Should You Hire a Real Estate Agent to Sell Your Home? Here's What Dave Ramsey Says

The Motley Fool ^ | July 3, 2022 | Maurie Backman

[srmanuel]

I can only speak for how it works in Florida, which I assume is the same in most other areas states.

When you hire a real estate agent, they present you a standard contract which spells out the commission rate, length of time they will attempt to sell the property and what happens if you try to sell the property out from under them while they represent you.

In most cases the standard real estate commission is 6%, if the buyer has a real estate agent, the two agents split the commission 3% each.

If you are the seller, then negotiating a lower rate than 6% can be done, in my mind I don’t see how it would be considered an insult but getting the agent to agree to it is probably not likely, except in the case where they are the buy and seller’s agent and will collect the entire 6%, no harm in asking, they can only say no.

What I have experienced a couple of times when I was the seller, is the buyer at the last minute wants to change the deal, hoping you are desperate to sell and will agree to changes.

I’ve always said an emphatic NO and told the buyer if they walk away from the deal, I will deem it a default on their part and keep their deposit.

Each time the buyer’s agent spoke up and said, they would cover the cost out of their commission, not huge sums of money but I hate it when the buyer attempts to change things attempting to put pressure on me to sell, call their bluff, if they have gone up to the closing day and want to walk away then they need to know the consequences.

The most important thing if you sell or buy a property is to use a closing agent like a Title Company or Real Estate Attorney.

You will need to find out if they’re any liens on the property if a survey needs to be done and who pays for it, prepare all the final documents, make sure everything gets filed properly and the funds are dispersed correctly.

Remember if you buy a property with liens on it or defects in the title and you close on the property all the liens and defects now belong to you.

[BipolarBob]

I agree with everything you said. IF I sell, I will do it myself.
#1 Here, the title company does all of the paperwork.
#2 The RE only advertises and schedules prospects. I can do that myself. They will claim to screen non-creditworthy or just Sunday lookers but that is NOT the case. They will show it to anybody.
#3 Here they used to charge 10% 30 years ago! That's highway robbery. I don't know what it is now.
#4 As a pre-condition, have them pay for a home inspection to make sure they are a serious buyer. Anything outside of what that inspection shows is as-is. And on them.
#5 Put everything in writing. Forms are available online. If there is anything of concern, address it on the offer/counter-offer.
#6 Negotiating is part of the fun(?). The house I'm in, I negotiated directly with seller even though it was listed through RE agent. The RE agent was pissed but to me time was money and I insisted and because the seller was motivated, he agreed. It just saves time to get to any questions and price. No need to get emotional. The seller took a lower price because #1 My offer was cash (no credit contingency) and it was a take it or I walk away (and I was serious). The seller re-negotiated with the RE agency on their commission to make the sale go through. We all compromised.

[Caipirabob]

Well, a story related to this is in a very hot area I live near. Most homes are gone within a week. The one exception is a home that did one of those “Open Door” type sales. One home, same size and starting price sold within a few days, there and gone and probably plus a few thousand. The same size and near condition home has not moved in a month. They’ve dropped the price as a result. These homes started at about the same time so rates didn’t play into it. I think it’s bad marketing because another home in the same area went to market and is pending already.

This is anecdotal, of course, but the only variance we can see is the lack of a motivated realtor.

[Leaning Right]

Thanks for the info. It is appreciated.

[nomorelurker]

“I sold real estate both ways”

At least here in Texas, if you have been on the buying and selling side 2 or more times you probably can get by without the agent. Find a title company that does not mind working with FISBOs (most will) and a good real estate attorney (not your cousin who does divorces) to review documents and answer any questions. I’m retired but have 30 plus years in title insurance, etc.

