How much does a Realtor Cost?
In 5 Minutes or Less
How expensive is your home…really?
How much does a Realtor cost?
Should you go with a budget service…or an expert?
Homes are expensive…
For most of us, buying or selling our home will be the most expensive financial transaction in our lifetime.
In June of 2023, the median sales price of a home in Williamson County, TN was $855,000. With 10% down and a 7.22% interest rate, that comes out to a whopping total home cost of… $1,884,769.00!
Here’s a pretty chart to prove it…
With an expensive purchase like this, it sure is tempting to save some money on transaction fees…after all the industry standard 3% for a Realtor adds up quickly in this price point.
But, this is an enormous financial decision…maybe the most important in a person’s life.
What if we compare this to other major important decisions — how would you approach the most important medical decision of your life? I would get multiple opinions and speak with several doctors, prioritizing their experience, knowledge of the procedure, and their professional network just incase something goes wrong beyond their skillset.
My first question would not be “what does this cost?” or “are you the cheapest in the market?”
Don’t get me wrong, we’re all consumers and cost matters!
But what if your doctor missed something? Or botched the procedure? I would forever regret not paying a premium for the best expertise I could find.
The same goes for real estate. Except in our medical example, your cost for an expert might be double or triple factoring in travel expenses and the nuances of insurance. In real estate, the difference in expert service is 1-2%
How expensive is a Realtor?
Costs of service are pretty standard in our industry:
Budget real estate agents: $5,000 flat fee per transaction
Full Service Realtors: 3.0% per transaction
…and these fees are paid by the seller.
At face value, this means in Williamson County, the cost difference in a budget service and full-service is about 2.5%.
But let’s remember that the total cost of your home is much more expensive than the initial purchase price….$1,900,000.00 in fact.
This means your upfront realtor fees, for the best service are more like 1.3% of total cost.
But what could go wrong…
…with a budget service? Should you pay the extra 1%? What happens if your Realtor doesn’t have a good home inspector?
Here are some repairs we’ve seen lately:
New roof cost: $36,000
New HVAC system: $ 13,500
Foundation Repairs: $9,000
These would be costly misses for sure—catching just one of these justifies an expert Realtor.
You probably plan to live in your home for years. What if your Realtor was willing to work with you over the lifetime of your investment to secure savings as things break over time?
New roof cost: $36,000 $32,400…savings = $3,600
HVAC: $13,500 $8,500…savings = $5,000
Foundation Repairs $9,000 $1,800…savings = $7,200
Better yet, how much would it save if your Realtor could leverage 30 years of professional connections with local lenders to negotiate your interest rate down by .1%?
In this case, it would save $18,775.
These are real examples of how much money we’ve saved our clients.
The real question isn’t should you pay the 1%. It’s “how much does that flat fee service really cost?”
The bottom line is this…
It is very easy for a good agent to save you 2%. In fact, it’s common that we save our clients 10-20% through negotiation, vendor connections, and regional expertise.
If a doctor said you can have expert advice and peace of of mind for 1% more, would you take it? Personally, I would pay the extra 1% for the best waiter at Chili’s…it’s a no brainer for the biggest financial decision of my life.