The COVID-19 outbreak hasn't necessarily hurt the housing market. Rather, it largely put things on pause. That's good news for sellers and house flippers, as it could pave the way to lower real estate agent fees.
Real estate agents typically charge a 5% to 6% commission for selling homes, and generally, it's the seller who absorbs that cost. But with less inventory available due to the pandemic, real estate agents may not be as busy as they'd like. They also might find themselves desperate for business. And that gives sellers and house flippers a key opportunity to do some negotiating.
Inventory is bare
Selling a home these days may not require the same amount of effort it once did for one big reason: There's not a lot of competition.
On a national level, housing inventory declined in June by 27.4% year over year, according to Realtor.com. The result? There were 363,000 fewer listings on the market compared to June of 2019. Meanwhile, housing inventory in the 50 largest U.S. metro areas declined by 26.5% year over year in June.
All of this boils down to the fact that real estate agents may be underbooked -- and eager to earn more business. And that could put you, as a seller or house flipper, in a great position to negotiate a lower fee on your home sale.
How low will real estate agents go? It's hard to say. On the one hand, some might hold firm on their usual rates because they can't afford a hit on the listings they take on. But it certainly doesn't hurt to try to talk agents down.
Of course, the extent to which you're successful will largely depend on what you expect of your real estate agent. Right now, the simple act of conducting an open house is more involved than ever due to the dangers of COVID-19. As such, it'll take extra effort and coordination -- not less -- on the part of your real estate agent to pull off showings. Furthermore, real estate agents are increasingly being called upon to set up virtual tours, since that's a safer way to gauge buyer interest in listed homes during the pandemic. All of this added work means real estate agents may not come down on fees.
On the other hand, if you're looking to your real estate agent for marketing only and you'll be handling your open house cleanup and virtual tours yourself, then you may be able to get away with paying less. The same holds true if you're not getting help staging your home.
Finally, remember that if you're in the business of house flipping and have a standing relationship with a specific real estate agent, you can work that to your advantage -- think of it as a customer loyalty discount. The promise of future listings might also snag you a lower fee, and that's something you can work with not just during the pandemic but also once it comes to pass.
Save money on your home sale
While it's unfortunate that real estate agents may find themselves struggling in the face of limited housing inventory, sellers like you have a solid opportunity to reap some savings. You should not only try to negotiate the fees you're presented with but also meet with a few different agents to see who has the most competitive offer to begin with.