Real Estate Companies or Individual Agents

Pros and Cons of Working with Individual Agents or Real Estate Companies

The home-buying process can be very stressful, regardless of whether you’re a first timer or a seasoned veteran. Fortunately, you can always find a real estate agency or an independent realtor willing to do a lot of the grunt work for you.

When you sell your house, unless you are selling it yourself (i.e. For Sale by Owner (FSBO)), you will have to decide if you want the help of a real estate agency or an independent agent.  Your decision will be influenced by the type of property and its location, as well as by the real estate market itself.

• If there is a glut of properties on the market, with few buyers, it can make more sense to have multiple agents.
• If there are few properties on the market, but lots of eager buyers, then an independent agent may work just as well.

Real Estate Agencies

Real estate agencies are present all over the country. Often they have city-wide, county-wide, state-wide, national, and sometimes even international offices. The main benefits of using an agency with multiple offices is their network and often extensive advertising budget.

Agencies with many agents and multiple offices often conduct weekly tours of new properties with their agents.  From a seller’s perspective, this is great because the agents on the tour are most likely to be actively selling properties and the tour will give then first-hand knowledge of your property!  Promoting a property to potential buyers is always easier and more effective when the agent has actually walked thru the property.  This approach is much more effective than merely viewing the property on the multiple listing service.  Agent property tours also have the potential to reach more buyers, faster.

Another upside of choosing a large real estate company to work with is that in most cases these agencies have more buyer power for marketing and advertising. Brand recognition plays an important role in marketing success. Real estate agencies usually have more elaborate websites. In addition, they tend to have more informative brochures and pamphlets. Furthermore, they offer more services, such as relocation services, and can utilize multiple forms of media, including TV, to advertise your house to a broader community.

If you decide to list your property with a real estate agency, your house will have more exposure to more potential agents that can sell your house.

A downside of agencies is that they tend to charge commissions at the higher end of the scale. The level of fees or commission charged by real estate agencies can vary widely. It is usually around 6 percent. However in some cases it can go as high as 11% of the value of the sale.  Commissions in agencies are usually more rigid and agents in those agencies usually don’t have much authority to negotiate lower commissions with sellers or buyers.

In a real estate agency, the person from the agency that represents you at closing (i.e. the broker) is usually not the real estate agent that you worked with when buying or selling the property.  This can be good or bad, depending on the personality of the broker and if situations arise at closing.  If all goes well, it doesn’t matter who the broker is.  If problems surface at closing, then the personality and knowledge of the broker become critical.

Independent Real Estate Agent

On the other hand, if you decide to hire an independent realtor, it can prove to be a much cheaper alternative when compared to the pricing structures of large real estate companies. There is usually less bureaucracy in negotiating lower commissions when buying or selling with independent agents.

Personalized Service

Usually, when working with an independent realtor the focus is on driving the business and ensuring that a quality brand is being built. Independent agents have to prove a greater sense of care and diligence and attention to detail,  as their name, business, and reputation is on the line.

Real Estate is primarily a people/relationship business. Real estate agencies as well as independent agents provide a  service. You need to be comfortable with that service and with the skills, knowledge, and personality of whomever you select to represent you. The key to choosing an agent is not whether that agent works for a large real estate company, for a small one, or on their own, but rather your assessment of the level of service that will be provided and if you feel that you can develop a repertoire with the agent.