Consumer Reports recently conducted a survey of home buyers and sellers about a number of topics. You can find the report here. There were a number of interesting findings, some a surprise and some not so much.
Here are a few of the findings.
For Home Buyers: The 66 percent of our readers who used a real-estate agent in buying a home paid an average of $5,000 less than the listing price. Some of the agents were buyers’ brokers (they generally work exclusively for the buyer) and some were conventional agents whose legal obligation is to the seller, even if the buyer brought them into the deal. The 34 percent of buyers who negotiated their own deals, without an agent, paid close to the asking price.
Looks like using an agent to purchase a home is a good move that will not only protect your interests, but save you money.
For Home Sellers:
You can negotiate the fee. The usual 6 percent commission that agents charge sellers has been standard for so long that many homeowners apparently don’t realize it’s negotiable. But 46 percent of the sellers in our poll attempted to negotiate a lower commission and roughly 71 percent of that group succeeded.
We found that paying an agent a lower commission rarely had any effect on the sales price. And readers who paid commissions of 3 percent or less were just as happy with their brokers’ performance as those who paid 6 percent or more. People who paid extra, in fact, were more likely to say they had regrets about the selling process. The biggest regret? Nearly one-third said they should have been more assertive in negotiating their agent’s fee.
Paying less won’t hurt service. The industry generally defends the full 6 percent commission by saying it enables brokers to provide all the services home sellers need. And some of our survey respondents who paid lower commissions did get fewer services from their agents. But there wasn’t as big a gap as you might expect. For example, 81 percent who paid 3 percent or less said the agent provided a competitive market analysis of their home, compared with 87 percent of people who paid 6 percent or more. And those who paid a lower commission were somewhat less likely to have agent-sponsored open houses (54 vs. 59 percent).
That’s right, commissions are negotiable. What I find interesting is lower or “discount” commissions rarely had an effect on sales price. Even better, when people paid less they were just as happy with the service they received. There has been a long standing misconception that in order to receive “full service” you need to pay “full price.” This is simply not true.
As real estate agents, we all have the same tools at our disposal. We all have access to the same information. The only difference will be in the experience and expertise of the agent. On the experience and expertise front, I find “discount” agents generally have much more experience because they to a lot more business.
Before you hire an agent to sell your home, do a bit of research. There is no reason to pay to much.
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