Why You Should Always use a Real Estate Agent to Sell Your House

by | BiggerPockets.com

Real estate agents are expensive, but trying to sell your home yourself may cost you a lot more money.

I am a real estate agent so I may have a biased view on this subject, but I also have many reasons to back up why I think you should use an agent.  Of course there is an easy way to have the best of both worlds and become an agent yourself like I discussed here.

The Most Important Reason to Use an Agent

The most important part of investing in real estate whether you are flipping, holding or wholesaling is knowing the value of property.  When fix and flipping you need to be spot on with your ARV to make sure you are not paying too much for a property.  With buy and holds you need to know if the property you are buying is a great deal or if it is mediocre for the neighborhood.  You can’t always tell what values are by the homes that are currently for sale.  You need to know what the sold comps are, what concessions were paid, what condition homes were in and any other circumstances.  The only way I know how to get all of this information is to hire a real estate agent or become one.

I see posts on the BiggerPockets Forums all the time asking id such and such is a good deal.  Real estate values are extremely localized down to the neighborhood or even street.  How in the world can someone in Arizona tell you if a house you saw in MLS is a good deal in Northern Michigan?  The investor in Arizona may be the best investor in the world, but they don’t know the neighborhoods, the rental market, the local economy or what similar properties are selling for.  The only way to truly know if you are getting a good deal is to be a market expert or hire one.

I Can Price My Home Myself!

Many sellers think they can market their homes for sale by owner (FSBO) and come up with a price by using what else is for sale.  They know of three houses on the same street for sale and that tells them what their competition is, so all they have to do is be priced similar to those homes and theirs will sell.

  • How do you know all the details on those houses?
  • Are they under contract?
  • How long have they been on the market?
  • What condition is the interior in?
  • What amenities do they have or not have compared to the house you are pricing.

Once you find out all of these things, how do you put a value on them to determine a value on your house?

It is possible to find all this information out, but how difficult will it be and how confident are you going to be in your value?  A real estate agent figures these things all the time and can give you a solid value.  Many FSBOs are overpriced because they use houses that are for sale to price their homes.  They also have a tendency to use emotion to price their home, because it is theirs.  I know I love my house more than my neighbor’s homes. I can point out 20 features that make my house superior.  That doesn’t mean buyers are going to think the same way as I do and think my house is superior to my neighbors.  I third party agent will come into the picture without emotion and bias.

The Market Changes Quickly!

When a FSBO lists their house for sale and it is a little overpriced it probably won’t sell.  In a seller’s market that is not the end of the world.  If the price is lowered and buyers know about the home, then it will probably sell.  In a buyer’s market it is a much bigger deal.  If prices start to decline, the FSBO is not going to see the trends as quickly as a real estate agent.  The real estate agent is immersed on the market and will spot softening areas or trends much quicker than the FSBO.  Chasing a declining market is never fun and if prices are not lowered quickly enough to catch up with the downward trends it can lead to disaster.

Can You Sell a House Yourself?

Yes, a non licensed agent can sell their house for sale by owner very easy.  If you have a $200,000 house and you list it for $130,000 I bet you can sell it in less than a week!  I saw someone boasting on another forum about how they saved all this money by selling their house without a realtor.  They listed their home, had four offers in one day and sold it 30 days later.  Sure beats paying an overpriced real estate agent!  However, if they received four offers in one day, I can almost guarantee they underpriced their home.  I can almost guarantee they underpriced it my more than the commission they saved.  Those sellers probably cost themselves 10’s of thousands of dollars by listing their home themselves.  A real estate agent could have given them a much more accurate value and netted them more money.

Paying a Buyer’s Agent

There are no typical or standard commissions, but I will use 6 % as an example of a commission on the sale of a home listed with a Realtor.  Usually 3% is paid to the buyer’s agent and 3% is paid to the listing agent.  When a FSBO sells their home they are not always saving 6% of that commission.  If a buyer is using a Realtor they are going to want representation to buy the home and the FSBO may only save 3% commission.  Then the FSBO is in a situation where the buyer is represented by an agent and the FSBO is not.  Who do you think will have the advantage in negotiations and the contract preparation?

