The housing market is finally starting to cool after two years of lightning-fast sales and sky-high prices.
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Inventory has been slowly building up, loosening some of the stiff competition that had buyers bidding within minutes of touring a home, if not sooner, and at higher-than-asked prices.
Now, with some vendors having to really lower their list prices, homeowners might be thinking of ways to save on transaction costs: namely, real estate agent fees.
Sellers typically pay 5-6% of the sales price to their real estate agent, who then typically splits the money with the agent representing the buyer.
But there are ways to sell a house. without using a traditional agent. While doing it this way can save a lot of money, it’s important to know exactly what you’re getting and what you’re not.
The flat rate option
Nearly 90% of homeowners used a real estate agent to sell their homes in the past year, according to a new report from Realtor.com.
Joe Bourland, a real estate agent in Phoenix, says there’s a good reason most people work with real estate agents.
“It’s work,” he says. “There is effort and experience involved and skills that most owners don’t have.”
However, not everyone feels like they need an agent to help them through the sales process, or just don’t want to pay a 6% commission. In these cases, some sellers turn to so-called flat-rate real estate brokerages.
These companies charge an up-front fee to list your home in your region’s Multiple Listing Service (MLS), a searchable database of properties for sale.
Sinan Zakaria, the broker for San Diego-based Listed Simply, which offers a flat-rate service in California and Arizona, says that with the simmering marketsellers are looking for ways to save.
“Now that the market is changing, they may get less money than before,” says Zakaria. “They can save money on the listing side of the transaction to make up the difference.”
Zakaria’s company charges a flat fee of $79 to list a home on the MLS. But the services they offer are minimal. For example, the homeowner must take and upload their own photographs of themselves, and they will have to take calls from potential buyers and agents and handle any showings or open houses.
And sellers must still offer a commission to the agent representing the buyer.
One way to save on Realtor fees is to simply ask your agent to reduce the commission.
“You shouldn’t envy someone for asking, and then it’s up to the agent to decide what to do,” says Bourland of the Bourland real estate team at eXp Realty.
Still, Bourland says he was more willing to negotiate his rate when sales were happening at lightning speed. That is no longer the case.
“For us, we stay tighter on commissions because it takes longer to sell houses and it’s more work for us than before when we knew a house would be contracted for in a matter of hours instead of months.”
Resign from MLS
Some sellers choose to skip the agent and MLS altogether. Those who list their houses “For sale by owner” they often do this because they don’t trust the agents or because they want to save money. Others do it because they have the time and the knowledge.
“Some are able to negotiate in their own best interest and may team up with someone else with an opposing interest,” says Bourland.
Another less common way to sell is for a homeowner to hire a real estate agent but request that their home not be listed on the MLS. Some homeowners do this for privacy reasons, but they stand to lose financially, according to a recent study by Maryland-based Bright MLS, which represents realtors covering six states and Washington DC.
the to studywhich analyzed more than 840,000 real estate transactions across the Mid-Atlantic region between January 2019 and March 2022, found a sales price gap of nearly $56,000 between a typical MLS-listed home and one it was not.
The analysis showed that the benefit of listing on an MLS grew during the pandemic, with homes selling in the region for a premium of 9.8%, 10.1% and 14.8% in 2019, 2020 and 2021, respectively. .
“When a property is marketed through a limited number of agents in a specific market area, many potential buyers are left out of the process, creating an uneven playing field for consumers that goes against fair housing practices. that the industry strives to promote.” Brian Donnellan, president and CEO of Bright MLS, said in a statement.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.