Recently, there has been an explosion of services that help home sellers and buyers complete their real estate transactions without involving an actual real estate agent. It may be reasonable to assume that real estate agents have become more like a relic of a bygone era. Of course, doing the work by yourself may save you the substantial amount of commission real estate agents demand, but flying solo could be more costly than you think. Selling or buying a home is a significant undertaking, both emotional and financial wise.
Here are five good reasons we’ll always need human real estate agents.
1. More convenience/Better access
The main work of a real estate agent is to serve as a liaison between sellers and buyers. As such, he/she will probably have full access to all the other properties associated with other agents. Both the seller’s and buyer’s agents work around the clock to come up with a suitable deal for the parties involved. For instance, if you want to buy a home, the real estate agent will look for homes that match your criteria, contact the agents involved, and book appointments for you to see the homes.
On the other hand, if you are going it your own way, you will need to take these steps yourself. This may prove to be quite difficult, especially if you are looking for homes being sold by the owner. In the same way, if you want to sell the home yourself, you will need to actively look for interested parties, make appointments and answer questions.
Bear in mind that if you don’t respond quickly enough or tend to be busy, you will more than likely lose potential buyers. Then again, you may find yourself compromising your schedule to make an appointment, only for the interested party to fail showing up.
2. Negotiating can be tricky
It is a popular belief that direct negotiations between sellers and buyers is more transparent than using an agent, and that it allows both parties to look after their own particular interests. To some extent, this is probably true (that is, assuming both the seller and buyer are reasonable individuals who can get along fine, but this isn’t always the case).
Supposes you, as a buyer, are attracted to a home but aren’t really impressed by its lurid orange kitchen, shag carpet, or wood-paneled walls? If you’re going through an agent, you can point out your disappointment at the decorating skills of the current owner, or rant about the cost of upgrading the house without insulting the owner. In any case, the choice of décor could have been the selection of the owner’s late mother for all you know.
A real estate agent can pass your concerns to the other party’s agent, who may be in a better position to bargain for a discount. What’s more, a real estate agent can act as the villain in the transaction, hindering the bad blood that can kill a deal between a seller and a buyer. Remember that a seller has the right to reject any offer presented to him/her for any reason whatsoever, even if it’s simply because they hate your guts.
The work of an agent in these scenarios is to speak for you and smooth things over before they get too personal. The same applies for the seller: a keen real estate agent will represent their interests without repelling prospective buyers that want to negotiate around the price.
3. Handling contracts can be difficult
Whether you are selling or buying a home, a contract will ensure that you’re able to pull out of the deal in case certain conditions are not met. For instance, if you are planning to purchase a home using mortgage and fail to include financing as one of the conditions for the sale – and the mortgage is not approved – your deposit can go down the drain and the seller could actually sue you for failing to meet your end of the bargain. A reliable real estate agent handles the same conditions and contracts regularly, and knows how to use the contracts for your own benefit, as well as which conditions apply and when they can be removed safely.
4. Real Estate Agents cannot lie
Okay, technically they can. However, since they are licensed professionals, the consequences are more severe than for an individual seller or buyer. If you have consented to an agency agreement with the licensed real estate agent, he/she will be governed by common law. This simply means that the agent is required by license law to act in the best interest of their clients, and not his/her own. What’s more, most realtors depend on repeat business and referrals to cultivate the type of clientele base they will need to survive in the business. As such, it is in their best interest to do the right thing for their clients.
Furthermore, if you find that your agent has lied to you, there are several avenues for recourse, like a professional association (eg. The National Association of Realtors), the agent’s broker, or even through the court. When sellers and buyers work directly together, they may seek legal counsel, although since everyone is expected to look for their own best interest, you will probably have limited options if you do discover that you have been duped about the house’s condition.
5. Not everybody can save money
Most people who steer away from real estate agents are often looking to save money. However, bear in mind that just because you don’t have to use a real estate agent, you will reap the reward of not paying commissions. For instance, when you’re selling your home, chances are you compare the sale prices of other properties in your neighborhood before setting the price. Most of these properties will involve an agent, but you get to keep the percentage that might have otherwise ended up with the real estate agent.
On the other hand, people who are looking to buy a home advertised by owners directly may also be looking to save some cash by not going through an agent. In fact, they may even anticipate it and make their offer accordingly. Unless both of these parties decide to split the savings, they’ll probably not save any commission.