Most Buyers Work with Real Estate Agents

The reason a FSBO is going to have to sell to a buyer with a Realtor in many cases is most buyers are represented by agents.  It usually costs the buyer nothing to use a real estate agent because the seller pays the commissions in most cases.  Why wouldn’t a buyer use an agent to help them sell a home, most FSBOs know this and pay the buyer’s agent to get their home sold.  If you want to try to save even more money by not paying any commission a listing or selling agent, then you are limiting your buyer pool and really hurting your chances to sell the home.

Realtors are  Scared to Work with FSBOs

Even if you offer to pay the buyer agents commission on a FSBO listing, many agents don’t want to work with FSBOs.  The agents certainly aren’t going to be searching Craigslist or the local paper for your FSBO listing and many buyers rely on their agents to find homes for them.  The reason agents don’t like working with FSBOs is because they feel there is a better chance the buyer and seller will try to leave them out of the deal and it will be more work.  If the seller isn’t represented there is a good chance they are going to be asking questions and for advice from the buyer’s agent.

Experienced Investors Selling Homes Themselves

I am sure there are many experiences investors who sell homes themselves without a license.  They do many deals a year and feel they know the markets well enough to avoid paying a full commission.  I am sure some investors are very successful doing this, but I am sure it is costing some investors money as well.  First off, how much time does it take the investor to show homes, advertise, market, and determine price?  Is there time better spent marketing properties or finding more deals?  Secondly making friends with agents is not a bad thing.  If you have a great agent who knows you will use them to list homes, there is a good chance they will start sending you deals.  What is better than deals coming to you without having to do any work to find them?  Finally some states have laws about how many houses you can sell by owner without a license.

I know some investors who actually have their license and still use another Realtor to list their homes.  They know they aren’t full time Realtors and their time is better spent finding deals than listing homes.

Discount Brokerages

Obviously a huge disadvantage to FSBO’s is they are not listed in the MLS where agents look for homes for their buyers.  There are discount brokerages all over that will enter homes in the MLS for a minimal fee.  You are still going to run into the same problems I talked about earlier in the article.  Those agents are not going to help with pricing, negotiating or any issues that come up.  They won’t be able to help you with repair choices, color choices or staging ideas. Remember a good agent will not just list your home for you, but help you throughout the process if you enlist their help from the beginning.  Listings are like gold to agents and they will work hard for them.

Photo: SalFalko

About Author

Mark Ferguson

Mark is Real Estate Broker and investor in Greeley, Colorado. Mark invests in long-term SFR rental homes and also does 8-15 fix and flips a year. Mark started a blog this year that focuses on investing in long term single family rentals.


  1. I think much if what Mark says is true, especially about having a property listed on the MLS that statistically sells more home than any other forum.

    However, for those individuals who want to test the FSBO waters and or have many friends, associates etc. that could by their home directly from them, why doesn’t the Realtor® offer to List the property on an “Exclusive Agency” Agreement and not an “Exclusive Right To Sell” Agreement.

    I anticipate a favorite Realtor® comeback that he/she spent time and money on the Listing so what about the FSBO agreeing to a set amount he/she will pay the Realtor® for the time and materials if the FSBO sells the home through no direct cause of the Realtor®?

    It seems rarely, if ever, are the differences between the “Exclusive Agency” Agreement and the “Exclusive Right To Sell” Agreement debated.

    • Hi Tom, everything is negotiable. I have seen deals where the buyers submitted a list of buyers or contacts they had before listing a home. If any of those buyers purchased the home, then no commission was owed or a reduced rate. Much like the holdover period a Realtor has where if the the seller of the homes sells their house without a Realtor after the listing expires to a buyer that found the house because of the Realtor a commission is still owed.

  2. Realtors are a waste of money! At least that is what I said when I sold my first flip house a week before I actually settled on it.

    Now the second flip house was a completely different animal, 6 years old completely renovated, the previous owner being totally generous was an utter pig. The place needed carpet, flooring, a 40 yard dumpster and a paint job.

    Priced $30k under market it sat FSBO for 5 months no offers except on neighbor who offerer $25k under my market price. 5 months, yes I am a glutton for punishment. Eventually a very smart local Realtor called to see the house first acting as a buyer, and later selling me the idea he could sell the place for market price and in 2 weeks.

    This was in 2005 so I couldn’t use a slow market as an excuse. 2 weeks later the house sold for the highest price any house on that block had ever sold for, the neighbor later mentioned he was a fool for low balling me.

