There's a reason so many sellers partner up with real estate agents to sell their homes, despite losing money to fees. Working with a real estate agent could result in a higher sale price -- and a smoother listing process.
But right now, it's clearly a seller's market. And that could hold true for much of the year.
That leaves sellers with an important decision to make: Does it pay to hire a real estate agent to sell a home this year? Or should you go it alone and pocket more of your sale proceeds?
Sellers have the upper hand right now
As of early 2022, the inventory of active property listings is down 60.4% compared to two years prior, according to recent data from Realtor.com. As such, in January of 2022, there were 163,000 fewer homes actively for sale compared to a typical day in January of 2021.
Meanwhile, the national median listing price for active listings in January was $375,000. That's a 10.3% increase compared to January of 2021 and a whopping 25% increase compared to January 2020.
All of this makes the case to not hire a real estate agent right now if you feel equipped to handle the process of selling a home yourself. Since there's not much competition these days, you don't necessarily need a real estate agent to market your home strategically in the hopes of attracting buyers. In reality, you might get your share of buyers by virtue of having an actual home to list.
Furthermore, with home prices being up, you may not need the help of a real estate agent to command a higher-than-usual asking price. This especially holds true if inventory is particularly sluggish in your neck of the woods. If that's the case, you may find that once you list your home, you get a string of buyers who are willing to outbid one another for a chance to own a property -- even if that means paying well above your asking price.
That said, there are a few caveats to all of this. First, if you're a real estate investor or even a regular homeowner who's been through the process of selling a home before, then you may feel equipped to tackle the process solo. But if you've never sold a home, then doing so without an agent could end up being stressful, even in a market that gives sellers an edge.
Furthermore, while home prices are up and housing inventory is low right now, we can't say for sure whether this will continue to be the case later on in the year. Mortgage rates are already starting off higher in 2022 than they were at any point over the past year and a half. And less competitive rates could lead to waning buyer demand -- which could, in turn, drive home prices downward.
Additionally, many sellers have held off on listing their homes due to uncertainty related to the pandemic. If that changes and there's an influx of homes that hit the market later on this year, that might make the case to hire a real estate agent after all.
Keep tabs on the housing market
Working with a real estate agent can benefit you in many ways, even at a time when market conditions clearly favor sellers over buyers. If you feel prepared to handle the sale of your home yourself, then doing so could save you money. But if you don't feel up to the task, there's nothing wrong with enlisting the help of an agent. Remember, agents earn their fees not just by marketing your home but also by guiding you through the negotiation and sale process. And there's a real value to that.
Furthermore, if you're planning to sell your home later on in the year, you'll need to keep an eye on the housing market to see if working with a real estate agent makes sense. If conditions change, hiring a real estate agent may become necessary if your goal is to move your home off the market quickly, all the while commanding the highest price for it.