If youre selling your home, you should expect a list of expenses. The commission you pay the sellers agent is usually one of the biggest, around 6% of your homes selling price. This pays for the valuable work your sellers agent, also known as a listing agent, does for you: preparing the home, marketing it, showing it to potential buyers and helping you through the selling process.
Some owners try to save money by not working with an agent and listing their homes for sale by owner. But FSBOs, as theyre known in the trade, require time, effort and real estate know-how. FSBOs also incur their own expenses, ones that people who hire listing agents dont have to pay.
For most homeowners, it pays to hire a listing agent. Heres why:
An experienced real estate agent can help price your home, in part by reviewing recent selling prices for comparable nearby homes. Without an agent, youd need to research the market and find these comps on your own.
A sellers agent can also list your home in a local Multiple Listing Service database, where buyers and their agents can find it. If youre selling on your own, you can pay a listing agent a one-time fee for this service. It would be much less than a 6% commission, but youd still be paying for a service a listing agent would normally provide.
Listing agents can help you negotiate with potential buyers and respond to multiple offers. Once you accept an offer, he or she will also help manage the scheduling of appraisals, inspections and related tasks before the deal closes.
Some sellers decide to go to FSBO route, then hire listing agents when their properties dont attract buyers. But if your goal is to sell your house fast, you might be better off starting with a pro who can quickly draw traffic to your home.
Even if you dont think speed is a factor, potential buyers might offer lower-than-desired prices if your house has been on the market for a while. They might also make lower offers if they know you arent paying a sellers commission.
Listing agents dont always charge 6% of the purchase price. You might be able to negotiate a lower commission or find an agent who charges a flat rate for his or her services.
Its also worth noting that listing agents dont pocket the entire commission; they split it with the buyers agent. If you plan to sell your home yourself, you might attract more buyers if you offer to pay their agents share of any commissions. But this means that in addition to paying for an MLS listing and handling the sale process yourself, youll pay a buyers agent about 3% of the sale price. So selling your own home might not be as big a savings as you expected.
Hiring a sellers agent is best in most cases, but there are some times when selling your own home is a good choice:
Youre in a sellers market: If youre in a hot area, it might be easy to sell your home. But youll still need to review and negotiate offer letters. Even if you dont work with an agent, consider hiring an attorney to help you through the closing process.
You already have a buyer: If someone has already contacted you about purchasing your home, its possible to put together a private sale without a real estate agent -- but its still a good idea to research selling prices for nearby homes and get legal advice before agreeing to a deal.
Margarette Burnette is a staff writer at NerdWallet, a personal finance website.
This article originally appeared on NerdWallet.
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