Real Estate Agents: Why They’re Not Worth It – To give you all a little insight as to why i am qualified to talk about real estate agents is because my my family has been in the business for close to 40 years.Nothing has changed,except for the exponential rise in property prices – its comparable to gold.
So you may think i’m stupid to tell you why hiring a real estate agent is not worth it but i will also tell you how it will benefit you.
How our real estate business operates
Not only do we take commissions from sales but also from rentals and homestays.This may shock some of you,but its true.Most people search Craigslist/Kijiji or some other classifieds website for accomodation,but what if you dont find exactly what youre looking for.
That’s where the estate agent comes in.He has a wide variety of apartments,condos,houses of all sizes and budgets.
How much does it cost to hire an estate agent ?
The price of property in a large city is an ultra expensive “commodity” .So how is this good for business – simply put – higher prices means a higher commission on sales and rentals.Yes – you heard that right -rentals.
These business practices may change from state to state or even country.
Here is a tabled list of costs a typical real estate agent will charge you:
|Small property sale
|Large property sale
|Rental short term (6 months or less)
|Rental long term
|Homestay / Paying guest
Two pronged – There are also some agents who take a commission from both the buyer and seller,and don’t be fooled,it isn’t 1% each – its 2% from both sides.
For property sales,the commission rates are always negotiable depending on the value of the property.Even earning a small percentage on a high value deal can be a substantial amount.
Reasons why real estate agents are not worth it
1.Thyre expensive – If you hire an estate agent to sell your home worth $500,000,you would have to shell out about $10,000 to pay by way of fees which is a large part of the pie.You could clear out a small credit card debt with that much amount of money.
2.They network – In a way and bad and also a good thing.For the bad part,they network with other estate agents in the area in order to either find a buyer for their property or to find out if there are other properties for sale for which they might have a buyer.
You may think that this is good,to pool resources together but here are tow problems.
- Sometimes when all the other agents get to know your property is on the market,they also might approach you directly.
- Also if you are a private person and do not want the neighbourhood to know you are selling,because of an entire horde of estate agents,everyone else also comes to know.
3.They underwrite – This is a bit of a misnomer,because they do not actually put down the money for your property and then resell it higher,BUT – what they do is, if your asking price is $450,000 they will tell the seller $475,000 and keep the extra $25,000.This may seem reasonable if they are not getting a paid by you,but some do it in spite of getting a commission.
What this essentially does,is create a complicated situation between you-the seller and the buyer and leads to mistrust.
4.Bring down the value – More often than not,the broker will try and try and coax you to bring down the price of your property,so that it is easier and faster to sell.If you are in a hurry to sell its ok,but many estate agents just want to finish off the deal quick and take their commission,without caring how much you stand to lose if you sell lower.
1.Mediator – Not only is the real estate agent there to bring customers to your open house and to put advertisements and fliers.He/She is there to sell your property.Period.In many cases the estate agent goes way beyond in order to see the deal through and acts as a mediator between the buyer and seller.
OFten there are complications due to price negotiations and other factors where none of the parties are willing to budge and the agent needs to get both the sides to come to a compromise and seal the deal.This goes unseen,but the broker in many cases saves the deal when its about to fall through.
2.Paperwork – An extremely important point – the real estate agent besides finding you a suitable buyer for your property will also assist you with all the paperwork.This maybe a lease or a sale agreement,registration,taxes,stamp duty(if any) or the other legal documentation that needs to be drawn up.This part of the sale deal is extremely important and a mistake here would cost you later on.
3.Lots of leads – Back to the good point of networking-the real estate agent gets lots of leads through other agents.He gets details of potential buyers who are looking to purchase.If he gets the lead from another agent then he needs to share part of the commission with that agent.IT takes a bite from his pie – but that’s the way the business is.
3.No headache – the biggest reason anyone hires an estate agent and gives them a time frame to sell their property is because they dont want the hassle of putting ads,showing the house etc.In many cases,selling a property is no joke and can take months or even years on the market.Especially if the property is embroiled in litigation or has some flaws.