Real estate agents are more relevant than ever.
According to the NAR’s latest Profile of Home Buyers and Sellers, 89% of home sellers and 87% of home buyers used an agent to sell or purchase their home last year. The use of agents in real estate transactions remains at an all time high.
Why is the use of real estate agents still at an all time high?
You may be wondering whether it is really necessary to engage a real estate agent when you buy or sell a home. While doing the work yourself may save you the real estate agent’s commission, doing so is more complicated and time consuming than you may realize. Buying or selling a home is a major financial and emotional undertaking and it pays to have professional help guiding you through the process and giving you the support and information you need to make the right decisions. Many who start the process of buying or selling home on their own soon after decide to engage a real estate agent.
A real estate agent’s duties change depending on whether they are engaged to help you purchase or sell a piece of property. More often than not there are 2 or more agents involved in a transaction as some agents work in teams and both the seller and buyer have agents handling their side of the transaction. Both the buyer’s and seller’s agent(s) work full time as real estate agents and they know what needs to be done and when to get a deal together.
1. Bringing the right buyers and sellers together
Real estate agents have access to better and more accurate data for every property listed for sale by all of the real estate agents in their MLS (Multiple Listing Service) area. If you are looking to buy a home, a real estate agent will compile a list of homes that meet your criteria and contact listing agents to make appointments for you to view the homes you are interested in. And, using their skills to access the sold data from their MLS, real estate agents are able to determine if the asking price reflects the market value of recently sold homes in the area.
Going it alone means you will have to find homes on realtor.com or a similar site, identify and contact the listing agents make the appointments, determine if the home is worth the asking price (!) and submit offers and negotiate on your own. And because it is the seller who pays the commission, you most likely will not realize any savings from all of this hard work.
If you are looking to sell your home on your own, you will have to determine the fair market value of your home on your own before you decide on a price. Then you will have to choose marketing outlets to attract buyers. There are many online websites that will list your home for you. When the calls start coming in from interested parties YOU will have to figure out if the callers are qualified buyers and make and keep appointments. You may find yourself making an appointment and rushing home, only to find that no one shows up...or worse, buyers show up over and over again, just to waste your time when it turns out they aren't qualified to buy your home, or they were "just curious".
2. Handling stressful negotiations
You may feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own interests. The trouble arises when they do not see eye to eye. What may be in the seller thinks is in their best interest is very often not what the buyer thinks is is their best interest and vice versa. An agent or agents can help the buyer and seller come to terms that are agreeable to both parties and may help you avoid mistakes that cause a breach of contract causing some serious headaches.
A real estate agent helps in tough transactions by getting all of the parties to stay focused on the transaction and keeping the personal stuff at bay. The seller can benefit from a straight-forward no-nonsense real estate agent who will not let the buyers call all the shots. Negotiations are tough. Buyers sometimes disparage a home in order to get the seller to lower their price. A listing agent will know when buyers are being reasonable in their remarks and objections or just trying to get a better price. This is how some negotiations go and a good agent keeps it about business. If the objections are real – house is overpriced, roof is at the end of its life, house is dated – then the listing agent will work with the seller to lower the price and make concessions. If the buyer is unreasonable, then their agent will show them why the home is worth what the seller is asking or close to it. The buyer can benefit when the real estate agent helps them recognize when they are letting their emotion rule their decision making – paying too much for a home because they love the kitchen or walking away from a solid well-priced home because the kitchen has not been updated in 10 years. Likewise, the seller may not want to make a counter-offer to what is referred to as a low-ball offer. An agent will be able to explain to the seller that the goal is to get the home sold and a counter-offer is a step toward achieving that goal.
3. Contracts can be complicated!
When you find a home you want to purchase, your real estate agent will write up your offer which will include your offer price and terms such as date you will close, if and when you will apply for financing, inspection contingencies, and all other terms you may require. Your offer will include your earnest money deposit and the name of the escrow company who will hold it. Your real estate agent will then submit your offer to the seller and or the listing agent.
An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.
After the offer is accepted the agents work to keep the transaction on schedule by coordinating the professionals, such as home inspectors, title companies, mortgage companies, appraisers, etc, needed for a successful closing. They pay close attention to the dates in the contract because a missed deadline can have detrimental consequences for either the seller, buyer or both.
4. Licensed professionals are held accountable
Licensed real estate agents are governed by their state’s laws. In Iowa the most common type of relationship to have with a real estate agent is that single agent. According to Iowa state law an agent's duties include:
Dealing honestly and fairly.
Accounting for all funds.
Using skill, care, and diligence in the transaction.
Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer.
Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing.
Limited confidentiality, unless waived in writing by a party. (This is intended to prevent the associate from disclosing that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, or the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential.)
In the state of Iowa, disclosure of the condition of the property is something that both the seller and all of the agents are required by law to do and it is best done in writing. All known facts or conditions that materially affect the value of residential real property and are not readily observable to the buyer must be disclosed.
For example, suppose a seller has listed their home with an agent but the home needs updating and repairs so potential buyers are turned off. After a couple of months without any offers, the seller gets anxious and hires unlicensed contractors to make some major repairs and updates to the home without obtaining permits. Even if the seller directs the agent not to disclose the non-permitted work, the agent must disclose or risk being sued and or fined, and could even lose their license. Most likely, if the seller wants to avoid disclosure, they will attempt to sell the home without an agent. Sellers are not always honest, but a real estate agent is bound by law to be honest and most likely will not risk their livelihood for one sale.
5. Going it alone may not save you much money, and could even cost you.
Many people decide to go it alone to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you might actually price it based on the sale prices of other comparable properties in your area and not emotion. Good for you! You're one step ahead of most for sale by owners. However, many of these comparable properties will be sold with the help of an agent. This means that the seller gets to keep the percentage of the home’s sale price that might otherwise be paid to the real estate agent. Tempting! However, buyers who are looking to purchase a home sold by owners will expect to save some money on the home by not having an agent involved and will make an offer accordingly, perhaps even overestimating how much they can "low-ball".
When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent’s commissions by the time the transaction is complete.
The Bottom Line
While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn’t as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.
With the correct person by your side, the buying and selling process doesn't have to be full of stress, doubt and anxiety - it can actually be FUN! Contact Jacquelyn Duke today to learn more.
1Jacquelyn Duke, Realtor®
Licensed to Sell in the State of Iowa
1360 SW Park Square Dr Ste 106
Ankeny, IA 50023
Disclaimer: The material on this site is solely for informational purposes. No warranties or representations have been made.