Selling your home: Should you use an agent?

One of the most straightforward ways to avoid foreclosure is to sell your home. Every home seller wants to maximize profits, of course, but those in foreclosure particularly need sale proceeds to be high enough to cover their loans. The question is: Will you get more money if you use an agent, or if you sell it yourself?

If you've never sold a home before, you may be surprised to find that "costs of sale" typically take up about 8% of the home's value. The biggest chunk goes to the two agents involved, each of whom typically get 2-3% of the sale price. On a $200,000 home, that's $8,000-$12,000 you don't get! On the other hand, some say that an agent will help you get a higher selling price for your home, adding to your purse as well as covering their fees. So should you use an agent?

In short, your decision should refer to Essential Truth #4: Benefits should always outweigh costs. So the question becomes: How much will you save by not using an agent? Will agents be able to fetch enough of a higher price to cover their cost? Here's how to make that decision:

• You're almost certainly going to have to pay for a buyer's agent anyway. If you sell your home in the traditional way -- that is, by advertising it in the MLS -- virtually all buyers will arrive with a buyer's agent who expects to get paid 2-3%. In most places, that cost is paid by the seller -- that is, you. If you won't pay it, the buyer is likely to reduce the offering price by the amount needed to cover it.
  
  

• Experienced investors don't need agents, but they'll expect to pay much less than homebuyers. Very few homebuyers feel comfortable completing the transaction without an agent. They know they're not experts in the many things an agent will help them with -- inspections, paperwork, loans, legal requirements, and so on. Experienced investors, on the other hand, will be happy to work without an agent, saving you that 2-3%. However, investors are "wholesale" buyers, expecting to pay at least 10% less than "market value", wiping out the agent savings several times over.
  
  
• Will an agent get a higher price? There's no way to know. While the National Association of Realtors frequently crows that their members are able to get homesellers more money, the only way to know that is to sell the same home, at the same time, two different ways -- an impossibility. And some agents quite frankly aren't worth their commission.

Chapter 8 of Save My Home provides more guidance on selling your home both with and without an agent. Add your own tips in this discussion forum.