Is it Worth the Money to Hire a Listing Agent?

You’ve decided to sell your own home, or what the real estate industry refers to as FSBO (For Sale by Owner). The question many homeowners have when considering doing the sale themselves, is it worth the money to hire a listing agent? To be honest, it can save you some money on the commission, but there are trade-offs that may cost you money and time without the assistance of a listing agent. California real estate commissions averages 6 percent. A home’s commission selling for $450,000 would range about $27,000. If you can outperform a professional realtor, you deserve the commission.

Something to think about as a marketing strategy, you could subtract the commission percentage from the listing price of your home, hoping for a quick sale. Just make sure the balance is enough to pay off the existing mortgage, loans and all closing costs as a result of the sale.

There’s another marketing strategy for selling your own home, using existing marketing services. In today’s market 80 percent of the homes sold are through full service sellers, 10 percent are sold solely by FSBO and another 10 percent are sold by FSBO opting to hire, discount brokers or joining forces with a real estate service like Movoto can lessen the California real estate commissions. The decision is up to you, considering the amount of time involved to prepare a home for sale, schedule to show the home to potential buyers and the legal details necessary to finalize the closing transactions.

Here are the PROs and CONs between selling your home FSBO and selling your home using a listing agent. It’s not just about the money you save by doing it yourself; it’s getting the final results with less stress. Remember realtors make a living selling homes; they manage their time meeting with multiple prospective buyers at the property daily.

Listing

California real estate commission

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FSBO listings share the same Multiple Listing Service (MLS) and agents are required to show these homes, making no distinction between FSBO or Realtor listings as part of the Realtor Code of Ethics. The difference falls to the FSBO, who becomes the listing agent and responsible for hiring services to prepare the home for sale before listing. Services include, appraisals, staging, photos, marketing flyers and legal consultations with a real estate lawyer to help with the required sales process. Unlike the FSBO, real estate agents have established relationships with these services, allowing them to focus on selling a house.

Pricing

There are reports that show agents listing homes for more than 20 percent of the average list price. The high sales price may be related to the market level access of qualified buyers within the real estate database.

Whereas, FSBO have limited access to the market and finding a qualified buyer may take time. So if you can afford to wait for a potential buyer and can manage the paperwork yourself it may work. If your home is in a good marketable area, where inventories are low, you need to establish a fair market value price that’s affordable to the market.

Marketing

California real estate commission

Source:wikimedia.org

Certain conditions of the sale make hiring a listing agent an advantage and the California real estate commissions, worth the time and money. Gated communities or new developments tend to be exclusive, and hard to find. Real estate advertising and marketing efforts have wider outreaches, attracting potential buyers to the properties for sale. As a FSBO you should be concerned with availability of prospect buyers and the market demands. Housing prices can increase and decrease as a result of market demands, better home improvements, and overall appreciation in home values. Here’s a comparison of single family homes in California:

32 – Price increased during 2016
74 – Price reduction during 2016
15 – Price increased during 2015
20 – Price reduction during 2015

FSBOs taking the time to research may find opportunities taking advantage of shared or discounted real estate services for less than the traditional commission percentages. If a listed agent has an interested buyer for your property, you still have to pay a percentage of the commission to the buyer’s agent to sell the home.

Market Research

Remember listing agents have connections and experience with real estate information that sells property. They know the territory and spent years developing best practice strategies, selling homes for top dollar in good and not so good markets. More important, they monitor the market changes, providing sellers with valuable information pertaining to current list prices that can change daily. In 2016 there was a reduction in listing price of $49,000 compared to end of the 3rd quarter in 2015.

January 2016 Median listing price $990,000
October 2015 Median listing price $1,100,000
September 2015 Median listing price $1,039,000

Unless FSBO have done the market research finding the sales information or developing the right marketing campaigns getting the sale done quickly can be daunting. One advantage for FSBOs is using the money saved on commission to hire a marketing firm to promote your home aggressively. You could lower your list price to sell the home faster. Or consider offering an incentive to listing agents in the same neighborhood, proposing a higher split commission percentage for showing and selling your home.

Is it worth the money to hire a listing agent?

California real estate commission

Source:wikimedia.org

The answer of course is yes, a listing agent brings contacts, knowledge, experience and skill as an expert throughout this financial transaction as a realtor. Commission fees and service charges are not the only determinants for hiring a listing agent. Although all real estate sales share common guidelines, and as an area agent they do more than just sell your home. Here’s the average time from listing to closing of single family homes in California: