10 Pros and 5 Cons of Working With a Real Estate Agent

Real estate agents provide important services to homebuyers and sellers. But not everyone works with one when investing in real estate. Regardless of which end of the transaction you're on, it's worth considering the advantages and disadvantages of hiring a professional to act as your advisor and advocate during the process.

Consider these 10 pros and five cons of working with an agent to help you make an informed choice about whether hiring help is right for you.

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Real estate agents get to know their local markets well and develop an in-depth understanding of how much different properties are worth. This knowledge can be invaluable to both buyers and sellers. Current homeowners who are listing their houses can make sure they price them right. And those looking to buy can avoid overpaying if they follow their agent's advice.

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By showing homes regularly, agents get to know all the different local neighborhoods. That means they can help buyers find properties in locations that are a good fit based on their desired lifestyles. And they can help sellers showcase their houses to the types of buyers most interested in purchasing properties in the area.

If you are selling a home, one of the biggest benefits of working with an agent is that only agents can list properties on the Multiple Listing Service (MLS) -- a large property database most agents rely upon to find homes. Most online websites dedicated to showcasing house listings also draw their data from the MLS. That means being listed in the MLS is crucial to reaching a wide buyer pool.

If you are selling a house and do not hire an agent, you will either need to find other ways to market your home or use a flat-fee service to add your property to this database.

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For buyers, a big benefit of having a real estate agent is the possibility of hearing about upcoming homes for sale before they go on the market. These are sometimes called pocket listings because they aren't marketed through traditional channels, and only a select number of people know about them when their agents share the information.

This can give buyers a competitive edge when not many homes are available because supply is tight.

When it comes to home showings, both buyers and sellers can benefit from the services agents provide.

For sellers, agents can facilitate the process of arranging visits from buyers and be there to show the property, so sellers don't have to be. On the other side of the coin, agents can arrange showings for properties buyers want to visit and accompany them while they look at them.

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Sellers benefit from getting professional advice from real estate agents about how to make their properties look their best.

Agents can offer tips on decluttering and staging the rooms of a home so that it attracts more potential buyers. Artful design that paints a picture of what life will be like in the home can help to ensure a home sells more quickly and for a higher price.

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On average, homes sold by individuals sell for around 11% less than comparable properties sold by real estate agents. As a seller, being able to fetch a higher price is a major advantage and may outweigh many possible disadvantages of working with an agent.

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Both buyers and sellers need someone in their corner skilled at negotiating. Agents have this expertise as they work on their clients' behalves on dozens, even hundreds of sales each year.

An agent can help ensure buyers pay fair prices and sellers get what their homes are worth through skilled negotiation. Agents can also negotiate other aspects of the transaction, from the closing date to the contingencies included in a sales contract.

In most cases, buyers include an inspection contingency in their contracts. An inspection is important to ensure there are no surprise expenses after purchasing a home. But if issues arise during an inspection, this can jeopardize a sale. Agents can help work out a resolution that satisfies all parties and allows the deal to go through if a problem arises.

Real estate agents typically have a network of professionals they can recommend to their clients. This benefits both buyers and sellers.

For example, an agent may have relationships with a lender, title company, home repair professionals, inspectors, and surveyors. If agents connect their clients to these individuals, they can help move the transaction forward to closing by taking care of steps that must be done along the way.

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Cost is one of the biggest disadvantages of working with an agent. Traditionally, the commission is 6% and is split between the buyer's and the seller's agents -- and sellers pay the commissions for both. That can be a huge sum of money.

However, some of this cost is indirectly passed along because the house is priced with the assumption this commission will have to be paid.

ALSO READ: Can You Negotiate Real Estate Agent Fees?

Sellers almost always have to sign a contract giving their real estate agents exclusive rights to list and sell their property for a period of time. As part of this agreement, sellers agree to pay a commission to their agents, so they can't simply walk away without paying them if a buyer approaches them independently.

Some buyers' agents also require clients to sign a contract to work with them before being willing to arrange showings or facilitate the sale.

Since agents earn commission as a percentage of the home's value, they make more money when buyers pay more. That could be a disadvantage for buyers because agents may be incentivized to try to steer them into more expensive deals.

While agents aren't supposed to do that, they may violate the rules or even act subconsciously without realizing how much they are influenced by knowing they'll get a bigger paycheck with a costlier sale.

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While it can be helpful to be connected to lenders and other professionals through a real estate agent, it can also be a disadvantage if these mortgage providers or other service providers charge more than their competitors.

Buyers and sellers can mitigate this downside by shopping around, but that negates the benefit of having access to the agent's network.

Finally, one big con is that not every real estate agent is good at their job, meaning it takes time and effort to find the right agent. And a buyer or seller could, ultimately, regret signing a contract with someone who turns out to do sub-par work.

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Hiring a real estate agent makes sense for you if you believe the pros outweigh the cons. Many people do better having a professional representing them than they would if they tried to navigate the transaction on their own. But others would prefer to save the money and/or have more flexibility.

Ultimately, the choice of whether to hire help is a personal one. Just be sure you consider these advantages and disadvantages when making your choice.

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