What does a real estate agent do to sell your home? | Mortgage Rates, Mortgage News and Strategy : The Mortgage Reports

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What does a real estate agent do to help you sell your home?

Your agent will help you set the asking price of your home
Real estate agents list, advertise and show your home to prospective buyers
Your agent assists you in evaluating offers and negotiating with buyers

The amount of assistance you get from an agent depends on the type of service you want, and what you’re willing to pay. Options range from self-service to discount brokerages to full-service firms.

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How does a real estate agent help sell your home?

From an early age, many consumers learn that “cutting out the middleman” is a smart idea. It “passes the savings on to you.” But if that’s true, why do 90 percent of home sellers hire a real estate agent - a middleman who typically charges 5 percent to 6 percent of the home’s sale price?

(In most areas, this commission is split 50/50 with the buyer’s agent.)

What does a real estate agent actually do for you - the seller - to justify taking $18,000 from the sale of a $300,000 home?

Do you need a real estate agent?

Wouldn’t it make more sense to sell the house yourself? You could then pocket that money or deduct it from the asking price to attract more buyers.

In many cases, the answer is: No.

For one thing, study after study has shown that, on average, homes sold without a real estate agent fetch lower prices.

In one survey, for example, FSBO (For Sale By Owner) homes netted 6 percent less than those sold via the MLS (Multiple Listing Service) used by agents.

For another, selling requires a lot of time, effort and expertise.

Unless you have local real estate knowledge and top-notch marketing and negotiating skills, you could leave thousands of dollars on the table.

A good agent knows how to price your home

Knowing how to correctly price a home is both an art and a science. It’s probably the most important thing a real estate agent can do for you.

A good agent will use science, in the form of comparable recent sales, to set an accurate price for your home. She’ll use art, based on her experience, intuition and local market knowledge, to tweak that price and make sure it’s competitive.

A truly first-rate agent will also be there for the home inspection and appraisal to make sure the reports aren’t negatively “spun.”

For example, what if a home inspector says your house needs a new furnace in five years? A buyer’s agent might spin this as, “bad furnace = lower sale price.” Your agent will spin this as “furnace is fine,” and strive to keep the price higher.

Real estate agents versus online valuation models (AVMs)

Why not use an online calculator instead? Aren’t most of them just as accurate when it comes to pricing?

Not really.

For example, Zillow claims that its calculator has a median error rate of 4.3 percent, meaning the estimate should be within 4.3 percent of the home’s value half of the time. The remaining homes are off by a larger percentage.

How large?

The company says that 87.6 percent of its online calculator’s estimates are within 20 percent of the actual value, a pretty big margin for error. (For the $300,000 home above, that equals $60,000.)

Although online calculators use some of the same publicly available resources as agents, they don’t take into account factors such as curb appeal, recent renovations, nearby school districts, etc.

A good real estate agent is a skilled marketer

In today’s digital world, homebuyers often start (and end) their tours of your house online. They view photos and take virtual tours of your property. If they don’t like what they see, they never bother to visit your home in person.

Knowing this, a good real estate agent will take great photos and videos of your property, or hire a professional photographer to do it.

Just as important, the agent will showcase your listing on the MLS, the network of databases that agents use to spread the word about available properties, as well as social media sites such as Facebook and Pinterest, and (ideally) their own website.

They will also help stage the house, post yard signs, conduct open houses, take out ads and distribute flyers.

Could you do this yourself? Sure. If you have the time and you’re a “people person.”

(To get an MLS listing yourself, however, you’ll need to hire a discount broker and purchase that service from its a la carte menu.)

Screening out unqualified buyers

Every lookie-loo and lowballer who’s ever guzzled free wine at an open house claims to be interested in buying, but will usually waste your time.

Even genuinely interested buyers can waste your time if they don’t have their financing lined up.

Because agents work on commission, they have a vested interest in screening out unqualified buyers so they can focus on the best prospects.

In addition to screening out obvious time-wasters, an agent will make sure that buyers are preapproved for a mortgage, not just prequalified.

Mortgage pre-approval equals (almost) cash buyer

A prequalification is fairly easy to come by but doesn’t guarantee that the buyer will get a loan.

By contrast, preapproved buyers have had their credit scores checked, and their income and employment verified. They’re much more likely to get a loan when it’s time to close.

Again, there’s nothing stopping you from doing all this yourself, assuming you have the time and patience.

You can also forego hiring an agent if you have mad negotiating skills and you hire a lawyer to prepare (or simply review) the sale contracts.

Is a discount brokerage for you?

If you’re an experienced home seller looking to save money, consider a discount brokerage.

Depending on the brokerage and the area where you live, you could shave several percentage points from the usual fees.

However, if you’ve never sold a property or want lots of hand-holding a discount brokerage might not be a good fit.

Discount brokerages make up for lower commissions by selling more properties, so don’t expect a ton of personalized service.

If you’re looking for someone to assist with the “grunt work” or you simply want an MLS listing, you could go a step further. Sites like Forsalebyowner.com offer a menu of services from which you can pick and choose.

Keep in mind, though, that many of these sites offer commissions to buyers’ agents to encourage them to steer clients to your home. That’s because sellers who pay 2 percent to 3 percent commissions are 25 percent more likely to sell than those who offer nothing.

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