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Edited by Bailey Peterson
Written by Ashley Sweren
Edited by Bailey Peterson
Info for buyers:
What does a realtor do for a seller? | How much does a realtor cost? | Cash back for buyers | Exceptions | Bottom line: Do I need a real estate agent?
Info for sellers:
What does a realtor do for a buyer? | How much does a realtor cost? | Money-saving alternatives | Exceptions | Bottom line: Do I need a real estate agent?
You don’t need a real estate agent to buy or sell a home. However, the benefits of working with one are significant.
Sellers who sell their home with the help of the realtor generally sell faster and for more money. Buyers who purchase their home with an agent also typically score better prices.
Realtors leverage their expertise to simplify your home transaction — they handle sticky negotiations and mountains of paperwork to preserve your time and sanity.
Some people may think buying or selling a house without a realtor saves money. However, in most cases, that’s not true.
Our friends at Clever Real Estate offer a smart way to save money when selling your home. You get all the benefits of working with a top-rated full-service local real estate agent for just $3,000 (or 1.5% on homes that sell for more than $350,000). Clever offers eligible buyers 0.5% of their purchase price in cash back once the sale closes.
💰 Connect with a Clever agent and save thousands 💰
Key Takeaways
- Real estate agents possess special skills to help smooth the complicated process of buying or selling a home.
- Though you’re not required to work with an agent, most buyers and sellers find them valuable.
- Real estate agents are paid commission by the seller — generally 5-6% of the home sale price split among the agents and their brokers.
- It’s possible to save money by buying or selling a home without a real estate agent, but other approaches give you discounted commission rates alongside full-service help from an agent.
What does a realtor do for me?
Real estate agents are trained professionals with years of experience they apply to get their clients the best deals.
In addition to the studies they must complete to become licensed, realtors gain real-world knowledge throughout their careers that qualifies them to orchestrate transactions for buyers and sellers.
Realtors effectively navigate transactions through:
Research and expertise
Agents are experts on local neighborhoods and recent sales within them. Additionally, they can access and analyze sales of comparable homes nearby to ensure fair pricing.
Agents also know the cost and potential return on home improvements and repairs. They advise sellers on what they need to do to create the most value for their home, and tell buyers how much to ask for in negotiations to cover future work on the property.
Administration and organization
Real estate transactions involve a ton of paperwork. (See a full list). It can be overwhelming to tackle a transaction on your own, especially if you’re not familiar with the forms and regulations surrounding them. Agents know what needs signing and when to submit it.
Failure to complete real estate documents properly may result in negative (and costly) legal ramifications. Most buyers and sellers aren’t willing to take this risk.
Negotiation
Real estate agents are master negotiators. They’re trained in the principles of negotiation and have significant experience working out home purchase transactions.
Realtors can identify the tactics other agents use and respond accordingly to garner a favorable outcome for their clients.
Networking
Agents have relationships with other local realtors that can help you connect with the ideal buyer or seller. They also have connections with local pros who can aid your transaction, including inspectors, loan officers, and home improvement contractors.
💡 Learn more: Honestly, What’s a Real Estate Agent? (Are They Worth It?)
What does a realtor do for a buyer?
When representing a buyer, a real estate agent takes on a number of responsibilities to smooth their home search and purchase.
| job | description |
|---|---|
| 💲 Facilitates financing | Connects you with a lender to determine your budget and secure pre-approval. Provides guidance on mortgage-related paperwork. |
| 🔎 Identifies properties | Finds homes that meet your needs and budget requirements. Analyzes properties to determine fair pricing. |
| 🏠 Tours homes | Accompanies you to open houses. Arranges private home showings. Points out features of note. |
| 📝 Submits offers | Advises on offer amount, contingencies, etc. Writes up and submits offers. Handles related paperwork. |
| 🤝 Negotiates deals | Provides expert counsel during negotiations. Communicates on your behalf with the listing agent. |
| 🎉 Orchestrates closing | Oversees home inspections. Hires and manages other professionals to complete the transaction, like title or escrow company, attorney, specialty inspectors, and contractors. |
💡 Learn more: What is a Buyer’s Agent? Everything You NEED to Know
What does a realtor do for a seller?
When representing a seller, a real estate agent helps make the property look its best to attract buyers willing to pay top dollar. Agents orchestrate the preparation, listing, and closing processes for the seller.
| job | description |
|---|---|
| 💲 Advises on pricing | Analyzes neighborhood sales and presents a pricing strategy based on market knowledge. |
| 🎀 Helps prep home for listing | Advises seller on repairs, improvement, and staging to maximize value. May coordinate with associated professionals (inspectors, painters, plumbers, etc.) |
| 💻 Lists property | Coordinates professional photography. Lists home on appropriate platforms (MLS, Zillow, etc.) |
| 📣 Markets listing | Creates marketing materials (fliers, listing sheets, etc.). Coordinates showings and hosts open houses. Networks with contacts to share listing. |
| 🤝 Negotiates deals | Reviews offers. Provides counsel during negotiations. Communicates on your behalf with the buyer's agent. |
| 🎉 Facilitates closing | Hires or connects you with professionals necessary to close the deal, like contractors for repairs or title company for signing. |
💡 Learn more: What’s a Listing Agent? (Do I Need One?)
