Selling your house yourself, without the assistance of a real estate professional may save you the commission fee, yet it can cost you in other ways. Buyers often expect a lower price if the property owner is listing the house, and finding those buyers can be challenging, especially in a buyer's market. A licensed real estate agent has the experience to help you price your home in the current market. If you do use a licensed real estate agent or broker, he may or may not be a REALTOR.
Not every real estate sales agent or broker is a REALTOR. A REALTOR is a member of the National Association of REALTORS, a professional organization. Members vow to adhere to a higher code of ethics, and should a client have an issue with a REALTOR, he has the option of filing a complaint against the agent with the organization, which attempts to regulate its members. REALTORS are typically members of the local multiple listing service (MLS) database, which means the seller who lists with a REALTOR gains wide exposure for his property listing.
The duties of the REALTOR include marketing the property to potential buyers and agents with buyers to get the highest possible price for the listing and to protect the interest of the client. It is not necessarily the REALTOR's duty to find a buyer personally. By belonging to the REALTOR Association and MLS database, the REALTOR is able to network and reach out to hundreds of other agents with buyers looking for properties similar to the property listing.
While the fees may differ between REALTORS, a common arrangement is one where the REALTOR's payment comes from a percentage of the sale price. For example, if the REALTOR charges 6 percent commission fee, this means the property owner pays $6,000 if the property sells for $100,000. Yet, commissions are negotiable and there is no standard commission fee. Typically, the REALTOR offers a portion of the commission, such as half, to the agent bringing a buyer. This would leave half of the commission, with a portion going to the REALTOR's broker to pay for business expenses such as insurance or office expenses, a portion going toward marketing expenses for the listing, a portion going toward the REALTOR's business operating expense, such as business cards and real estate classes, and the remainder is the REALTOR's income.
If the REALTOR charges just a commission fee on the final sale price, this typically means the seller pays nothing if the property fails to sell before the listing agreement expires. Even if the listing doesn't sell, the REALTOR pays marketing expenses covered in the listing contract, which might include the MLS listing fees, virtual tours, newspaper advertising and open houses. For the property owner without funds for marketing, listing with a REALTOR can be an affordable way to market the property. When it is a buyer's market, meaning there are many listings yet few buyers, it is far more difficult for a property owner to find a qualified buyer, and she needs the marketing expertise and connections of a REALTOR.
Listing your own property can tie you down. If you want to go away for the weekend or are at work, your house is "off the market" during that time. When you allow the REALTOR to put a lock box on your property, other REALTORS can show the property when you are not home. When listing with a REALTOR, it is the REALTOR's duty (not yours) to separate qualified buyers from those who can't afford your home. The REALTOR will also help you through the purchase process, but the extent of a REALTOR's involvement varies by state, and the laws set by each state's real estate department.
- "Modern Real Estate Practice"; Galaty, Allaway and Kyle; 2006
- National Association of REALTORS
- Photo Credit David Sacks/Lifesize/Getty Images
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