Real estate mistakes can be costly and time consuming. While it's impossible to guarantee a home sale goes perfectly, there's one major error to avoid: selling a house without an absolute superstar of a real estate agent.
When it comes to real estate, properties belong in the right hands. In this post, we'll make the case why anything else just doesn't make sense.
(NOTE: While this is written specifically for home sellers, the value of a top agent applies to home buying as well).
FSBO Is Sale Suicide
The first thing you need to understand about the real estate process -- selling without a real estate agent ain't it! For Sale By Owner (FSBO) sales historically go poorly. Like, laughably poorly.
Nobody likes paying money for a service they can do themselves. We get it. But there's a reason why 90% of homeowners use an agent for the sale of their property. That reason? Home listings handled by real estate agents sell for 14% more on average than those handled by the owners themselves.
That eye-popping statistic suddenly makes a 6% agent commission look like a great investment. Of course, with the recent NAR case settlements, that 6% may get even smaller, making it a no-brainer to use real estate agents in the selling process.
Perhaps our favorite "nail in the coffin" of the notion that FSBO makes financial sense -- the founder of ForSaleByOwner.com used a real estate agent to sell his home. If the people in the real estate industry telling you to sell yourself aren't even doing it themselves, why should you believe them? Real estate professionals exist for a reason; don't overthink things. Kill the idea of selling property yourself.
The 80/20 Rule
Hopefully our first reason highlighted why you need a real estate agent! Next, we want to let you in on another dirty little (open) secret about the real estate market.
Top real estate agents handle the lion's share of all real estate transactions.
The old adage has been the "80/20" rule. Meaning, the top 20% of all real estate agents handle 80% of all sales volume. Recently, it's been argued that really should be the 93/7 rule, with the top 7% of agents handling almost all the deals in the real estate industry.
Regardless of the exact ratio, it's undeniable that the best real estate agents are the ones driving the majority of sales. This does not happen by mere coincidence. The National Bureau of Economic Research produced a fascinating paper showing "houses listed for sale by inexperienced real estate agents have a lower probability of selling." This paper also details how the (previously) high commission potential and low barriers to entry to becoming a real estate agent enticed many wannabes to get their license.
The implication from these findings is that any agent outside of the top tier of producers is either new and inexperienced (but may eventually become a top agent), a housing market ambulance chaser, or just simply not very good at their profession. At any rate, we'd argue that anyone in those three groups should be immediately excluded from the pool of candidates in consideration to provide you real estate services. You don't want a part-time agent handling your biggest asset; only a top real estate agent should be trusted.
Winners Win
If the top 7-20% of real estate agents are the experts, the professionals who can get the job done, then there's only one more question to ask.
What's the difference between a top 5% agent and a top 10% agent?
The answer isn't always concrete, but that makes it no less important. For some reason, the top 5% of agents outperform other "top agents" in the market. If someone's annual sales volume is consistently higher than that of their peers, then they're doing something better than other real estate agents. It could be higher volume of property listings (which suggests they sell them quickly), or higher sales prices than market value (which suggests they can get homeowners more money). Naturally, luxury properties have higher prices so top-producing rankings tend to favor an agent at a luxury real estate brokerage; but that illustrates another point. You actually have to be a really successful agent to cut it handling high profile clients and homes. So the sales volume bump that comes from operating in that market is deserved; it takes extensive knowledge and valuable insights as a market leader to sell multi-million dollar luxury homes.
Whatever the exact explanation, why wouldn't you pick an agent that outperforms everyone else, even other top agents? You don't always need to know the exact secret sauce in their "real estate recipe." You just need to be smart enough to identify the best of the best and recruit them to your corner. That extra boost could make a world of difference when it comes to how quickly your home sells, what price it fetches, and how smoothly your experience goes.
Final Thoughts
If you've followed our logic with these three tips, then it should be pretty obvious why a top real estate agent (5%) is a huge asset to a successful home sale. The only thing left to do is find one.
Great data and real estate market research can be hard to find. Even more confounding is that there really isn't any correlation between individual agents' quality and the reputations of their real estate brokerages. So you can't just pick a fancy real estate agency and choose any agent there with great confidence.
TrueParity uses the latest 3rd party data to identify the top real estate agents in every neighborhood.
Our platform has great agents from all brokerages: Coldwell Banker Realty, eXp Realty, Keller Williams Realty, The Agency, Sotheby's International Realty, and more!
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