How much does a realtor cost?
Real estate agents are paid in commission. They make a percentage of the home sale price.
Typically, commission is 5-6% of the home price, though it may vary based on your location or market conditions. This is usually split between the buyer’s agent and the listing agent, so each gets about 2.5-3%.
Real estate commission is paid by the seller. It’s deducted from their sale proceeds during the closing process.
Can I save money by buying a house without a realtor?
The seller pays the buyer’s agent commission. So, buying a house without a realtor usually doesn’t save you any money.
However, there are a few exceptions when buying a house without a realtor may be advantageous. (Read more here.)
✍ Editor’s Note
There’s only one situation we’re aware of when a realtor is required to buy a home. Buyers must enlist the services of an agent when purchasing a foreclosed property from the Federal Housing Administration.
Can I save money by selling a house without a realtor?
Selling a house without a real estate agent reduces realtor commission costs. But you may end up losing money by selling your home for a lower price overall.
If you sell your home without a realtor, you won’t have to pay a listing agent commission, which is usually 2.5-3% of the home sale price. In most cases, you’ll still have to pay the buyer’s agent commission of 2.5-3%.
Studies find that selling a house without a realtor nets a price of about 5-7% less per square foot than traditional agented sales.
When you subtract the 2.5-3% savings you’ll achieve by omitting the listing agent’s commission, you’ll actually end up making about 2-4% less when you sell without a realtor. Of course, not every home sale reflects these statistics, and in some situations you may save a little money by selling a house without a realtor.
Is selling a house without a realtor worth it?
Though you may save a bit of money by selling without an agent, you’ll need to determine whether those savings are worth your time and effort.
Selling a home is a time-intensive process with a realtor. Selling a house without a realtor involves a significant investment of resources. You’ll need to do everything a realtor does, without the training, tools, and support they have.
Potential pitfalls of selling a house without a realtor
In addition to the time you’ll need to devote to the process, you’ll face other potential challenges if you decide to sell a house without a realtor.
Some buyer’s agents won’t even show for sale by owner (FSBO) properties because they associate them with headaches:
- Negotiations may be difficult, as emotions can run high without an agent as a go-between.
- Paperwork may be filed improperly because the seller doesn’t know what they’re doing.
This reduces your pool of buyers, which can mean less competition and, ultimately, a lower sale price.
Along the same lines, FSBO properties may stay on the market longer than agent-listed homes. FSBO homes are often priced incorrectly, which reduces the number of buyers interested. They typically also get less exposure, since they’re not marketed at the same level as agent-listed homes.
In fact, one Zillow study found that though 36% of sellers try selling FSBO, only 11% actually succeed. The rest eventually give up and seek an agent’s help.
Selling FSBO may expose you to potential liabilities. If you submit paperwork incorrectly you may jeopardize your sale or face expensive litigation from the buyer in the future.
💡 Learn more: Selling Your House FSBO? Read This First (2021 Update)
Money-saving alternatives to selling a home without a realtor
If you’re looking to save money when selling your home, FSBO isn’t your only option. There are ways to save on commission while retaining the benefits of working with an agent.
Negotiate a lower commission rate with your listing agent
Agent commission rates aren’t set in stone. When interviewing realtors, you may be able to negotiate a lower rate.
You’re more likely to score a discount in a hot seller’s market or if you’re willing to take on some heavy lifting to make the agent’s job easier, such as arranging your own home photography or personally hosting showings.
💡 Learn more: How to Negotiate Your Real Estate Commission and Save on Fees
Work with a limited-service agent
Limited-service brokerages allow you to pick and choose which services you need. Some do this by service tier, others charge à la carte. For example, you can pay for negotiation assistance but opt out of professional photography.
This style of agent works best for individuals with a few home-sale transactions under their belt who know exactly what they need and what they can handle on their own.
💡 Learn more: What Is a Limited-Service Real Estate Agent?
Choose a discount brokerage
Some real estate brokerages (like Redfin) offer reduced commission rates. Make sure you understand exactly what you’re getting before you decide to go this direction.
Most of the time, discount brokerages offer lower rates because they sacrifice service for efficiency. For example, with some discount brokerages, you’ll have multiple agents helping throughout your transaction, so you won’t receive personalized service.
💡 Learn more: Discount Real Estate Agents and Brokers – Scam or Legit?
