Last spring, a bombshell court judgment against the National Association of Realtors found that the organization had colluded to require burdensomely high commissions to agents in the homebuying process. As a result, the standard rules of real estate transactions have been overturned, and agents are no longer guaranteed a 3 percent commission. Many prospective buyers are beginning to rethink what the realtor-client relationship looks like — and how much they should pay for it. This is one of the most important transactions of your life. But with technology and regulation changes, do you need to pay 3%?
And in the settlement’s aftermath, homebuyers are left wondering: What kind of representation do I need, and how much is it going to cost?
Armed with Zillow, Redfin, and the like, buyers are savvier and more informed than ever before. If you can find a dream listing all on your own, and you’ve been to the bottom of every Reddit thread about making a strategic offer, why do you need an agent to walk away from your home purchase with tens of thousands of dollars?
You don’t. The three percent commission model is outdated, but it doesn’t mean that the role of an agent is no longer necessary. Buyers can pursue a smarter, more modern approach: hire an agent who utilizes technology to make all the transaction processes more efficient, and only pay a fraction of the standard commission.
Flat fee agents, like we have at TurboHome, offer twofold benefits. They have years of experience with successful home purchases, and they’ve seen all the surprises that the homebuying process can bring. But they’re also assisted by proprietary AI technology that takes care of the more basic, formulaic steps in that process. If you already have a property you’re interested in — as most buyers on the market do — you get all the services of an agent at a fraction of the standard cost.
What makes an agent worth it?
A buyer’s agent is responsible for more than just finding a property. A skilled buyer’s agent can:
- Negotiate on price and repairs
- Provide expertise on local markets and property values
- Guide you through paperwork and legal details
- Manage challenges that can derail a home purchase
If you choose to buy a home without an agent, you’re probably doing so because you believe that the transaction will be uncomplicated. It may very well be! Plenty of people buy and sell homes with minimal friction.
But assuming that will be the case can be a dangerous bet when you’re dealing with an asset as expensive — and possibly emotionally fraught — as a home. It’s probably the biggest purchase you’ll ever make.
Let’s consider these real-life scenarios described by users on Reddit:
- You’ve outgrown your starter home, and you’re trying to find something bigger in a tough market while working full-time and raising your kids. This is a time-consuming process: combing through listings, setting up appointments, getting offers in before other prospective buyers. You could theoretically do it all yourself, but an agent would make it much less overwhelming — which leaves you more able to focus on making the right choice for your family, rather than the quickest and simplest one.
- An inspection isn’t necessarily going to reveal every problem with the house — in fact, in many cases sellers try to prohibit an inspector from looking at parts of the house that have known issues, like a water-damaged roof or sewer problems. A good, worthwhile agent can put pressure on the seller to amend the sale price or pay for the repairs if something gets discovered after the contracts are signed.
- The seller starts to get emotional and combative about the acquisition of their beloved home, and starts to push back on different repairs and modifications requested by the buyer. An agent is a detached broker who can handle the emotional elements of the deal.
- The listing agent gets aggressive, and uses intimidation and threats of urgency to get you to accept terms of a deal that aren’t best for you. If you aren’t an experienced negotiator, you could really use the help of someone in your corner.
Is an agent worth 3% of the home price?
More and more buyers are beginning to feel that it isn’t. The good news is that an alternative is emerging: flat-fee agents. An increasing number of brokerages and solo agents offer their services at a flat fee that ends up being much less than that. It also removes any buyer's concern that their agent has an incentive to negotiate for a higher price.
We believe that flat fee agent services are the future of homebuying, offering efficient, informed, and affordable services to buyers and sellers. If you feel the same, contact us at hello@turbohome.com to set up an appointment.