    Needless to say after spending about $1000 marketing the place, 3 open houses, one signed agreement where the buyer was completely unqualified to purchase even a toaster, but tied the property up for 35 days. The Realtor was looking pretty valuable, did I mention I had $132k of my own cash in the house? A great motivator for getting the place sold.

    No more flips, I realized buying to hold was a lot less stressful and pays a lot better over the long run. Banks or private lenders don’t mind lending to investors with a track record and some tangible assets.

    Realtor, Realtor, rah! Rah! RAH!

  3. I see in the article you mentioned wholesaling a house. For Example: I i as a wholesaler got a house under contract for $25,000. House needs $25,000 in repairs with estimates from 2 different licensed contractors. ARV of $96,500. How would I give this deal to a licenced agent to put on the MLS to resell for me.

    • Gerald, it’s tricky with wholesaling, because you can’t list a house you don’t own. You can only sell the contract, not the house. I still think it is important to use an agent for accurate values.

      You could make sure an agent knows you will use them for any listings or purchases you make, but on many houses you can’t use them to list. You could offer to pay them a buyer agent commission if they bring you a buyer. You can take them out to lunch and give them something in return for providing values.

  4. I only buy after considering market conditions (CMA/ forecasting), price, ARV, loan/closing costs, repair costs and exit costs/ net sheet (exit closing costs and Realtor commissions all built into the deal on the front end). If I’m materially squeezed at resale because of a 3-6 % agent commission, I did something wrong in my analysis when I purchased. Anyway, who would want to micro manage the sales process? Ads, calls, screenings, showings, offers/counter offers, contracts/ disclosures, verification of funds, escrow. Talk about a time suk.

  5. The one point I’ll add is that not all realtors are created equal. The lazy realtor may not be worth the commission. The savvy realtor who hustles is usually a bargain at the example Mark used of 6%. Although I have a broker’s license, for the properties I purchase that are outside of my geographic comfort zone (roughly 15 mile radius), I’ll outsource to a local broker who really knows the market.

  6. I agree, as a full-time investor/flipper, I only use realtors to sell (I am not licensed), and unlike most investors (looking for ‘investor friendly’) wanting to reduce commissions, I like to pay the full price or even more dependent upon performance. With the time spent selling, I could have spent finding another flip- do the math on that vs. that extra % in commissions savings.

    On the flip side (pun intended), when I meet the FSBO’s and the ‘my cousin’s girlfriend is a realtor’ the analogy I use is if your car needed $300 worth of work, you wouldn’t take it to someone with just a sign out front or do it yourself- you’d shop around for the best, so why are you comfortable doing it yourself or someone you don’t know on a six figure transaction?

  7. As you stated: “The most important part of investing in real estate whether you are flipping, holding or wholesaling is knowing the value of property.”

    A Realtor is not licensed or trained to value property. The Realtor has no responsibility or liability for their property valuation.

    I’ve reviewed a lot of Realtor valuations. Most are not worth the paper they were written on. This includes BPO’s.

    If you need to know a property value, then you should consider a person who is licensed and trained to value property, i.e. an Appraiser. Better yet, consider a competent Appraiser.

    Since the property valuation is the “most important part of investing”, this is the last place the investor should be cutting corners.

    There are numerous articles on how the “Appraiser killed a deal” because the appraised value was too high or too low. In every case I’ve reviewed with a competent Appraiser, the market data supports their valuation and the complaining party had nothing to support their claims. The complaining parties did a poor job analyzing the market data then tried to blame someone else for their mistakes. If an Investor does not know how to value property, then they need to find someone who does.

    • Al, I agree with you, but taking a more ‘philosophical’ approach (and assuming you may be an appraiser), you mention yourself there are many articles on how an appraiser killed the deal, so what makes them any more accurate than the realtor?

      In answering my own question, the only difference is the banks rely upon them vs. the realtors. However, it certainly does not make them any more accurate in their assessment. The only real accurate ‘appraisal’ is what the buyer is willing to pay for it.

      Appraisals are an antiquated, subjective and useless waste of money that we are required to do, simply from a paradigm of the business- it’s a ‘because we’ve always done it that way’ behavior that makes no sense, at least from the bank’s standpoint, a required part of the process. From an economic standpoint, 1) You have a seller for a good 2) you have a buyer that has agreed to the price of that good 3) you have a third entity who can kill the deal. There’s no other transaction that this can occur except in real estate (maybe needed in healthcare, though).

