There is a reason why some home sellers choose to forego a real estate agent and handle one of the biggest transaction of their lives alone—the sale of their home: commissions. Recent statistics show that homes sold by the owners take longer to sell and typically sell for less than the selling price of other homes (National Association of Realtors, 2020) so the advantage of placing the home in the local multiple listing service to reach the universe of buyer agents is actually cost effective. Real estate professionals typically handle condition assessment, staging, pricing, paperwork, and showings for a percentage of the sale price. However, in many cases sellers pay MORE than commissions and certainly more than they should. Here is an abbreviated list of things you should not being paying your agent to sell your home:
Buyer closing costs
It is customary for both parties—the buyer and the seller—to pay their own costs to close the sale. If the buyer cannot pay the costs to purchase the home, this could be a signal that the buyer may not be able to qualify for the loan and complete the sale, which is a risk to you. As the seller, you are already compensating the buyer’s agent to bring you a buyer, so as the seller it’s perfectly fair to ask the buyer to pay his or her fair share to complete the purchase.
Costs to fix cosmetic defects
No home is perfect, especially one that has been lived in and cared for a number of years. While big problems like a leaky roof, a deficient air conditioning unit, and mold or wood rot in most cases must be addressed by the seller, things like counter top scratches, small nail holes in wall plaster, and loose caulk in the tub do not need to be. In fact, the Florida sales contracts expressly spells out many items that the seller need not address for a buyer.
Costs for marketing
Many real estate agents are trained for a number of things: how to write a great description for your home, how to take the video and photos or arrange drone footage, how to market for and hold a broker or public open, and how to spark interest about the listing on social media. Commissions paid to the agent are partly to reimburse the agent for all such marketing and the time and effort in handling the calls, email, texts and showing requests that follow. The only time agents should be requesting compensation for marketing is when a seller ends the contract earlier than the agreement and even that arrangement is written into the contract up front.
Appraisal and Inspection
The buyer or the buyer’s lender is responsible for determining if your asking price is worth what you’re asking. The same goes for the inspection. You may want to get an inspection prior to placing the home on the market to become aware of any deficiencies that may be present, but keep in mind that every detail of deficiency uncovered in that inspection—every detail—must now be disclosed to all potential buyers so it’s better to allow—and insist—that every buyer performs their own inspection. Since buyers will more likely obtain both an appraisal and an inspection, there is little need, if any, for you to spend anywhere from $1,000 to $2,000 for this additional expense.
Transaction fees
A transaction fee is a nice way to say junk fee and many real estate agents, unfortunately, overcharge the seller and over compensate themselves by charging this fee. Some agents may not even disclose it prior to closing. The fee can range from $295 to $595, depending on the broker, in addition to the commission. Some agents or brokers will go so far as to charge the buyer’s agent this fee as well, which essentially means that the seller actually will have paid the transaction fee twice: the seller pays the listing the commission, the seller’s agent splits that commission with the buyer agent in exchange for bringing the buyer, and then charges the buyer’s agent a transaction fee.
If asked why a transaction fee is charged, some agents will say it’s for things like records storage, handling paperwork, or placing the listing in the MLS. But all of these are either necessary or mandated by law—the state of Florida requires agents to keep contracts and other paperwork on file for a minimum of five years—so sellers should never be charged a transaction fee. If you see this fee on your closing statement, request that it be removed.
The value for the help and expertise of a knowledgeable, competent agent is an understatement. Nevertheless, you should never pay more than you need to for it.