📈 Key stats from the National Association of Realtors
- 87% of home buyers and 89% of sellers work with a real estate agent.
- Home sellers who work without an agent sell their property for 5–7% less, on average.
- 76% of home buyers would use a real estate agent again or recommend one to others.
Most people work with real estate agents because they’re:
- Strong negotiators
- Real estate experts
- Connected to other local real estate professionals
These benefits of using an agent give you a big advantage whether you’re selling or buying a home.
Plus, the commission real estate agents charge is usually outweighed by the value they bring to your transaction.
Listing agents can generally help you sell for more money than you would otherwise get selling on your own, and buyer’s agents are paid from the proceeds of the sale, so there’s no out-of-pocket cost to you.
Unless you have extensive real estate experience, you probably won’t know how to navigate the purchase or sale of your home. It’s best to have a professional in your corner who can give you advice and deal with any problems that come up along the way.
If paying an agent’s full commission is your main concern, our friends at Clever can connect you with top-performing local agents who charge just 1% in listing fees, or offer up to 0.5% cash back when you purchase a home.
Top reasons to use a real estate agent
|🏠 Sellers||💰 Buyers|
|Listing agents know how to price houses||There's no out-of-pocket cost|
|Listing agents know what local buyers are looking for||You'll find the right house faster|
|Listing agents are pro marketers||You can get a professional second opinion|
|Listing agents can list your home on the MLS||Your offers will be more competitive|
|Listing agents have a strong network of contacts||You can connect with other real estate professionals|
|You can usually sell for more money||Buyer's agents have errors and omissions insurance|
|Listing agents have errors and omissions insurance||Your deal is less likely to fall through|
|A professional can handle the paperwork|
Reasons to use a real estate agent when you’re selling
- Listing agents know how to price houses
- Listing agents know what local buyers are looking for
- Listing agents are pro marketers
- Listing agents can list your home on the MLS
- Listing agents have a strong network of contacts
- You can usually sell for more money
- Listing agents have errors and omissions insurance
- A professional can handle the paperwork
Listing agents know how to price houses
Real estate agents use data and market knowledge to set a competitive listing price for your home — they don’t just guesstimate the best price.
Your listing agent will use a comparative market analysis (CMA) to see what similar houses in your neighborhood have sold for recently.
Unlike listing prices, sale prices reveal how much home buyers in your area are willing to pay.
You can access sale prices yourself using real estate websites like Zillow and Redfin, but these sources are likely to be inaccurate or out of date. Agents have access to the Multiple Listing Service, so they can see the most recent sale prices in your neighborhood.
Your listing agent will also consider the unique features of your home when they do a comparative market analysis (renovations, upgrades, and so on) to account for other factors that may raise or lower the price.
By comparison, if you’re selling for sale by owner, your price might be way off because you don’t have access to the best information or expertise.
If you overprice your house, it won’t sell, but if you underprice it, you could leave thousands of dollars on the table.
Listing agents know what local buyers want
Local listing agents know from experience and research what home features are popular with buyers. This knowledge can end up saving you money when you’re prepping your home for sale.
For example, you might think you need to remodel your kitchen before you list your home. However, your realtor might point out that other houses in the neighborhood are selling quickly as is, so the extra expense might not be worth it.
On the flip side, your agent might suggest you repaint some of the rooms in your home with a neutral color to make it more appealing to potential buyers.
If you’re selling without an agent, you’ll have to guess which home prep projects are most important, or you might make the mistake of putting up a for sale sign without prepping your house at all.
Listing agents are pro marketers
Successfully marketing a home to potential buyers takes a lot of time and effort. So much effort, in fact, that many people give up. The National Association of Realtors found 28% of FSBO sellers ended up hiring a real estate agent after trying to market the home on their own.
Top agents know how to get more eyeballs on your home with marketing efforts like:
- Advertising on social media
- Hosting an open house
- Hiring a professional photographer
A listing agent wants to make your home look as good as possible for as many people as possible so they can earn commission when it sells.
If you’re selling FSBO, it’s hard to know how or where to market your home so qualified buyers in your area can see it.
Listing agents can list your home on the MLS
Only licensed real estate agents can list homes on the Multiple Listing Service (MLS) — the online database where houses are listed for sale.
It’s important to get your house on the MLS because 97% of all buyers use the internet to search for homes.
FSBO sellers can technically list on the MLS by using a flat fee MLS service, but these services charge $299 on average and often more for anything but a basic listing package. If you have to pay to get your home on the MLS anyway, it makes sense to let your realtor do it instead.
Realtors post listings on the MLS all of the time, so they’ll usually include great photographs of your house and a description that piques potential buyers’ interest.
Listing agents have a strong network of contacts
A realtor’s connections in your community could help to speed up your sale.
Listing agents can notify other agents the moment your house is on the market, and they can even reach out to prospective buyers who they may have met or worked with in the past.
It’s also common for agents to have connections with local contractors, which could come in handy if you need work done to your house before listing.
