Who pays Realtor commissions? Usually home sellers and for some people, hiring a full-service seller agent to sell their house is a no-brainer—they’d rather live in a house they hated than have to sell it on their own. However for others, completing some of the home selling tasks themselves is a way to save on costs. Here’s how to decide what’s right for you.
What Closing Costs do Sellers Pay? How Much Do Full Service Real Estate Agents Make?
In the virtual age, paying the industry standard 6% commission (although it can vary) might seem unnecessary. Especially if you can take decent photos and know your way around a contract. On the other hand, full service real estate agents spend years developing the expertise it takes to accurately price a home and then negotiate its sale, so it’s safe to say it’s not a skill set you can learn in a weekend.
What Are À la Carte Services?
If you already have a working knowledge of real estate and experience with selling your home in the past, you could benefit from à la carte services offered by some real estate brokers. Agents that fill these roles often call themselves “consultants” and instead of charging a flat percentage of the sale, they allow sellers to purchase the help they need without paying for what they don’t.
If you choose this route, you will either pay the real estate professional by the hour for a specific task or a flat fee for bundled services and will have to manage the rest of the process on your own. Typical bundles include:
Pricing Assistance. A real estate agent will give you a comprehensive market analysis and guidance on pricing your home.
Listing Assistance. In this bundle, the brokerage will arrange for professional photos of your home and prepare a virtual tour to create an online listing for your home.
Contract and Negotiation Assistance. Once you have an offer you’d like to accept, the real estate agent will draw up a purchase contract and represent you at the home inspection and appraisal tour. They will negotiate with the buyer’s agent on price and any immediate repairs or contingencies they request.
How Do I Know Which Services To Choose?
Each brokerage will offer different packages/services at varying rates so we advise you to research three or four options to get a sense of your local market. And then answer these questions before you decide what help you need:
Have you ever sold a home before? Even if your answer is “yes,” how long ago did you sell that home? The laws and regulations around home sales change from year to year so you will either need to re-familiarize yourself with your state’s laws about contracts, contingencies, seller disclosures and typical time frames for home inspections and appraisals, or hire an agent to take care of this part.
Do you have a good camera and can you take professional-looking listing photos? The majority of buyers look at homes online prior to touring in person so flattering pictures of your house are your most important marketing tools. Compare photos that you take with comparable home listings in your area.
If you were planning on taking photos with your smartphone, you should instead consider hiring a professional photographer to do this for you. Homes that were professionally photographed sell 32% faster than homes that are not.
Are you available to show your home in the middle of a weekday? And if so, are you comfortable being present while strangers pick apart your nearest and dearest asset? In a traditional arrangement, the seller’s real estate agent conducts the one-off home tours and open houses. But unless you hire a consultant to do this for you, you will be responsible for meeting the potential buyers and their agents and selling the attributes of your home. Another thing to keep in mind, most consultants won’t agree to host open houses because of the amount of work they entail.
Are you comfortable asking prospective buyers for pre-approval letters from their mortgage company? And once you receive them, do you know what you’re looking at? You might feel awkward asking for this, but the letter is essential to knowing whether or not the potential buyer can afford your home.
Can you draw up a sale contract? If not, and the buyer has an agent, they can create the contract. But since that agent is representing the buyer’s interests, you will still want your own attorney or consultant to review it.
Are you knowledgeable enough to negotiate contingencies, immediate repairs, and price reduction requests from the buyer following the home inspection and appraisal? To protect your financial interest, you need to be familiar with industry standards, the typical cost of repairs, and how certain issues affect the value of your home. If this is outside your scope of knowledge, you will need to hire an agent or consultant to take care of this for you.
You can prevent any surprises by hiring a home inspector prior to putting your house on the market. The inspector will alert you to any potential problems and this will give you time to either fix them in the most economical way possible or factor the needed repairs into the purchase price. (You may want to read Common Home Inspection Issues for FSBO Sellers.)
Can you afford to pay for all of the à la carte services up front? In a traditional full-service arrangement, the costs are paid by the seller out of the sales proceeds, so they don’t have to come out of pocket for anything upfront. But if you arrange for any consulting services, you will have to pay for those either upon signing the contract or upon completion of the task.
Doing The Math
After answering all of the above questions honestly, how many “no”s do you have? If you answered, “no” to four or more of the above questions, you likely don’t have a solid enough foundation in real estate to successfully sell your house without significant professional help.
And even if you only need a consultant for one or two major tasks, you still need to do the math to see if it makes sense. First, price out the tasks for which you want to hire a consultant. Then estimate your home’s value and calculate 3% of that. This is the approximate amount you would pay for a full-service seller’s agent (you’ll be paying approximately 3% to the buyer’s agent regardless). The difference between these numbers is the amount you will save be going the à la carte route. Are the savings worth it?
If you decide the savings make this option worthwhile, make sure you interview the prospective consultants to get a clear idea of the help they will provide. And then get to work!