The housing market is hot right now. With housing prices higher than ever and showing no signs of stopping, many American homeowners consider this an optimal time to sell. Furthermore, there is no shortage of buyers, from single families looking to break out of their apartments after COVID-19 to real estate companies looking to expand their catalogs and flippers trying to capitalize. Simply put, listings don’t last for long in our current market.
If you’re going to sell your home, you will want to get the most out of it. One of the primary ways you can take home some extra cash from your home sale is by saving on realtor fees. These fees are a staple part of any real estate transaction with a brokerage agency. Thankfully, you can use some of these handy techniques to either reduce or outright eliminate realtor fees.
What Are Realtor Fees?
If you sell your home for $500,000 through a realtor, they will take $30,000 as a realtor fee. This fee is the agent’s commission, and the national average is around 6% of the total sale price. This commission is then divided between the seller and the buyer’s agent. Most of the time, the seller pays the entirety of this commission, meaning you will pay for the agents on both sides.
Can You Sell a House Without a Realtor?
The first and most straightforward way to avoid realtor commissions is not to use a realtor. The industry term for selling without a realtor is For Sale By Owner (FSBO), and it can save you vast amounts of money. Selling a home without a realtor means that you will have to take up all of the responsibilities that the realtor typically manages. Your first barrier to entry will be getting your home listed through the Multiple Listing Service (MLS). The MLS is the primary means by which homes are listed and sold. You will also have to undertake the following responsibilities and more when selling a home on your own:
- File all paperwork and mandatory disclosures
- Create an accurate listing price
- Properly market your home to potential buyers
- Make your home show-ready
- Schedule home inspections
- Conduct walkthroughs/work with buyer realtors to conduct walkthroughs
- Host all open houses
- Manage closing costs
- Handle coordination with lenders
- Hire a real estate attorney
While you will undoubtedly save money by selling your home yourself, you’ll increase the amount of work you will have to undertake. Finally, don’t forget that you will still have to cover the 3% buyer’s agent commission. Generally speaking, the only people who should consider going FSBO are the following:
- Individuals with industry experience in buying and selling homes
- Anyone selling in a boom or “hot” market
- Anyone with a property that sells itself
- Anyone who is consistently being approached to sell their property
How to Avoid Realtor Fees
If you’re looking to cut down on realtor fees without going all-in on selling your own home, there are still plenty of tricks to reducing that steep 6% commission. Remember that we are in a seller’s market and that competition is fierce across the board, so you might be able to leverage multiple of these techniques to get the most out of your sale.
Negotiate Your Realtor’s Fee
The phrase “everything is negotiable” applies to real estate more than any other market. Everything is a massive negotiation from the first phone call to the last signature, including realtor fees. Realtor fee negotiations are standard, and many realtors are willing to be flexible with their commission to guarantee a client. When beginning to work with a realtor, be straightforward and ask if they are willing to negotiate their fee, and if so, you’re golden. If not, there’s no shame in turning them down and shopping for a realtor who is willing to work with you.
Sell Through the Same Realtor You Buy Through
Promises of future deals are great ways to leverage negotiating power. When selling through an agent, try leveraging a future purchase to save on your current commission. By buying a home through the same agent you sell through, they will get a commission on the current home sale price and your future home purchase. Since they will be getting two commissions, albeit one later down the line, they may be more willing to take a lower commission price now.
Shop for the Best Deal
Like any high-value purchase, you should always shop around when buying or selling a home. By shopping for the right realtor, you will find someone more willing to negotiate and be able to leverage your negotiations from a stronger position. Since our market is ultra-competitive, realtors know they will have to fight to obtain clients. Mentioning that you are currently shopping for the right realtor will make them more likely to negotiate their fees with you.
There are other benefits to shopping for agents. First, many brokerage agencies do not allow their agents to negotiate or adjust their commission rates. This industry standard can be unfortunate, but by explaining that you’re shopping for an agent willing to negotiate their rates, you can eliminate agents who cannot negotiate because of their agency. Second, shopping allows you to find an agent who is right for you. It might sound odd, but selling a home can be a personal experience, and a real estate agent will be negotiating on your behalf with the buying agent. It pays off to ensure that your agent understands what you need out of the sale and is willing to work with you.
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