Work with Clever or another agent matching service
Agent matching services connect buyers and sellers with real estate agents in their local area. Some, like Clever, also provide built-in commission savings.
Clever partner agents are from big-name full-service brokerages like Keller Williams and RE/MAX. When you sell your home with Clever, your agent will list your home for $3,000 (on homes that sell for less than $350,000) or 1.5%, opposed to the standard 2.5-3% listing agent commission.
On the sale of a $400,000 home, you’ll save up to $7,000!
| Clever Real Estate | Traditional real estate agent | |
|---|---|---|
| Listing fee | 1% | 3% |
| Buyer's agent commission | 3% | 3% |
| Total commission cost | $16,000 | $24,000 |
Other agent matching services like Ideal Agent and UpNest also offer discounts, but with Clever, you’ll save at least twice as much.
💰 Save thousands with Clever 💰
Cash back options for buyers
Some real estate services offer commission rebates for buyers. This is a financial lure to attract new clients.
With a commission rebate, the buyer’s agent shares a portion of the commission they earn on the deal with the buyer. These funds are usually issued in credits that can only be spent in certain ways, like on the buyer’s closing costs.
Commission rebates are regulated. They require approval from your lender and are not available in some states. (Learn more.)
Instead of a commission rebate, our friends at Clever offer buyers a cash back incentive. This is preferable in most situations, because it’s less complicated and the money can be spent any way you want.
Clever sends eligible buyers cash back of their home purchase price after closing. You don’t have to seek lender approval. Eligible buyers get the full amount, guaranteed.
On the purchase of a home, you’ll get Clever Cash Back, which will definitely come in handy when buying a new place!
Exceptions: When buying or selling a house without a realtor may be OK
Buying or selling a house without a realtor may be warranted in a few situations.
Amicable deals between friends or family members
If negotiations aren’t necessary, both parties don’t need to be represented by their own agents. Typically, one agent can handle the process for both parties.
Working with one agent simplifies matters and probably saves you some money, as most agents are open to working for a reduced commission when representing both sides in a deal.
Hot sellers’ market
If the market is competitive, an unrepresented buyer may be able to use that to their advantage to get the home they want.
For example, if you find a home you’d like to buy but don’t have an exclusivity agreement with an agent, you can approach the listing agent and offer to work with them. This will likely save the seller from having to pay the full buyer’s agent commission, which will make your offer more attractive.
❗ Beware of the complications that may come with dual agency in this situation.
🤷 What’s dual agency?
Dual agency means the same realtor represents both parties in the transaction — the home seller and the buyer. Some states have outlawed dual agency because it presents a conflict of interest.
Agents may have a personal interest in achieving the highest sale price since their commission is based on that price. Therefore, they may not negotiate strongly on behalf of the buyer.
As a buyer, if you’re considering dual agency, you should be confident in your negotiating skills and knowledgeable about the local market to ensure you’re getting a fair price.
New construction
When purchasing a newly built home, realtors are helpful, but not essential.
Realtors can provide guidance through the process, including help with lot selection and advice on what finishes retain value. However, there may not be much room for negotiation in new construction.
❗ If you visit a new construction sales center without agent representation, you may jeopardize your ability to be represented by an agent later on if you choose to purchase a home there. (Read more here.)
Industry insiders
Investors, flippers, and other real estate industry pros who have conducted many transactions may be comfortable representing themselves when buying or selling a home.
If you’re confident in your skills, know what you’re doing, and have time to spare, it may be worth it to forgo an agent and save a few bucks.
Bottom line: Do I need a real estate agent?
You’re not required to use a real estate agent to buy or sell a home. But if you want to maintain your sanity, it’s a good idea to work with one.
Realtors ensure your home transaction runs smoothly from start to finish. And they take a ton of work off your plate.
If you’re looking to save money, don’t resign yourself to for sale by owner. Consider working with our friends at Clever instead.
Clever will hook you up with a top-rated local agent who will sell your home for 1.5% or $3,000. Even buyers save money with Clever Cash Back.
FAQs
Do I need a realtor to buy a house?
No. But we recommend you use one. Knowledgeable real estate agents provide significant value to buyers.
Do I need a realtor to sell a house?
No. But real estate agents simplify the sales process for home sellers. If cost is an issue, there are different approaches to achieve lower commission rates.
Related reading
How to Choose a Realtor – Don’t Sign a Contract Until You See This: Don’t know where to start when searching for a real estate agent? This handy guide will help you.
20 Ways You Can Save Money When You Sell Your House: Keep your hard-earned cash in your pocket when you sell your home! Here’s a list of ways to cut back on sale-related expenses.
Selling Your House FSBO? Read This First (2021 Update): Selling your home without a real estate agent is certainly not for the faint of heart. This article is a useful primer.
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