"I Can Sell This Without an Agent:" Thinks Everyone, At Least Once

So what does a real estate agent do?

While every brokerage and the agents therein have certain specialties (market knowledge and experience, to specializing in types of real estate and situations), almost every owner thinks of Broker commissions and wonders if they can save the money. 

Pause for a moment. If this is you, then there is actually a simple, rather blunt exercise to know whether or not you do or do not need an agent. Answer yes or no to these 3 questions:

• Will I need to ask anyone for help and advice during the course of my listing, marketing and negotiating the sale?
• Do I know what the highest and best use of the property is and whether I should or should not spend money on improvements?
• Do I have realistic expectations about the price, time to receive an offer, time to close, and terms of the deal I am likely to receive and accept? 

Now, be honest. Did you answer a confident "yes" to all three questions? Did you think, I can Google and ask a friend who is an agent some questions then confidently answer "yes." 

If you answered a resounding yes to all three of these questions, then you are actually likely in a league with the top agents and real estate experts in your area. 

If you answered yes to two and maybe to one, then perhaps you can improvise along the way, but may stumble or perhaps find yourself in a tricky situation. 

If you're not sure and have your doubts, talk to an agent and ask them to explain what the value of an agent is and what their particular strengths and selling points are.

Penrose Realty, for example, specializes in bespoke real estate solutions around the Greater Boston Area with an investment-minded approach to real estate.  Even for first-time homebuyers, we guide their decisions based on present and future value.  We are adviser and consultants who also are local experts.  We lead our clients and therefore take clients who see our value and will benefit from our advice. Penrose Realty specializes in full-service and full-cycle real estate services, from finding properties, designing and developing or remodeling where necesarry (for purchase or for sale), leasing and managing investment units, and advising clients when to sell, buy more and 1031 exchanges. 

Other brokerages mahy specialize in specific neighborhoods, working with first-time homebuyers, assisting those looking for affordable housing opportunities, helping sellers with short sales and foreclosures, and a host of commercial real estate categories, and the list goes on!

Whatever the case may be, there are so many real estate brokerages that you likely could spend the rest of your life working with a new agent every day. That is why loyalty, experience and trust are so critical in this business and why many agents depend upon their close circle of friends and family to get started and then build their business based on referrals. 

But, first, you still need to decide if you even want an agent. Check out this Investopedia article about 8 reasons why you may want an agent. 

I will add that money saved on commission can actually be one of the biggest myths and furthermore is not a valid or good reason.  To put it simply, sellers should note myriad studies showing that agents earn sellers more money for their homes. Many studies also say that the majority of For Sale By Owner (FSBOs) sellers end up hiring an agent.

Another tip, if you are a FSBO, you should know what people really see when they look at your sign. Agents see "new listing opportunity" and buyers see "a chance to get a great deal". So get ready for 50-75% of your phone calls being agents looking to list your property; of the remaining callers, a handful (you'll be lucky if you get one) will be qualified and willing to pay close to your asking price. Regardless of how interested they all are, many will haggle and negotiate.  Your goal should be to reach real qualified buyers and to save yourself as much time as possible.

I will also add that commissions and other expenses related to the sale of a property are tax deductible. Before making a quick back-of-the-napkin calculation about your bottom sale price, I highly advise you to take the time to speak with a financial planner or your acountant if you have one about what your net proceeds would be after you factor in your cost basis, capital gains exemptions, and deductible expenses. You may be surprised by how this exercise and scenario playing will impact your decision to hire an agent.  Depending on how you look at it, you may actually say that hiring a professional real estate agent to do everything for you - save you time, absorb certain liabilities, minimize Federal and State law compliance risks, and get you a higher sales price is one of the smartest decisions you ever made!

In Massachussetts, the typical agent fee is 5% split 50-50 between cooperating brokerages. There can be variations to the split and overall commission. This is something you should discuss with the listing agent.  Andrew Stuckey typically structures a listing agreement to include tiers of commissions depending on whether or not the buyer has representation and what form that representation takes. Stay tuned for a future article discussing this in more detail.  Some listing agencies may also discount the fees to 4% or even 3%.  There is not a single hard-set rule when these amounts do and do not make sense and they should be considered and evaluated on a case-by-case basis and discussed with your agent. If there is one general truth, it is that people should be compensated for their time, effort and the value they add. 

Further Reading:

This article details some scenarios of selling with and without an agent.

The National Association of Realtors, clearly, will always state that agents are the better options (particularly Realtors). While their agenda is self-serving, the conclusion is correct. Most sellers are probably better off with an agent (but it does not necesarrily need to be a Realtor. Many top agents are not Realtors). 

This article also presents some common and fair arguments in favor of using a real estate agent. Of particular note, sellers will not entirely escape buyer agent fees. Consider that many buyers will have an agent negotiating for them.