      Most people will agree, 95% of the transactions you put out there based upon the realtor’s suggested sales price and gee, it happens to come in a few thousand over or right at (suggesting they’re just as good at appraisals as the licensed ones).

    • AL, thank you for the comment, but I would counter with a few points.

      I think Realtors have plenty of training and real world experience. It is not the appraiser that sets value, but the market. I have had many appraisals come in low when we had multiple offers! The appraisers are 95% dependent on sold comps and must be within a certain distance, size etc. To expand on those guidelines they must provide a lot of commentary and documentation to show it is needed. Most appraisers do not want to go through the hassle and use easier comps.

      The last bad appraisal we had was 20k below contract price. The house was in a neighborhood with few sold comps so the appraiser went back to September 2012! and used that value. He said the market was stable, even though all indicators show 20% increases in the last year. He was lazy and didn’t want any extra work so he took the easy way out. Happens all the time. The appraiser always says the sold comps on’t support value, but what a about all the buyers willing to pay that amount? They don’t count, because the sold comps don’t support value. 90% of appraisers ignore listings and, because their system tells them too. Technically if an appraiser is only supposed to use sold comps, how can a market increase in value?

      The last two refinance appraisals I did on refis were 15% below market. They were sad how little the appraiser did. I am a HUD listing broker and HUD sets prices by appraisal. IN one neighborhood I had three similar houses listed within 3 months. appraisals came in at $110k, $130k and $160k! Guess what they all sold in the first ten days. $125k, $135k, and $155k. Those two low priced homes would have sold for $150k if they were priced right.

      • Respectfully, I disagree with most of your comments. I’ll address a few high points.

        I explicitly stated “competent Appraiser”. I agree there are incompetent Appraisers whose appraisal may be as poor as a Realtor’s valuation. Neither of these people should be performing a property valuation. This addresses many of the issues you raised.

        If a poor appraisal is submitted, the parties involved need to know how to respond. A poor appraisal can be addressed if you know what to do and have the market data to support your claims. I successfully do this when I am a party in the transaction and consider an appraisal to be poor. The reason I’m successful is I can support my claims. The other complaints I’ve seen have no support or blatantly poor support (i.e. significantly different Comps from miles away). The people making complaints about poor appraisals with no support do not understand a property valuation, or else they could address the poor appraisals.

        Quote: “The only real accurate appraisal is what the buyer is willing to pay for it”.
        If the transaction is a cash transaction, then I agree and you don’t need an appraisal or property valuation. However, almost all transactions are not a cash transaction. The buyer wants a bank to make a loan and take the risk. The value of the property is what it may be sold for on the open market, not what a single buyer is willing to pay with financing from someone else.

        One of the issues that was completely ignored is the Realtor is a party in the transaction and has a vested interest in the transaction. Due to the Realtor’s vested interest, the Realtor’s opinion may be biased and cannot be trusted. The Appraiser has no vested interest in the transaction and can provide an independent opinion to his client (i.e. lender). The Appraiser is typically hired by and working for the lender for the lender’s benefit, not the buyer or seller.

        You may claim the appraisal is antiquated, subjective and useless. I disagree. As identified in this article, the most important part of investing in real estate is knowing the value of property. This is an appraisal. A person understanding this has a huge advantage over people who do not.

        The task that is headed in the direction of the dinosaur is the Realtor. Many of the Realtor tasks can now be performed at a much lower rate by a discount broker and online services. The Realtor’s are struggling to maintain and justify their 6% commission. Personally, I always negotiate a highly discounted rate from a Realtor whenever I need their involvement due to their limited contribution.

        • Al, doesn’t the current appraisal system reward the incompetent appraiser? They reward appraisal work based on low fees and quick turn times which encourages bad appraisals and less research. I have many appraiser friends, one who is the head of the appraisal association in my area. He has told me he is very frustrated with the appraisal system because of how they pick appraisers. Most of the people doing the work are from out of town who have no idea about our market. he said he spends almost all his time dealing with complaints and most of the time, the complaints are justified. This is coming from an appraiser.

