When you hire a real estate agent to sell your home, their #1 job is to get a ton of buyers to come see your home. What should you expect them to do to make that happen? And can you just do it yourself without having to pay an agent?
There are two big factors your agent must manage to get tons of buyers to come see your home.
1. Offer A BIG Cash Reward for Bringing the Buyer
First, your listing agent should be offering a significant portion of their commission as a motivation for other agents to bring their buyers. And that amount must be equal to what buyers agents in your local area have historically been paid.
For example, in Wake County North Carolina, buyers’ agents expect to be paid 2.4% of the sales price. In neighboring Durham and Orange counties, it depends on the area, but it could be as high as 3%. NOTE: There is not agreement about this between firms (in fact because of antitrust laws, there cannot be). These average amounts evolved over time through competition between agents to attract buyers’ agents to their listings.
Two important points about the buyer’s agent portion of the commission:
1. It will not help for your agent to offer more than the expected amount to the buyers’ agents. But, offering less can sink your home sale, because if buyers’ agents are not getting paid the expected amount, they will come up with reasons not to show your home to their buyers.
2. If you decide to sell your home yourself, one of the issues you’ll run into is that buyers agents will often steer their clients away from your home. This is for three reasons:
- First, they assume they will not get paid for their work on their buyer client’s behalf.
- Second, legally they need to treat you, as an unrepresented seller fairly, so they’ll have to explain to you and advise you on a ton of issues and document all of it just to cover themselves with the real estate commission and many for-sale-by-owner sellers are a LOT more work to deal with (because typically there is a lot about real estate transactions they don’t appreciate or understand) … especially compared to dealing with an experienced listing agent, and the buyers agents are certain they won’t get paid at all for this extra work for the seller.
- Third, experienced buyers agents (the ones representing the most buyers) have learned that there are often issues with for-sale-by-owner homes that aren’t properly disclosed by the sellers, usually not on purpose, but that still puts the buyers agent at legal risk because normally the listing agent would be responsible, but there isn’t one in this case.
So, given all these points, if you DO decide to sell your home yourself, it may make sense to offer more than the expected buyers agent commission in order to communicate to buyers agents that you’ll cover their cost and time and liability, so they’ll be more likely to show your home to their buyers.
Now, about that … a for-sale-by-owner seller might say “Well, I’ll just sell to a buyer who isn’t represented by a real estate agent, then I won’t need to pay anything to a buyers agent”. I get that point. However there aren’t very many buyers who don’t have a buyers agent once they start wanting to look at homes, because these buyers want to look at several, or dozens of homes, not just yours, before they make a decision,
- and since most homes are represented by a listing agent, and since buyers can’t access those homes without a licensed agent,
- and since there is no cost to the buyer to use an agent (because the buyers agent commission comes from the listing agent),
- and since buyers agents provide quite a few other benefits to buyers (see the list in the description I referenced earlier)
Therefore, almost all buyers engage a buyer’s agent once they start looking at home, and when they do that they sign an agreement agreeing to pay the buyer’s agent, out of their own pocket if necessary, even if they buy a for-sale-by-owner home.
2. Bring A Good Reputation Among Buyers Agents
A vital thing you should be getting from your listing agent is their good reputation among buyers agents.
Unfortunately, there are too many listing agents who have a reputation for being … difficult to work with. Buyers agents will warn their buyers about them, explaining for example, how they might handle offers in questionable ways, or discourage sellers from fixing problems with the home, or stress everyone out by not being responsive to questions until the day due diligence ends.
I know several listing agents where agents will tell their buyers “If you like that house, be prepared to offer at least $10,000 less than you would otherwise, because the agent will tell the sellers not to fix anything wrong with the home, and you’ll need that money to do it yourself later.” A listing agent with a poor reputation will get your home fewer offers (if any) and a lower price.
On the other hand, there are listing agents who buyers agents love, because of prior experience with them and how well their listings are prepared, buyers love their listings, they’re easy to buy and stress free to close. So buyers agents go out of their way to show these listings, even if they aren’t a perfect match with their buyers’ criteria. Your listing agent needs to have earned that good reputation among buyers agents. Your agent’s good reputation will get you more and higher offers.
Check out these articles for a comprehensive list of 16 things your listing agent must do when selling your home.
If you’re thinking about selling or buying or know someone else who is, we are never too busy for you or your referrals to your family, friends, neighbors, and co-workers. If you already know a Relevate agent just give them a call and they’ll be happy to help. If you don’t already have a relationship with one of our agents, or if you live in an area where Relevate isn’t (yet), just send an email to me at firstname.lastname@example.org and I’ll be glad to introduce you to one of our best agents, or a great agent from our network in your area of the country.