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July 17, 2024

Paying a Commission

Who Pays the Realtor When Buying or Selling a Home?

Although it may look as if the seller is solely responsible for paying agent commissions, the full story is a bit more nuanced. While the realtors involved do split a commission paid for with the proceeds of the sale, commissions are factored into the sale price. In other words, the buyer is typically paying slightly more than they would if there was no commission. In that sense, both parties share the cost of agent commissions.


Are Realtors Really Necessary?


That depends on your familiarity with the home selling process, your preferred time frame for selling your home and your desired price. Home sellers who are represented by a real estate agent typically sell their homes more quickly and for significantly more money. Real estate agents also handle the majority of the work, from marketing your home to organizing open houses and drafting closing paperwork.


If you want to sell your home relatively quickly and maximize the sale price of your home, it’s often preferable to work with a real estate agent. 


Challenges For Sale by Owner (FSBO) Sellers May Experience


It’s natural to want to maximize your equity. You might assume that cutting out the middleman and their commission is a reliable way to ensure you keep more of the equity for yourself.


The problem with that calculation is the assumption that you will get the same home sale price as a professional who has been selling homes in your area for decades. There’s quite a bit that goes into effectively selling a home for top dollar, and the average homeowner who doesn’t sell homes for a living may struggle to replicate the same top-tier sales results.


Sale price is not the only factor to consider. There are many aspects of the home selling process that a real estate agent handles on the seller’s behalf. Failing to meet all the necessary requirements could delay closing, expose you to liability and lead to a lot of extra wasted time and effort on your part.


Is Your Price Too High, Too Low or Just Right for Your Local Market?


Pricing mistakes are some of the most common FSBO mistakes – and they’re easy to make.


There are some common and understandable misconceptions about home valuation, especially when it comes to home improvements. Many people put a lot of money into their homes – sometimes specifically for the purpose of increasing its value prior to selling.


You might have added a pool, redone or expanded the kitchen, added an extra bathroom or invested in high-end natural hardwood plank or stone tile flooring. Some homeowners want to recoup those investments and expect to see every dollar reflected in increased home valuation.


Unfortunately, there are very few home improvements that have a positive return on investment. The current average ROI for home improvements is about 70 percent. In other words, if you spent $50,000 on a new pool, you may only see your home value increase by $35,000 – if you’re lucky.


There’s a secondary problem with some home improvement projects. Not every home shopper necessarily wants what you installed, like a pool. Families with young children might be worried about the safety or liability risks. Others might not plan on using a pool very often and the benefits it adds to their life won’t justify the extra cost or effort of upkeep.


Real estate agents take a dispassionate view to pricing. They aren’t emotionally invested in your home – but they also have an interest in maximizing their commission by selling your home for as much as possible. You can trust them to recommend a listing price that ensures your home moves quickly but also for the maximum value appropriate for the condition of your home and its location.


Marketing Knowhow


As salespeople, real estate agents are fundamentally marketers. They want to ensure your home is visible to every qualified, relevant buyer looking for homes in your area. Realtors have a diverse array of tools and methods for marketing your home. Many marketing tools, like listing on the MLS or leveraging a network of local buyer’s agents, are not easily available to FSBO sellers.


Legal Disclosures


Failure to disclose known problems can potentially land home sellers in hot water and jeopardize the profitability of their home sale. For example, home sellers in California are required to provide a pest inspection report to potential buyers and fill out a Natural Hazard Disclosure Statement. Homes built prior to 1978 require a disclosure if lead-based paint is in the house. There could be other unique rules in your state or city for things like septic system inspections, radon gas disclosures or home energy audits.


Local agents know about these disclosures, how to generate the reports and the proper way to shield sellers from penalties or liability.


Closing Complications


The closing process seems easy when you’re working with a real estate agent. You’re given a stack of pages to sign for both your mortgage and transferring ownership of the property. Although tedious, signing your name and initialing dozens of times isn’t all that hard.


It’s different when you’re the one responsible for generating that paperwork on your own. If you’re not familiar with the process, it’s easy to make mistakes with paperwork, the final walkthrough or coordinating the closing timeline.


Maximize Your Home Sale Speed and Price While Minimizing Your Stress


At 72SOLD, we have independent analysis showing that our sales prices are consistently higher than other properties for sale within an MLS. We sell homes fast and minimize the stress and intrusiveness of the process.


Use our website to Get Your Price fast.  

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