After two years of lightning fast sales and soaring prices, the housing market has finally begun to cool.
Inventory has been slowly increasing, alleviating some of the pressure of competition that once saw buyers making offers within minutes of touring a home — if not before — and well above asking prices.
Now, some sellers are finding they have to actually lower their list prices. Which may leave them searching for ways to save on transaction costs: namely real estate agent fees.
Sellers typically pay between 5% and 6% of the sale price to their real estate agent, who then typically splits the money with the agent representing the buyer.
But there are ways to sell a home without using a traditional agent. And while it can save you a bunch of money, it’s important to know exactly what you’re getting — and what you’re not.
The flat-fee option
Almost 90% of homeowners used a real estate agent to sell their homes in the year before, according to a 2022 report from Realtor.com.
Joe Bourland, a real estate agent in Phoenix, says there’s a good reason the majority of people work with Realtors.
“It’s work,” he says. “There’s effort and expertise involved and skills that most homeowners don’t have.”
Yet not everyone feels they need an agent to hold their hand through the sales process — or they just don’t want to pay a 6% commission. In these cases, sellers often turn to so-called flat-fee real estate brokerages.
These companies charge an upfront fee to list your home on your region’s Multiple Listing Service (MLS) — a searchable database of properties for sale.
Sinan Zakaria, the broker for San Diego-based Listed Simply, which offers a flat-fee service in California and Arizona, says that with the market simmering down, sellers are looking for ways to save.
“Now that the market is turning, they’re going to maybe earn less money than before,” Zakaria says. “They can save money on the listing side of the transaction to make up the difference.”
Cutting the commission
Zakaria’s company charges a flat fee of $79 to list a house on the MLS. But the services they offer are minimal. For example, the homeowner must take and upload their own photographs — and they’ll have to field calls from prospective buyers and agents and handle any showings or open houses.
And sellers must still offer a commission to the agent representing the buyer.
One way to save on Realtor fees is to simply ask your agent to reduce the commission.
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“You shouldn’t begrudging somebody for asking — and then it’s an agent’s decision to decide what to do,” says Bourland, of the Bourland Real Estate Team at eXp Realty.
Still, Bourland said he was more willing to negotiate his fee when sales were happening at lightning speed. That’s no longer the case.
“For us, we are holding tighter on commissions because it’s taking longer to sell houses and it’s more work for us than before when we knew a house would go under a contract in a matter of hours vs. months.”
Forgoing the MLS
Some sellers choose to skip the agent and MLS altogether. Those who list their homes “For Sale By Owner” often do so because they either don’t trust agents or want to save money. Others do it because they have the time and the know-how.
“Some are able to negotiate in their best interest and are able to come together with someone else with an opposing interest,” Bourland says.
Another less common way to sell is for an owner to hire a real estate agent but ask that their home not be advertised on the MLS. Some homeowners do this for privacy reasons, but they can lose out financially, according to research from Maryland-based Bright MLS, which represents real estate agents covering six states and Washington DC
The study, which analyzed more than 840,000 real estate transactions throughout the Mid-Atlantic region between January 2019 and March 2022, found a sales price gap of nearly $56,000 between a typical home listed on the MLS and one that was not.
The analysis showed that the benefit of listing on an MLS grew throughout the pandemic, with homes selling in the region for a premium of 9.8%, 10.1% and 14.8% in 2019, 2020 and 2021, respectively.
“When a property is marketed through a limited number of agents in a specific market area, many potential buyers are excluded from the process, creating an unlevel playing field for consumers that goes against the fair housing practices the industry is working hard to promote,” Brian Donnellan, president and CEO of Bright MLS, said in a statement.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.