REALTORS® offers a wealth of value by performing critical functions throughout a real estate transaction that often go unnoticed by their clients. This can lead to the perception that agents are overpaid and do not earn their commissions. The amount of real estate commission agents receive and which party in the contract is required to pay it is often thought not to be negotiable.
Real estate commissions have always been debatable, but a recent lawsuit was upheld against the National Association of REALTORS® (NAR), Keller Williams, and Home Services of America alleging that due to their business practices, NAR and these companies conspired to inflate or maintain higher real estate commission rates. The verdict may undergo years of appeal, but in the meantime, it may require putting forth a clear understanding that real estate commissions are a negotiable item under the terms of a real estate contract.
Today’s homebuyers and sellers have a much higher level of awareness about real estate transactions because of available tools and information online. Along with the attention from the recent lawsuit against NAR, Keller Williams, and Home Services of America, consumers are questioning commission rates and are asking for more clarity about what services REALTORS® perform to justify their commissions. The list that follows outlines the most essential functions and services they provide.
- REALTORS® can maximize the return on investment for home sellers.
Using the services of a REALTOR® to sell a home can increase the return on investment significantly! According to the National Association of REALTORS®, in 2022, home sellers not utilizing the services of a REALTOR® sold their homes at a national median sales price of $310,000, significantly lower than the median of agent-assisted homes sold during that same period at $405,000, or $95,000 more, on average. - REALTORS® reduce the likelihood of overpaying or understating the value of a property.
REALTORS® are knowledgeable about the cities and communities in their market area. They also have access to extensive real estate data for recent home sales, current listings market pricing trends, sales concessions, property taxes, and any other assessments such as HOA fees. - REALTORS® provide exclusive representation and deliver fair and ethical treatment.
REALTORS® are bound to their client’s best interest. The guidance for this advocacy is the National Association of REALTORS® Code of Ethics and Standards of Practice which works in conjunction with state laws to protect consumers. Not collaborating with a REALTOR® could have a consumer working with someone who does not have their best interest in mind over others, such as a home builder, when they are purchasing a new home.
- REALTORS® help clients stay compliant with state and federal real estate disclosures and fair housing laws.
Real estate laws and practices change regularly, vary by state, and may be complicated. They may even vary within different regions of the same state. Not having a REALTOR® to help stay compliant with state and federal disclosure requirements could make a homebuyer or seller vulnerable to fines, lawsuits, loss of options to cancel a contract, and other negative repercussions. - REALTORS® function as knowledgeable negotiators and trained advisors.
To know how to advise their clients, REALTORS® must undergo extensive formal training and clearly understand their local market conditions, neighborhoods, schools, medical facilities, recreation opportunities, and even the typical concessions offered and/or expected by home buyers and home sellers. - REALTORS® coordinate and provide recommendations for estate service providers.
Throughout a real estate transaction, mortgage lenders, title companies, surveyors, appraisers, homeowners’ associations, property management companies, and other specialized professionals must work together seamlessly. Their responsibilities must be completed properly and on time, or the transaction may be jeopardized. Identifying these service providers and having them work together cohesively is one of the roles of the REALTOR®. - REALTORS® Facilitate the collection, distribution, and execution of critical documents.
Most states have required contract forms and addenda for use in real estate transactions. REALTORS ensure that they are completed properly, executed, and delivered promptly to the appropriate parties as required by law and the terms of the contract. Not performing these duties properly could result in the contract being unenforceable. and could forfeit a party’s rights to cancel without penalty or to continue negotiating disputed issues. - REALTORS® offer objective information and opinions to home sellers and buyers.
Home sales and purchases are often very emotional. A REALTOR® can help navigate their clients through the process with an unbiased approach and focus totally on their client’s interests. Agents are also a major source of reliable information when you have questions about local amenities, utilities, zoning rules, contractors, and more. - REALTORS® expand the home search coverage.
Using a cooperative system called the Multiple Listing Service (MLS), internet syndication, and established social media platforms, REALTORS® can cast a broad net to meet your home search criteria. They can also help you evaluate all active listings that meet your priorities, alert you to listings soon to come on the market and provide data on recent sales to help homebuyers make a competitive offer once they find a home they want to purchase.
- REALTORS® function as the homebuyer’s or sellers’ advocate during negotiations
There are aspects of a real estate transaction that are negotiable. They include the sales price, type of financing, timelines to perform specific actions, repairs, deposits, real estate commissions, and other fees to be paid. Entering negotiations without REALTOR® representation could put homebuyers and sellers in a restricted situation, unable to perform adequate due diligence on the property and pay for negotiable expenses. - REALTORS® provide up-to-date real estate expertise.
Most people purchase or sell 2-3 homes in a lifetime. This makes it difficult for the layperson to keep up with laws and regulations that often change rapidly and can be confusing to understand. REALTORS® handle hundreds of transactions over their career, and this extensive exposure, along with hundreds of hours of formal training and continuing education requirements, keeps them up to date on how to best advise their clients to meet their real estate objectives. - REALTORS® provide sound support during emotional moments.
A home is much more than walls and building materials. The magnitude of buying or selling a home can have an emotional and stressful impact on the family. Having a concerned and trained advocate can help homebuyers and sellers stay focused on their priorities and objectives when emotions threaten to negatively impact an otherwise sound transaction.
- REALTORS® provide a network of professionals with specialized expertise.
Because REALTORS® face a multitude of challenges with real estate properties, they often work with licensed and professional tradespeople. They establish a trusted network of service providers that you can depend on to take care of your needs as a homebuyer or home seller.
In summary, REALTORS® play a pivotal role in the complex landscape of real estate transactions by offering invaluable expertise and services. Beyond transactional facilitation, their negotiation skills are crucial in securing favorable agreements, and their supportive presence throughout the process adds reassurance and problem-solving acumen. REALTORS® assume multilayered roles which is a compelling case for the commission they earn. Remember that REALTORS® do not get compensated if there is not a successful closing of the transaction. REALTORS® play an indispensable role in achieving seamless and successful real estate transactions for every buyer or seller.
Al Denson, REALTOR®
Better Homes and Gardens Real Estate Winans
Email: [email protected]
Website: buyingatexashome.com