Regardless of whether you’re buying or selling, real estate is usually the most significant financial decision of your life, and one mistake could cost you tens of thousands of dollars and a lot of headaches. There’s no wonder why people choose to trust real estate agents instead of trying to handle all the ins and outs themselves. But what is the actual cost to hire a real estate agent? Is it worth it? Maybe you’re thinking that you could pocket a ton of cash by not hiring a licensed professional.
We get it! Everyone is looking for ways to save money. However, we think you might be disappointed at how little you will actually save if you skip on using an experienced pro to help you navigate the deal. Let’s discuss all the value a good real estate agent provides, and then you can decide for yourself whether they are worth it or not.
Everything You Need To Know About The Cost To Hire A Real Estate Agent
Here’s a list of everything you need to know about the cost of hiring a real estate agent and all the benefits that come with using one (especially on your first real estate transaction).
How Much Does a Real Estate Agent Cost?
The standard commission for a real estate transaction is typically 6% of the home’s sale price. The commission is usually split between the seller’s agent and buyer’s agent, a 3% cut for each of them. For example, if you’re buying or selling a $250,000 house, the agents would receive a total of $15,000 ($7,500 each). We get that it seems like a lot, so you want to make sure that you’re getting what you pay for.
Keep reading as we break down that 6% and what that commission covers for your transaction.
What Does a Real Estate Agent Do?
A real estate commission covers all the work that goes into buying and selling property. There is a lot that goings into buying and selling a house. A seller’s agent will help you stage your home to reach the right buyers, and most importantly, price it right. They take the time to get to know the area and compare prices so that it’s most appealing to buyers and will still bring you a profit. They’ll also make sure your home is seen by a ton of buyers, using a multiple listing service (MLS), social media, and ads. They have tools and tactics to get your home sold quickly and for top dollar.
On the other side, a buyer’s agent studies home listings that meet your needs and are within your budget. They will arrange for a home inspection, negotiate for any necessary repairs or contract adjustments, and make sure you’re getting a fair deal. Buyer’s agents cover all of the ins and outs that go into finding you your dream home that you can afford.
Both seller’s agents and buyer’s agents can give you confidence knowing you have a real estate professional on your side. Plus, both agents share many duties:
- Meet with you in person or answer your phone calls whenever you have questions
- Give you access to an MLS to offer more options to buyers and more visibility for sellers
- Educate you on current market conditions
- Refer you to other professionals in the industry (inspectors, attorneys, mortgage lenders, photographers, and more!)
- Schedule showings
- Negotiate the best price and help you through mountains of paperwork
- Represent you and act in your best interest throughout the entire process, no matter how long it takes
A good agent tackles all of these tasks day in and day out. Their experience handling tough contracts and helping you avoid mistakes is well worth the cost.
We thought we should also mention that although commission and the closing costs are paid when a home sells, there are few other costs to consider. Home appraisal and home inspections are used to make sure that the house is worth the price and helps bring to light any problems in the home. Talk to your agent to get an estimate of how much each of those necessary services costs, so you have a better idea of what to expect.
Is Hiring an Agent Worth the Cost?
You know the cost, and the ins and outs of what goes on in the daily life of a real estate professional, now let’s answer the question you’re really asking – are real estate agents worth the cost? As we explained above, sellers typically cover the commission for both agents, so buyers have nothing to lose. Sellers, if you think you’re getting the short end of the stick and are considering going the “For Sale by Owner” (FSBO) route, we want to lay out some stats.
FSBOs accounted for 8% of home sales in 2018. The typical FSBO home sold for $217,900 compared to $295,000 for agent-assisted home sales. That’s a huge difference! Even if 6% of that goes toward agent commissions, that’s still a chunk in your pocket that you would lost out on if you tried to sell yourself.
Make Sure You Find A Agent Who Knows Your Area
We hope this list has proved that a good agent is worth the cost of commission. The best piece of advice we can give you is to find an agent with plenty of experience. Your buddy who barely passed his exam might not be the best choice when it’s your first home. Look for a pro who has a long history of success!
The team of experts at 41 Realty Group would love to be your go-to person when it comes to real estate. Buying, selling, investing – we have an agent in every area who would to help answer your questions, find you the perfect home, the perfect buyers, and more. Reach out to our team today and see if we can help you with all of your real estate needs.