If you’re selling your house on your own, you probably won’t have the same ties to local professionals, so you’ll have to spend a lot of extra time contacting and vetting them.
You can usually sell for more money
On average, FSBO listings sell for 5–7% less than homes that are listed with a realtor, because:
- FSBO sellers generally price too low
- FSBO sellers often have to reduce their original price to attract buyers
- FSBO sales have a negative perception — a FSBO sale can feel less legitimate than a sale with a realtor, so some buyers might expect a lower price.
Even if you pay the typical 6% commission to list your home with a real estate agent, you’ll probably still walk away with more money because you’ll sell your home for the best possible price.
Listing agents have errors and omissions insurance
Most real estate agents have errors and omissions insurance to cover legal costs if they make a mistake.
For example, if a home seller fails to disclose repair issues, the buyer might sue for damages. Errors and omissions insurance would cover legal costs in this case.
Some agents have personal E&O coverage, or they have partial coverage through their real estate firm. A personal policy usually works best because it’s more likely to provide the agent with full coverage in the event of a legal dispute.
As a FSBO seller, you can’t purchase errors and omissions insurance. If you mess anything up when you sell your house, you might end up paying thousands of dollars out of your own pocket.
A professional can handle the paperwork
Home sales require dozens of important legal documents, and it can be difficult for inexperienced sellers to keep all of the paperwork straight.
It’s best to have a real estate agent handle the paperwork for you since they know what they’re doing and they have the support of a brokerage that can ensure your entire transaction is valid.
|Important documents required for a home sale|
|✍ Sales contract|
|📍 Property survey|
|🗒 Mortgage documents|
|📎 Title report|
|🏡 Property deed|
The required documents for a home sale vary by state, but a local listing agent will be well aware of the requirements in your region.
If you’re selling FSBO, you’ll need to navigate all of the paperwork on your own, leaving a lot of room for error.
Reasons to use a real estate agent when you’re buying
- There’s no out-of-pocket cost
- You’ll find the right house faster
- You can get a professional second opinion
- Your offers will be more competitive
- You can connect with other real estate professionals
- Buyer’s agents will have errors and omissions insurance
- Your deal is less likely to fall through
There’s no out-of-pocket cost
Buyer’s agents are paid from the proceeds of a home sale, so you don’t have to pay anything out of your own pocket to work with one.
Typically, buyer’s agents earn 2.5–3% of the final sale price, but their commission gets split with their broker, so they might only walk away with around 1.5%.
As a buyer, you don’t have to worry about paying your real estate agent or even negotiating their commission — the amount they’re paid will be worked out by the seller and the listing agent.
When you’re making one of the largest purchases of your life, it’s a huge advantage to be able to work with a professional without getting a bill for it.
» JUMP TO: How realtor fees work
You’ll find the right house faster
According to the National Association of Realtors, 53% of home buyers say the most difficult part of the home-buying process is finding the right property.
A buyer’s agent can find properties that meet your needs based on the criteria you give them, like:
- Square footage
Even though you can browse listings online, agents have full MLS access — enabling them to find houses you can’t see with your own search.
Popular real estate websites like Zillow can help you find houses, but the information on these sites can be outdated and the latest listings may not appear on the map.
Your buyer’s agent can notify you of new listings as soon as they hit the market, and they can even tell you about off-market opportunities — houses owned by people who haven’t officially listed for sale, but who may be open to offers.
Agents can also help you think outside the box when you’re struggling to find the right home. For example, your agent might say, “I know you really want to buy a home in this particular neighborhood but houses in a nearby neighborhood are 10% cheaper, on average.”
You can get a professional second opinion
Successful buyer’s agents tour houses all of the time, so they know what problems to look out for.
Your realtor won’t tell you whether or not you should buy a home because that’s your call to make. However, they can give you their honest opinion when it comes to things like:
- The asking price
- The overall condition of the home
- Possible repair costs
- How well the location suits your buying criteria
If you’re a first-time home buyer, professional advice like this can be reassuring. Without an expert’s second opinion, you might take unnecessary risks and buy the wrong home.
A buyer’s agent gets paid when you buy a home, but that motivation shouldn’t prevent them from protecting your best interests by telling you when they think something is off. An agent who doesn’t protect their clients could get negative online reviews that quickly destroy their reputation.
Your offers will be more competitive
In hot real estate markets, it can be hard to get an offer accepted without overpaying. Buyers sometimes get pressured into submitting offers well above the listing price because they want to outbid everyone else.
A buyer’s agent can help you submit competitive offers, even if you can’t afford to be the highest bidder.
Strategies buyer’s agents use to make offers more competitive include:
- Waiving the home inspection
- Offering to close in just a few weeks
- Working with a mortgage lender who offers upfront underwriting — this turns your offer into a guaranteed, all-cash offer so the seller doesn’t have to worry about financing falling through.
You can connect with other real estate professionals
Once your offer is accepted, you need to work with a lot of people before closing day, including a loan officer who can finalize your mortgage and a home inspector who can evaluate the property.
An experienced buyer’s agent can connect you with trusted professionals who they’ve worked with before.
