The high interest rate and low inventory housing market of the past few years, have many home buyers trying to forgo the services of REALTORS® and real estate agents, in an attempt to save money. However, inventory has been growing here in the Rio Grande Valley since the summer of 2024. Check out this graph depicting the change in homes for sale in McAllen, TX over the past 3 years (courtesy of my local MLS).
Many home sellers list their homes as For Sale By Owner (FSBO) listings to try and maximize their profit. Technological advancements and the establishment of companies like Zillow and Redfin have made it possible for both home buyers and home sellers to have an unprecedented access to information that buyers and sellers, in the past, could only dream of. Most REALTORS® and real estate agents are generally honest, but many have contributed to the negative public perception of the industry by their own questionable words and actions. All of this begs the question: Do you really need a REALTOR® to buy a home?
The Quick & Dirty
My answer is no. You do not need a REALTOR® to buy or sell real estate. Just like you do not need a barber to cut your hair, a mechanic to do an oil change, or a personal trainer in order to exercise. However, you do need to learn about the process of buying and selling real estate, the potential pitfalls (including their legal consequences), and details/nuances of it all. This takes time. You will not be able to learn everything you need in a 5 minute Youtube video. You also need to be willing to put in the time to actually do the transaction. How many hours from your day can you afford to dedicate to this if you are doing it on your own? How many weeks or months do you think this process will take?
Buyers
First things first, if you are the buyer, you are actually the one paying for both your agent’s commission and the seller’s agent’s commission. I will die on this hill. Agents who say the seller pays both agents’ commissions do not understand how price setting works. This is because the commission is baked into the price. Everything else is semantics. Do you really think that when companies offer you “free shipping” when you purchase their products online that it’s really free? The shipping is “free” because the company has made enough off of you from the sale that they don’t need to tack on the extra charge. It’s the same thing with real estate. If the seller offers to pay your agent’s commission, it is because the purchase price that you are agreeing to warrants their concession. If you want representation, know that it’s coming out of your pocket.
Secondly, be wary of For Sale By Owner (FSBO) homes. A home that is “off market” is not necessarily a good deal. An agent that I know was fired by his buyers because they found a FSBO home, but the seller would only sell it to them if they did not have an agent. The seller claimed it would save both parties money. The buyers fired their agent and entered a purchase contract with the seller. When the appraisal report came out, the property appraised for under the sale price. The seller refused to lower their price. Though the buyers were able to get back their earnest money (since their former agent had emphasized the importance of an appraisal contingency on any offer they make), the buyers were still heartbroken. They also wasted several weeks of their time. The seller lost a little bit of time, but since it was a FSBO listing, the contract falling out did not have the same negative effect it would have if it were publicly listed on the MLS (Multiple Listings Service) with a REALTOR®. If that seller wanted to, they could claim any number for the total days on market, and it would be difficult to confirm that number. Also, no other buyer would know that it had fallen out of contract previously unless the seller told them. Come to find out, the seller apparently had a relative who was an agent working for them on the side that they were paying under the table. If that isn’t playing dirty, then I don’t know what is. Stories like this are not as uncommon as you would think.
Finally, if you decide that you do not want an agent representing you, you should at least consider paying a lawyer to look over the purchase agreement for you. This goes double if you are buying new construction. For context, the standard contract that Texas REALTORS® use is about 10 pages without any addenda. The standard contract that Texas homebuilders use is over 20 pages without any addenda. Do you think a lawyer will go over either with you for free? You also won’t have the same access to a lawyer that you would with a REALTOR®. Don’t be surprised if they charge you by the hour.
Sellers
If you are looking to sell your home and decide you want to brave the For Sale By Owner route, let me give you some free advice: do not overprice your home. One of the biggest reasons a home doesn’t sell is that the asking price is too high. This is true for FSBOs, off-market properties, and publicly listed properties on the MLS. Even if you have the best REALTOR® in the world as your listing agent, if your list price is too high, your property won’t sell.
You don’t need a REALTOR® to price your home. You can use the free data that Zillow provides. Fair warning: Zillow is the Wikipedia of real estate data. It’s a good starting point, but you probably want to dig deeper. Zillow is clunky if you are trying to look at data sets over a period of time. Zillow also does not give information on any seller concessions or on the type financing used for a sold property. One of the benefits of using a REALTOR® is that they have access to the MLS. Comparing the MLS to Zillow is like comparing the Whataburger patty melt to the McDouble from McDonald’s. They are both burgers, but one is vastly superior.
The main benefit of using a REALTOR® or a real estate agent to list and sell your home is that they save you time. Answering phone calls and emails takes time. Vetting buyers takes time. Showing the property takes time. Going back and forth on negotiations takes time. Going over offers and making counteroffers takes time. Are you as a seller willing to put in that kind of time? Will your other responsibilities even allow you to put in that time?
Final Thoughts
Many people online (and from the safety of being behind a screen) are very vocal about their dislike of REALTORS® and their desire for the end of the profession. I think they had a bad past experience with a real estate agent. Either they got screwed over by an unethical agent in a deal, or they got their heart broken by someone who just happened to be in the real estate industry. Like many professions, there are some bad apples among real estate agents. And unfortunately, a few bad apples really can spoil the whole bunch. But just because you had one bad barber, are you really going to cut your own hair for the rest of your life? What if you’re about to get married? Are you going to risk an unplanned buzzcut a few days before your wedding?
I am not trying to convince you to use a REALTOR® or a real estate agent in this blog post. Many deals are not even that complicated, and if the buyer and/or seller is willing to put in extra time and effort, they might even be fine without an agent. I am pointing out that the job exists for a reason. Someone with no real estate knowledge or experience will have a rough time buying or selling property. They would be easy prey for unscrupulous investors and agents. For many buyers and sellers, the peace of mind that comes with working with an ethical and competent real estate professional is worth the cost of their commission. And for those buyers and sellers who don’t want to hire a real estate agent, but are willing to put in the time and effort to learn the process, willing to do the work themselves, and have the time to do the work themselves, more power to them.