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"Can I Save Money if I Don't Have an Agent?"

Some buyers and sellers wonder about whether they can save money by not using an agent for their home sale and/or purchase. I'll do my best in this post to explain the variables for different types of transactions.

IF YOU ARE SELLING A HOME, you will probably be best served to hire an agent to list it for you and to represent your interests throughout the transaction. This is known as a "fiduciary responsibility", and Realtors must abide by a code of ethics which means that we are working for you alone, not our own interests or those of the buyer. We must treat everyone fairly, but for negotiations, it's often helpful to have an agent. This also applies to exposure for your home. In Austin, more than 80% of homes sell from the MLS (multiple listing service). Only Realtors have access to place homes in the MLS.

In my humble opinion, it will behoove you to have a full-service agent who can help with pricing, photography, staging, marketing, negotiations, inspections (which sometimes lead to additional negotiations), and the closing process itself. Our company charges 6% for this, of which we pay 3% to the buyer's agent, if any. There are limited-service and discount brokers around if you want to shop them. Your mileage may vary. :)

If you try to go it alone, the statistics show that "for sale by owner" homes eventually end up listing with an agent around 85% of the time.

IF YOU'RE BUYING A RESALE HOME, you could go directly to the listing agent in an attempt to get him/her to give you a discount because you have no agent helping you. This could work, but keep in mind that they are under no obligation to give you any of their commission. Additionally, since the listing agent is representing the seller, they are on the other team and working against you with regard to the sales price and repair negotiations, so it could end up costing you more.

IF YOU'RE BUYING A BRAND-NEW HOME, the builder pricing already includes the agent commission (it's built in to the prices you see). If you go without an agent, you have no one looking out for you during the purchase, and no reputable builders in Austin will give you a discount, largely because they don't want to burn bridges with agents, who bring them the lion's share of their business. Instead, when you purchase a new home without an agent, the builder will likely just pocket the commission they would have paid out.

So, the bottom line is that although it's possible, you probably won't save money if you choose not to hire an agent. I always tell our potential clients that even if you don't like us, I would highly encourage you to find an agent that you're comfortable with, because you will reap the benefits. Furthermore, if you are actually able to save a bit of money, count the cost with the additional time spent and stress involved. It's a little bit of a cliche in our business, but you would never consider going into court to defend yourself. Allow a professional to handle your real estate needs. We do this stuff every day.

Thanks for reading. Let me know if you have any questions.

 

Image credit: http://www.flickr.com/photos/93496438@N06/

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