Most buyers are overwhelmed by all of the details of purchasing a home and want to do whatever it takes to close the deal, so getting contacts from a realtor can add a lot of convenience to the process.
If you have time, you can shop around to see who offers the best service and rates, but you’ll have to do the vetting yourself.
If you’re purchasing a home without the help of a realtor, you’ll have no choice but to make these important connections with real estate professionals on your own.
Buyer’s agents will have errors and omissions insurance
Just like listing agents, buyer’s agents hold errors and omissions insurance, which can protect you if you or your agent miss something during your purchase.
For example, if your agent didn’t do their due diligence and uncover a zoning violation on the property you purchased, you might be able to recoup the costs of dealing with the issue from the agent’s insurance policy.
If you purchased a home without a real estate agent and made a similar mistake, you would have to deal with it since you can’t purchase your own errors and omissions insurance policy. Without insurance, you might have to pay thousands of dollars out of your own pocket to fix the issue.
Your deal is less likely to fall through
Your real estate agent won’t get paid until the sale closes, so they have a good incentive to make sure everything goes smoothly.
A buyer’s agent can help to make sure all of the contingencies in your offer are met on time so there aren’t any surprises on closing day.
A contingency is a condition you as a buyer agree to meet before closing day.
Common contingencies include:
- Financing (mortgage approval)
- Home inspection
These contingencies allow you to back out of a deal if necessary, but you have to meet them to close on your new house.
Without a buyer’s agent to help you manage the contingencies in your offer, you might miss something important and risk the purchase falling through.
How realtor fees work
Real estate agents charge commission — a percentage of the final sale price.
Agents who represent buyers typically charge 2.5–3%, and it’s the same for agents who represent sellers.
Since realtor commissions are taken from the proceeds of the sale, the listing agent charges the full 5–6% commission then splits it with the buyer’s agent. This means the buyer and the seller don’t have to pay anything upfront.
Real estate agents split commission with their brokers. Commission splits range from 50/50 to 70/30 depending on the agent’s experience and the broker’s compensation agreement.
On the sale of a $300,000 home, the full 6% commission would be $18,000. Assuming a 50/50 commission split, the breakdown would look like this:
|Buyer's agent (1.5%)||$4,500|
|Buyer's broker (1.5%)||$4,500|
|Seller's agent (1.5%)||$4,500|
|Seller's broker (1.5%)||$4,500|
|Total commission (6%)||$18,000|
Realtor fees in a FSBO sale
FSBO sellers don’t actually save the full 6% on realtor commission since most still have to offer 2.5–3% commission to a buyer’s agent.
Buyer’s agents expect to be paid from the proceeds of a home sale, so FSBO sellers who refuse to offer commission will have a hard time attracting agents and their clients.
However, if you want to sell your house without paying full price for commission, discount brokers can help you save money.
Our friends at Clever Real Estate can connect you with full-service real estate agents from trusted brokerages like RE/MAX and Keller Williams who only charge a 1% listing fee.
Can I sell my house without a realtor?
You can sell your house without a realtor, but it will likely take longer and you'll probably earn less money in the end, even without paying a listing agent's commission.
Keep in mind you'll probably still have to offer commission to a buyer's agent if you sell for sale by owner (FSBO).
A listing agent can help you set a competitive price and market your home so you find a buyer faster and get the most value for your home.
If you're worried about paying realtor commissions, discount real estate brokers can help you list your home without paying full price.
Do I need a real estate agent?
You might need a real estate agent if:
- You don't have any previous real estate experience.
- You have questions about how your real estate transaction will work.
- You're selling and you want to get the most possible money for your home.
- You're busy and you need help from an expert.
Most home buyers and sellers work with agents because they can help you navigate your transaction and protect you from making costly mistakes.
If you want to work with a full-service real estate agent and save money on commission, services like Clever Real Estate can connect you with top agents who charge a reduced fee.
What does a real estate agent do for a seller?
Real estate agents help home sellers market their home to prospective buyers, which includes:
- Listing the home on the MLS
- Putting a sign in the front yard
- Coordinating showings with buyers/buyer's agents
- Negotiating with buyers when offers come in
Listing agents also help to ensure a smooth closing after the seller has accepted an offer. They do this by:
- Communicating with the buyer's agent to make sure financing and inspections are in order
- Checking with the seller to make sure they move out of the home by closing day
- Preparing a closing statement and other relevant documents
Collateral Analytics. (2020, August 16). Saving Real Estate Commissions at Any Price. Black Knight. https://collateralanalytics.com/saving-real-estate-commissions-at-any-price/
National Association of Realtors. (2020, November 11). Highlights: Profile of Home Buyers and Sellers. nar.realtor. https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
National Association of REALTORS. (2021, March). 2021 Home Buyers and Sellers Generation Trends Report. https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-generational-trends-03-16-2021.pdf
Zillow. (2017). Consumer Housing Trends Report 2017. Zillow.com. https://www.zillow.com/report/2017/sellers/seller-agent-partnership/
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