[Buttons12]

I flip houses, and always check with the neighbors first, when ready to sell a property.
I don’t use an agent. There’s zillow, facebook, and the classic fsbo yard sign.
I don’t use a lawyer, just a notary. I can write up a deed and do a title search, drive to the courthouse and file the deed.
I don’t use banks either. All cash or fsbo, whether buying or selling. Banks are a third party that can, without warning after buyer and seller are in accord, veto, kibosh, sabotage the deal with any new demand they pull out of their butts.
A few other rules, but I gotta get on the road. Don’t buy anything with tenants in it. Don’t sell to relatives or friends. If you’re selling a vacant dwelling, keep security cameras running.

[SisterK]

Myself and friends have been jacked over by real estate companies. I am a big fan of purchasing your own MLS# and using a real estate attorney or title company (depends on which is available in your state).

[where's_the_Outrage?]

Check out zillow.com, which is mostly linked to the MLS and provides free listing. I used it to sell my last house FSOB, very easy.

[joe fonebone]

Sold my house a few years ago..
at closing, the realtor ripped me off for almost 800 bucks in extra “fees”...

[cgbg]

It sounds like you know the business—and what you are saying makes sense for anyone with those skills and knowledge.

That said—if this is the first time selling their house there is a steep learning curve—and some sellers do not want to invest the time and effort to go there.

For folks who do sell their houses with real estate agents, due diligence in choosing them is critical. That means choosing someone with a long track record of fair dealings and marketing skill—no friends, relatives, or part-timers.

[1_Rain_Drop]

" When I was a Realtor, I stressed to the sellers how vital it was to receive an offer within the first five showings and certainly within the first fourteen days. Otherwise, there was a problem and it was paramount to find out what it was and correct it immediately. After thirty days on the market the owners are looking at a price reduction. When a buyer is interested in making an offer, the first three questions are “how long has it been on the market”, “why are they selling” and “have there been any other offers”."

I find those questions silly as if there's an expiration date on the house, a "sell by date". It's something a buyer is taught to ask. When I bought my house I was glad it was available for me to buy it. Later I found out previous buyers couldn't get a mortgage because of their own situation. It wasn't the house's fault. Meanwhile the owner was busy doing stupid repairs/improvements the agent was advising him to do.

Not a house but the same rules are used in renting apartments. I have just rented an apartment on Friday. Agent was freaking out because it had been on the market for 34 days and I was refusing the applicants. He wanted me to do improvements, lower the price etc. I refused saying the right people haven't started looking for an apartment!!! Then Friday someone showed up and everything lined up. I accepted them immediately. Agent was going to wait till Monday to inform them and wanted to keep the apartment listed longer! I had a fit! Let the applicants know NOW so they could enjoy Independence Day and make appropriate future plans.

Agents have a way of messing with people's minds.

[pops88]

I recently got my real estate license. Godspeed navigating the laws if trying to do it on your own. The fines for unethical behavior by agents can be quite steep, not to mention if the RE board finds errors in a contract, even after many years. Real estate agents are advocates for their clients, whether buyers or sellers. As someone else mentioned, there is dealing with the title company and praying the title is clear. Reputable agents will also work with a well vetted mortgage company closely for the buyer as a team. Knowledge is power, so you better know what you’re doing if you go it alone. I’m not looking forward to the 2 full days this coming week of classes on using the MLS, and thankfully haven’t thrown my glitchy laptop yet trying to use it. At least this week I know to bring a sweater after last week freezing in the class. Thankfully, for all the CEU courses needed to keep my license, I can choose the venue.

[mdmathis6]

When I ask about how long a house has been listed and about other offers it’s not about an “expiration date”...it is about trying to guage competition for the house and what I should offer should the house hold some interest for me. Do i ask for lower than the asking price, should I bid at the asking price; or if it is a hot looking house in a prime location and others are interested, should I bid higher?!

The ‘why are they selling” is a natural question. Is something wrong with the house or are personal imperatives such as a new job or retirement influencing the need to sell?

Most informed folks looking for a home don’t look at house buying in terms of an “expiration date” like it was food...but rest assured, folks don’t want a bad lemon or a rotten tomato of a house deal!

