful Negotiation: Both agents are driven by the best interest of their respective clients during the negotiation process. Each plays a vital role in coaching their client in successfully navigating the negotiation; at times, the agents will become the human bridges between the seller and the buyer. Finding solutions that keep the deal alive by satisfying both parties is a skill worth paying for.
According to a CBS Early Show post, industry reports suggest around 25% of home sellers try to do it on their own. The average number of days on the market for For Sale by Owner (FSBO) sellers is about 114. While they typically get 96 percent of their asking price, only about 12 percent actually close; on the other hand, a good agent closes on 60-80% of their listings. Bear in mind that buyers often expect a very steep discount if no realtors are involved. Many unsuccessful FSBO sellers move on to hiring an agent, losing the time and money they’ve already invested in “doing it themselves”.
You wouldn’t think twice about paying a doctor, lawyer, financial advisor, or other professional for their expertise; you would probably be willing to pay for valuable experience and skill rather than take risks with your health, finances, business, and future. Selling your home may be one of the most impactful financial moves you’ll make, and there are risks all along the way; while a realtor fee may seem a lot of money, when you consider all that an expert partner brings in skills and resources, it’s a well-earned commission and an investment that makes good sense.