The real estate market can be an intimidating place, even for the most experienced buyers and sellers. And for most people, purchasing a home is the most significant financial investment they make in their lifetime. Ultimately, hiring a real estate professional puts more money in your pocket, even after spending money on commission. If that's true, why would a consumer decide to go it alone?
In general they don't. Approximately 90% of home buyers and home sellers both hire a professional to assist them in their transaction.
1. Negotiation
Whether or not you feel well versed in the ins and outs of real estate, having a real-estate agent there to fight your battles for you can pay HUGE dividends in the end.
A real estate agent's job, first, is to know the real estate market. They should know approximate home values in a neighborhood, and more so, they should know how to analyze the data to recognize trends. You don't want to be the one holding the bag on a $400,000 purchase to find that the market dropped 10% within a year of buying. That's $40,000 in the toilet.
Currently in the Northeastern Illinois, according to Midwest Real Estate Data (MRED LLC.), the average home sells for somewhere around 94% of its original list price. A good Realtor can negotiate, on average, about 97% of the list price (we get even more), for a 3+% improvement on return just on face. (Of course it's more complicated than that, 97% of the correct list price might be far more than 94.5% of a poorly priced home.)
Our buyer clients also save money through strong negotiation skills. MRED says that Prudential Rubloff, @Properties, and Dream Town Realty's clients pay about 95% of original list price when buying a home, where Baird & Warner's clients only pay 93.2%. There are many, many variables that account for the difference (neighborhood, average purchase price, etc.), but the point is there's a difference even amongst represented buyers, imagine the challenges for an unrepresented one?
Finally, a Realtor's job is to act as a sort of buffer between the two negotiating parties, diffusing often very heightened emotional states of parties on both sides of the fence. In these sort of situations, it is your realtor's job to specifically negotiate the facts, and present your interests in the best possible way.
Already they have more than earned their commission, but we're not done.
2. Education
Buying and selling can be an intimidating experience, there's new terminology, a great deal of paperwork (eww, contracts and disclosures!), and a multi-step process. This is why it is the job of your Realtor to act as an educator along the way, to help you be both well-informed and able to make good decisions based on your newly acquired knowledge.
At the heart of it, real estate brokerage is truly a service position. Part of that service is their ability to inform you of the market conditions and realities, and in doing so, include you as a truly knowledgeable participant in the process. They teach you so that you can make informed decisions based upon their guidance, rather than either a) doing it for you, or b) having to fend for yourself (and most likely lose money or opportunities based on ill-informed decisions)
3. Market Knowledge (Values)
Real estate professionals are invaluable in their ability to determine the market value of a property. Frequently home owners will turn to an appraiser to determine the market value, but at its heart, the market value is the price a ready buyer is willing to pay a ready seller. Who knows better than a real estate agent how much a buyer will pay a seller? In my experience, no one.
Sellers want to know how much they can get for their property. While you as a seller may have some idea of what you believe your home is worth, that is generally based on a very limited snapshot (what your neighbor sold for last year, or how much the place down the street is listed for.) Your agent will have the knowledge of how your home will fit into the market, and what kind of price point will actually get your home sold. Overpricing your home from the beginning, is a recipe for disaster. The longer a home is on the market, statistically speaking, the less money a seller will garner.
Buyers want to know how much to offer. What you may not know as a buyer are things like, how many offers are expected to be made on a specific property, how low is too low, what kind of "short sale" situation the property may be in, or past buyer history. If bids are placed without the consultation of your real estate professional, you're opening yourself up for complications in the negotiation process, extending the timeline and increasing the odds for competing bids to come in.
4. Process
According to KeepingCurrentMatters blog, there are typically about 180 routine steps to be taken during a real estate transaction. There are many chances for error in there, especially if you are attempting to do this process without a professional's guidance. You definitely don't want a technicality to ruin a potential closed purchase/sale, and it truly could. In this case, having a real estate professional on your side is truly invaluable.
5. Paperwork
Throughout the course of a real estate transaction, an abundance of very important documentation will be floating around. Realtors are extensively trained on what all of the finer details of this paperwork entails, and are well informed of the changes that frequently occur to this paperwork.
In addition, they will also be able to refer you to the extremely important real estate attorney to legally represent you during the process. In some cases, you may also need a referral to a short sale negotiator, they can help with that too.
6. Relationship - They Know the Players
In cases where there may be high emotion amongst buyers and sellers (frequently) the pre-existing relationship between the agents may also serve to minimize the stress that comes with the process - a good agent can cut through the emotions to handle the facts at hand.
What other ways have you found a real estate professional to be helpful to the transaction?
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