Your agent probably didn’t want to do any work over the 4th week-end or he had someone in mind for the home that you might not have wanted. It happens.

[Toespi]

“the owner was busy doing stupid repairs/improvements the agent was advising him to do.”

Good on the agent for being proactive, it’s part of their job and responsibility. Because a day or so before the scheduled closing the buyers are going to do a final walkthrough and the agent was preventing any last minute dispute or delay. Not only that, around three months after a closing, you would be amazed how many lawsuits are filed against sellers and their agents for frivolous “defects”. Believe me, a professional Realtor has seen and heard it all. So you can say an agent messes with peoples minds, but a great Realtor is golden.

[Ann Archy]

SAFETY....STRANGE people coming into your house is DANGEROUS!!

[MayflowerMadam]

“How set in stone are realtor commissions?”

A couple times our agent offered to take a smaller commission than was normal. That was in CA.

[Christopher592]

I’ve sold real estate myself and with agents. I tell people to find a top local agent and ask for 2%. If you can find the right fit at a reduced rate, often times it’s just better to let them handle everything. I’ve done several deals where it turned into an absolute s show and wished there was an agent there to just handle everything. If in a state where the buyer will have an attorney, like NY or Northeast, then you should also hire a real estate attorney. Never skip the attorney in these areas. But if one is experienced in real estate and determined to sell FSBO, here is what I have done with success. The single most important thing is to get the property on the MLS. There are flat fee MLS listing services in every state. Most range from $300-$500. The MLS is what will sell the home. Offer 3% to a buyer agent, nothing less. The other most important aspect is pricing it right. One must do a thorough search of comparable sales in the area and price accordingly. If too high no matter what you do, it won’t sell. The MLS listing will also be picked up by Zillow, Realtor and all the other relevant websites. Do not bother with any site that specializes in FSBO, they are a complete waste of money. Hire a professional photographer or take professional looking photos and a lot of them. The max limit for the MLS is typically around 25 photos. Use every slot. Spend serious time on crafting the listing description and use up to the max character limit. Review listing description tips, blogs, etc. online to find keywords or phrases that sell and include them in the listing whenever applicable. Really highlight anything that makes the property unique. There is an art to creating a good listing description that hits key points and flows well that even many real estate agents don’t posses. Some should lose their license for the crap photos and descriptions of their listings. Days should be spent fine tuning the description. If it is a vacation rental property or high end property consider branding it with unique name and custom website. A property near the beach becomes “The Seaside Beach House” with it’s own website, custom URL, graphics, professional photos, long listing description, nearby attractions, rental history and rates, amenities, etc. The key is to make the property very unique and very special. If you really spend the time on the listing and create something unique and special, it shows, it creates excitement, it creates value. If you skimp, put together something quickly or amateurish, that also shows and it will have a better chance of just languishing.

[PeterPrinciple]

It has been my experience that real estate agents work for them selves, not you. They have NO negotiation skills and are more concerned about their license than anything else.

[MayflowerMadam]

Also, before putting it on the market, make it as “neutral” as possible without being boring. A relatively clean slate.

There’s a home for sale we’re somewhat interested in buying. Built well (we know people who are familiar with the builder and watched this go up), great location, perfect lot size. However, the decor is 100% Victorian with garish sparkly wallpaper in every room (there are many rooms), border paper “swags” around the top, fru-fru ridiculous light fixtures, etc. A bordello is more tasteful.

If they lowered the price about $50K-$75K it might be do-able. You’d need a great amount of money to tone it down to normal.

[Georgia Girl 2]

I used a company called Simply List here in Atlanta last year when my Mom passed an I sold her house. They charge you a very small $400 fee and whatever the MLS listing charges are. Then in effect you are the listing agent so you offer a 3% deepest agent fee and pretty much sell it yourself. They sell you a yard sign for $35 and a lock box for $95 if you want them. We did. Sold the house in one day and saved about $10,000 in realtor fees.

In a couple of months we are going the same route with our own house.