(Newswire.net — May 25, 2022) — Since real estate transactions involve high stakes or monetary value, it is imperative to seek the support of an expert person such as a real estate agent. So, when you need to indulge in a real estate transaction, then it is vital to pick only the right real estate agent.
Having put a lot of money into your property, it is probably the time to get your money back. Many people use this fund to plan their retirement. These sale proceeds must be a profitable proposition for the homeowners. To maximize the profit and get the money you are expecting, consider selecting your commission agent cautiously.
There has been a debate on whether low commission real estate agents are worth it or not. Here we will discuss the pros and cons of working with a low commission agent.
Average real estate commission in the U.S.
The average commission rate in the U.S. has been around 6% for decades. Most of the agents remain close to this average for their area. However, some may ask for above the average and some lower.
Who is a low commission agent?
First of all, it is crucial to understand what does low commission agents mean exactly? They are the agents who offer to sell your home at a commission lesser than the others. They charge a few percentage points less than normal agents. For example, if the rate in your area is 6%, they may charge somewhere around 3% to 4%. Some of them charge even 1% or 2%.
Many home sellers get tempted by the fact that it is going to save their money. But what they may not know is that opting for the low commission agent does not necessarily mean that the commission will remain low for the entire transaction. As per the commission structure in the United States, a listing agent may split their 6% commission with the buyer’s agent in a 1:1 ratio.
Take some time to know the pros and cons of low commission agents to determine whether you should hire a low commission agent for your property needs or not.
Low commission agent: Benefits
Here is why hiring a low-cost agent can be in your favor.
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Affordable
Since they charge a commission lesser, the owners are able to make more profits on their sales. As per Houzeo reviews, with the booming US housing market with home prices rising 18% every year, even the agent commission is soaring. record levels too. Houzeo recommends that you need not pay high agent commissions as the low commission real estate agents can help you save thousands.
This sounds like a great thing, but at the same time, ensure to check whether they are legitimate, will they really ensure your savings, will they be able to deliver the services you expect from them, and a lot more.
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Qualified
Low commission agents need to comply with the licensure and training requirements. Hence, it does not mean that low commission real estate agents are less qualified or not reputable. They are members of the National Association of Realtors too. They work according to the association’s ethical standards.
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Significant saving
If you are contemplating how much a low-cost agent can save your money, then a low commission agent with 3% to 4% can lead to considerable savings compared to the traditional agent’s commission of 6%. For example, if the home sale price is $300,000, then the traditional realtor with 6% will charge you a commission cost of $18,000, while the low commission realtor at 4% will cost you only $12,000. It generates a saving of $6,000, which is a huge amount. Houzeo reviews that the sellers can post their listings on MLS at a small flat fee to save commissions right away.
Low commission real estate agent – Risks
Though it makes sense to go for a low-cost agent compared to the regular agent as it leads to significant savings, be mindful of the fact that you can lose big money by looking at other aspects of the home sale. It can lead to disappointment later. The risks of a low commission agent include:
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Lack of time
Low commission agents work on the high sales volume model. They are involved in the sale of several properties to make substantial profits. This means that they can dedicate less time to your property sale. They hardly have time to answer your queries, solve your doubts, and resolve your concerns. It might be frustrating for you to keep waiting for them to turn up.
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Inefficiency
The biggest risk of hiring a low-cost agent is the frustration of an inefficient home selling experience. The low commission may mean a compromise or no service at all. In comparison, the full commission agents have a wide network of inspectors, attorneys, contractors, etc., who are always available and ready to help in case of a problem. They offer quick and effective solutions, which leads to easy management and handling of the transaction.
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Ambit of services
High commission agents offer additional services too. They have contacts of the people who can perform all the repairs needed at the property, click high-resolution pictures for fast selling, handle various things, and more. When you pay that kind of commission, you remain stress-free. If you are working with a low commission agent, then you may not get such kind of services and an experienced team as a backup.
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Representing buyer as well as seller
Many low-commission real estate agents represent both seller and buyer. It is called dual agency. Though it is illegal in some states due to the risk of unfair management, some states allow such agents. However, the dual agency is a risk even in the case of a high commission agent.
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Low sale price
One of the major risks in working with a discount agent is that your house may sell at a lesser value than you could have received with a full commission agent. The full commission agent may have better expertise in introducing strategic pricing, leveraging a well-connected network, and more tactics to enhance your property sale price. They also help during the negotiations and at the time of home inspection too by speaking on your behalf for your interest.
The ability to negotiate and provide the right guidance is key in the real estate sector. A specific skill set is mandatory to create a win-win situation. Isn’t it better to hire a full commission agent and pay them a bit extra, rather than getting a lesser amount of money on your home sale with a low-cost agent?
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The sale may fall apart
As low commission agents are involved in several transactions, they may not care if one falls apart. Many times, the deal gets over because the agent fails to communicate.
The Bottom Line
Now that you are aware of the pros and cons of hiring low-commission real estate agents, it will be easier for you to make your choice. The sellers who have the time can also list for sale by owner or “FSBO” and work as an agent themselves. As per the data from 2020, 7% of U.S. homes were FSBO sales.