          Another thing appraisers do not have is direct contact with the market place. Realtor’s are in the field talking to buyers and sellers all the time. We know what the buyers are looking for and what they are willing to pay because we work with them. An appraiser is going off data and many times appraisers call me to check on their values. They ask if I think they are accurate, if I have any more comps and what I think the market is like (on properties I am not involved in). A Realtor is much more in touch with the market because of their direct involvement in the market.

          So you are saying if I have multiple offers with multiple buyers willing to pay asking price or higher and an appraiser comes in lower than asking price, the buyers are all wrong? The buyers are the market, not appraisers. Appraisers are there to confirm the market prices are accurate not make the market prices.

          I have challenged many appraisals and had about 10% of them changed or corrected. The other 90% are completely ignored by the appraiser because they don’t care. I know how to provide comps, distance, condition, recent sales etc.

          I still think the system encourages bad appraisals. We are in a market where prices are increasing and there are very few homes for sale. Buyers are therefore willing to pay a premium. Yet because of the few houses for sale and the increasing prices there are few sold comps that justify increased values. The appraiser bases 90% of his value on sold comps. How can the appraiser justify higher prices when he is supposed to use sold comps that may not exist? If one were to look at the supply and demand side it would show 5 buyers for every house on the market, 90% of homes under contract and no active listings similar in price. All indications are the home is worth what the buyers are paying except there are no enough sold comps. The value comes in low because many other factors are ignored.

          As far as Realtor’s becoming the dinosaur I think the number of comments from successful investors who place a premium on a good agent would show that is not true. As my article states a good Realtor will save or make people thousands and much more then they would save by not using a Realtor in most cases. Notice some investors have said they will even pay more than 6% for a good Realtor because they know how important they are.

        • Good comment below, Mark.

          Al, I could be wrong, but going back to your comment appraisers have no vested interest, I believe the laws have changed where if the bank makes a decision based upon the appraisal, the home is foreclosed and bank cannot recoup their funds, they can hold the appraiser liable. If true (and I only heard that, have not verified), then they have a vested interest to come in low.

          Anybody else can verify or crush as a rumor?

  8. Just mentioning that any investor can find an agent who’ll post their house on MLS for $500 with the notes pointing at the investor to take all calls. In Atlanta we are down to 30 days of inventory selling is not a problem via a flat rate MLS ad, professionally taken photos add in a craigslist ad and put up an ebay ad too. You infer that only an agent can determine the best asking price, I don’t personally believe that!

    • Hi Curt, I think a non agent can come up with a value, but like I said is it worth the time and effort to do it yourself instead of find more properties? Sure you can sell a home in a hot market, but how do you know you are not leaving money on the table? Plus if you are listing it with a flat fee you are most likely paying a buyers agent. Then you run into the issue of not being represented while the buyer is. My point is, yes you can do it yourself, but how much money are you leaving on the table?

  9. I see the benefits a good agent could bring, but in my limited experience, I am underwhelmed. My guess for now is that maybe I have found the right one, but if they arent bringing me any useful information or properties I dont have access to myself, what is the point?

  10. Only an agent has access to sold comps? That’s not true. Get a login to listingbook.com or realtor.com has access to MLS. Lots of ways to get recent sales data. Every investor needs to know what’s happening in their farm area. I hope investors aren’t dependent on agents for their home work and tracking their farm?


    • Curt – I tried that Total View link. It still doesn’t really give you what a Realtor can give you.

      Here’s the example I tried. 3720 Ximines Lane N, Plymouth, MN 55441. This single family home sold on 11/25/13.

      According to Total View –

      Zillow Value – $326,531
      Appraisal.com Value – $325,045
      Their estimate – $312,105
      Last sold on 12/5/13 for – $299,000

      First off, their date for “last sold” is off by 10 days. Shows that MLS data is more timely. Secondly, why are they estimating $312k when they can see it just closed for $299k?

      Discount those issues because the REAL issue is that none of these websites actually capture the net price to the seller. This house had $7,983 in seller concessions. MLS doesn’t typically pass that information to these websites. The real sale price that the seller accepted was $291,017 which is substantially different than the $299k it makes you believe it sold for.

      Seller concessions are involved in over 1/2 of the deals in my market and it’s imperative that a Realtor factor those in to their pricing analysis to give buyers and sellers a real view into the fair market value for a property.

