If you decide to sell your house, the first person you’ll probably call is a real estate agent. Real estate agents can often help sell your house faster and for a better price, and they can also be very useful when you’re searching for your new house. Ultimately, though, real estate is a business, and a real estate agent needs to make money from the sale of your house. Unfortunately, this sometimes leads to underhanded tactics. It also means that real estate agents will sometimes keep information from you to convince you to sign with them. Here are twelve secrets of the real estate industry that your agent would hate you to know before you sign a contract with them.
1) You Might Make More if You Sell It Yourself
Real estate agents hate to admit it, but sometimes, you’d make more if you simply sold your house by yourself. In 2007, Northwestern University conducted a study about this in Madison, Wisconsin. They found that homes sold by the seller themselves netted the same amount as homes sold by an agent. Since the sellers who sold their homes on their own didn’t have to pay a commission to an agent, they were able to get more money overall. However, the study did also find that it often takes longer for a seller to find a buyer on their own. If you have the time, before signing with an agent, try selling it yourself. If weeks or months go by without a buyer, then it may be time to sign with an agent.
2) Agents use Open Houses to find new Clients
Most sellers believe that an open house is just for prospective buyers to come and view their house. While this is true, real estate agents also have another motive: they use open houses to find new clients. Agents know that only one out of every five or six people who enter your house are truly interested in your house. When they learn a prospective buyer isn’t interested in your house, they’ll offer to show them some of their other listings in the area. Even though everyone who enters your house won’t be interested in buying it, it’s still a good idea to hold an open house. Many sellers have found their buyer through an open house. Open houses are useful for selling your house, but it’s important to know that for a real estate agent, that isn’t the main purpose of it.
3) Agents Often have Little Control over Selling Time
Real estate agents want you to think that if you work with them you’ll sell your house faster than you would on your own. That may be the case sometimes, but there’s no guarantee that working with an agent will result in a faster selling time. Some agents, though, do have a faster selling time than others. This could be because they’re better at putting keywords into their listings that get them noticed by buyers. Or, they may simply have more connections that they can use to get you a buyer. Before signing with an agent, ask how long it typically takes them to sell a house. Then, check that time against the selling time for other real estate agents working in your area. This will help you decide if the agent is the right choice for you.
4) Agent’s Commission Negotiable
Many buyers think that an agent’s commission rate is non-negotiable, but this isn’t true. By law, agents commission rates are negotiable. In some parts of the country, the standard rate is 6 percent. In other areas, the rate is typically 5 percent. If you live in an area where the rate is usually 5 percent and your agent asks for 6 percent, you’ll have a good chance of negotiating them down. Be warned, though, if you negotiate the agent down to a very low commission rate, they won’t have as much incentive to work hard for you. Try to find a commission rate that won’t cost you a big chunk of your money. At the same time, it should give your agent incentive to try to sell your house quickly for the best price.
5) Agent Might tell Buyer’s Agent About You
When you’re selling your house, your real estate agent may give you some hints about what your buyers are thinking of doing. At the same time, they may also tell your buyer about you. Or, if your buyer is working with another real estate agent, your agent might tell their agent what you’re thinking. They could give hints about what you’re thinking of counter-offering, or if you’re close to a decision on their offer. This isn’t something that all agents will do, but it’s still good to think about. If there’s something you don’t want your agent to tell your buyer, let your agent know that the information you’re giving is confidential. This will give you peace of mind and will allow you to talk openly with your agent without worrying about who else will know the information.
6) Read the Contract for Hidden Fees
Before you sign a contract with a real estate agent, read it over very carefully. Double-check that the commission is what you agreed upon and that all your terms are there. Also, be sure to check for hidden fees. Some real estate agents will add these extra fees. These could range from anywhere from $250 to $1,500. These fees are used to cover the administrative costs that go along with selling a house. Like a commission rate, this fee is negotiable, so be sure to haggle with your agent to get the fee down to an amount that you find reasonable. Carefully reading over your agent’s contract will help you understand what you’re getting into by signing with them. It will also help you get a better idea of what your agent will do for you and the fees they will charge in return.