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Listing agents MAKE you money

I know it sounds counter-intuitive, but hiring a listing agent will actually make you more money. I know. I know. You want to keep as much money from your sale as possible. You want to put that into purchasing your next house or paying off debt. I want all of that for you too! So, before you decide to sell your home yourself or sell via a discount brokerage, hear me out. Hiring a qualified listing agent will more than likely produce more profit than you would make otherwise. Why? Let’s explore.

Unrepresented sellers lose money before they ever list their home for sale. This goes for sellers who list with discount brokerages too, since those brokerages do not guide clients through the process. They typically charge a flat fee or discounted percentage to throw your home on the internet without much forethought or guidance. Where do these sellers lose money?

  1. They prepare their home incorrectly for the market. They spend money on upgrades/repairs that do not have a 100% or more return on investment (ROI). Often times, these cosmetic changes have a 0% ROI.
  2. They accept a random offer or solicitation because it sounds good, because the buyer will “work with them” on certain details, or because CASH sounds flashy. Don’t be fooled. You’re paying out the wazoo for these “perks,” and you likely could have gotten them from a different buyer willing to pay more.
  3. They pay in advance for appraisals or inspections that are not necessary. Hiring an appraisal without a contract will often result in a higher-than-accurate value (which is great if you’re refinancing, by the way).

Unrepresented sellers lose money after they list their home for sale. It is very easy to make mistakes when you list your home. With a 1% mistake on your list price and a 1% mistake on your marketing, you’re well on your way to costing yourself more than you would have invested in a listing agent. Here are the most common ways unrepresented sellers lost money when they list.

  1. They set their list price too low. If you set it too low, you leave money on the table.
  2. -They set their list price too high. If you set it too high, you'll give up more in price reductions and concessions than you would have if you listed it correctly! You also risk stigmatizing your property by excessive days-on-market.
  3. They fail to market correcting, which leverages the negotiating power of multiple offers.
  4. They fail to discern which offers are strong and which are weak (do you know how to judge a prequalification letter or reputation of the lender issuing it?).
  5. They give up too much in contract negotiations.
  6. They pay for inspections or closing costs that are not customary in our market.
  7. They agree to too many repairs.
  8. There are plenty of other ways that an experienced agent can save you money and headache as well.
  9. They have a Rolodex of affordable and competent contractors so you’re not overpaying to meet contract requirements.
  10. Agents carry separate insurance policies that can protect clients during transactions that lead to lawsuit.
  11. Agents are knowledgeable on state requirements that could prevent an unknowing seller who from leaving themselves vulnerable to lawsuit (by failing to complete a property disclosure, for instance).

These are all items that a qualified agent can do for you that translate to more money in your pocket and less liability. It doesn’t even take into account the service of actually selling your home. 99% of buyers use a real estate agent; so, the vast majority of owner-sellers are still paying commissions. Not only that, they're negotiating against someone who knows their stuff. It is VERY easy to make mistakes without an experienced agent looking out for you.

As they say in the investing world, "mistakes in real estate have a lot of zeros behind them."