It’s a decision you may want to rethink, despite the potential savings.
- Hiring a real estate agent for a home sale means losing money to a commission.
- Despite that hit, hiring an agent could be worthwhile this year.
- It may be harder to sell your home under current conditions, and an agent can help.
The great thing about hiring a real estate agent to sell your home is getting the help of an expert to oversee the process from start to finish. A real estate agent can help you market your home, land on the right listing price, and negotiate with buyers and their real estate agents on your behalf.
Plus, there’s something to be said for not having to go through the process of selling a home alone. If you hire a real estate agent, you’ll have someone to walk you through what could end up being a stressful endeavor (even a smooth home sale process can result in some amount of disruption to your everyday life).
But there’s a clear downside to hiring a real estate agent — having to pay them a commission. Real estate agents don’t work for free, and often, you’ll pay a fee that amounts to 5% or 6% of your home’s sale price.
This means that if you sell your home for $400,000, you could easily lose $20,000 to $24,000 due to having to pay a real estate agent. That’s money you won’t be able to put into your savings account or use for the purchase of a new home.
Meanwhile, many home sellers made the decision to forgo a real estate agent in 2021 and even during the first half of 2022, since the housing market gave them a clear upper hand. But is that a good bet in 2023? It may not be.
The housing market isn’t as hot
There’s still not enough inventory on the housing market to fully meet buyer demand, and that gives sellers today a general upper hand. But let’s be clear — sellers do not have the same glaring advantage over buyers they did in 2021, and even at the beginning of 2022. And it’s important to consider that when deciding whether to hire a real estate agent.
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Over the past number of months, home price gains have slowed substantially. And while buyer demand hasn’t disappeared, it’s waned. We can thank higher mortgage rates for that.
Meanwhile, we could see an additional decrease in buyer demand this year as recession fears get into people’s heads. And given all of this, it could pay to hire a real estate agent this year — even if the housing inventory doesn’t pick up all that much.
A fee that could pay for itself
The only real downside to hiring a real estate agent is the fee you’ll have to pay. And that fee could be substantial. But if you hire a real estate agent who’s really great at what they do, that fee might pay for itself.
Going back to our example, let’s say you end up losing $20,000 to a real estate agent fee in the course of a home sale. But let’s say that by using an agent, you end up getting $30,000 more for your home than you would’ve gotten had you sold it yourself. All told, you’re coming out ahead financially — and you’ll have potentially spared yourself some stress along the way.
Remember, selling a home can not only be a tough process, but it can also be a time-consuming one. And if you have a job and other responsibilities, you might need help to see it through. While it may have made sense to skip the real estate agent in 2021, when mortgage rates and housing inventory were so low that buyers were practically begging for homes, today’s market conditions are very different. So hiring a real estate agent could really work to your benefit.