  11. I have a great realtor. She knows her market very well and is also an investor herself (having done some flips and having worked with investor buyers). Because of her experience in flipping, it is very helpful to look at a potential flip house with her. She has helped me buy and sell land and helped me purchase my rental, which was a FSBO, for $6k less than what the sellers were asking. And she got the sellers to pay her commission on top of that! I have been working with her for several years now.

  12. The problem is the barrier to entry for an agent is pretty low.
    Giving someone who has no idea what they are doing MLS access doesn’t make them any better at setting an ARV then using Tiger Woods golf clubs would make anything other than the triple digit hacker I am.
    A good one adds value but a mediocre or worse one is just an added expense.

    That being said I have my license and use other agents to list my flips about 70% of the time.
    Why? First because I AM a lousy agent. 🙂
    Next because I generally feel my time is better spent on other tasks.

  13. “I still think the system encourages bad appraisals.”

    Most (if not all) the problems identified are related to hiring the cheapest Appraiser, a.k.a. the most incompetent Appraiser. If a Client hires the cheapest, most incompetent Appraiser they can find, don’t be surprised if the Appraisal quality is poor and there are issues. This problem can be easily solved by hiring a competent Appraiser and paying a reasonable fee. I feel no pity for Clients who create this problem for themselves.

    “I have challenged many appraisals and had about 10% of them changed or corrected.”

    If you have a 10% success rate challenging appraisals, then you do not know how to challenge an appraisal and are wasting your time. The challenge success rate should be 100%.

    “A Realtor is much more in touch with the market because of their direct involvement in the market.”

    I disagree. The Realtor has a detailed knowledge of a small subset of the market which is made up of their Clients. The Appraiser deals with the entire market. It is common practice for an Appraiser to contact a Realtor to clarify specific issues on a property (especially when the MLS listing info is incomplete or incorrect).

    “I believe the laws have changed where if the bank makes a decision based upon the appraisal, the home is foreclosed and bank cannot recoup their funds, they can hold the appraiser liable.”

    This is America, anyone can sue anyone for anything. Everyone is responsible for their actions. This includes an Appraiser. If an Appraiser performs a poor job, then they should be held accountable the same as everyone else.

    I find it surprising (and despicable) that the banks may ignore the loan applicants, mortgage brokers, real estate agents, etc who submit fraudulent loan applications for buyers they know cannot afford a house and will default, but want to hold the Appraiser responsible for the default. The other parties collect their commissions and are not held responsible for their scam. Same goes for the Wall St staff who created the mortgage melt down.

    • Al, is it not the appraisal management system that hires most appraisers and not the clients themselves? The management system is what encourages the cheapest and worst appraisers and local appraisers have confirmed to me over and over they have lost a ton of work because of the new system to out of area cheap appraisers.

      Tell me how to challenge an appraisal as a Realtor? I can’t contact the appraiser directly or have been told not to by my lender. I have to contact the underwriter, who then has to contact the appraiser with a request to review and as much documentation they can get. Usually I give them comps and info and they send it to the appraiser. Most of the time the response is “I stick with my value” and that is it. They don’t want to redo an appraisal because it will take time and money.

      The Realtor is not dealing with only their clients. The Realtor is looking at MLS constantly, talking with other agents and speaking directly with their clients. When they are looking for houses or listing houses they are looking at the entire area to see what the competition is and what is available. I don’t have appraisers calling me just to confirm concessions or condition, but asking me my opinion of value. Many of them are from Denver 60 miles away and have no clue about our market. Yet you think someone 60 miles away has a better knowledge of my market because they cover a broader range?

      Many mortgage brokers and Realtors were sent to jail as well as appraisers. The homeowners lost their home and credit.

  14. The one question that has not been answered by the pro-appraisers is if the realtors are not qualified to provide a price, then why are they the ones initially involved to price the home to the sellers, and more importantly, why are they (estimating) 98% correct when the appraisal is done? Appraisers offer no added value beyond cost

  15. Great article, Mark. Well, who wants to be hassled with all the nitty gritty –and for the beginner, the complexities — of buying or selling when I can use an agent to make my life easier? I should let my money work for me and not the other way around. Your example of an underpriced property is the best point to let one realise the cost benefit of hiring a good agent.

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