Typically there are two items that have sellers scratching their heads, the sales price and real estate commission. Both are important and we’ll be discussing commissions in this article. Commissions like the sales price are completely negotiable but the traditional fee an agency will probably charge is about 6.0% of the sales price. This fee is ONLY paid if and when the property sells and the commissions are usually paid from the proceeds of the home through escrow unless the seller is upside down then the seller may need to bring money into escrow to balance the deal.
Most of the time the commission is split with another agent or agency that brings the buyer. This is called a cooperating agent, of the agreed upon 6.0% commission the listing agreement would be paid 3.0% and the buyers agent would be paid the other 3.0% for assisting with the sale and bringing a buyer. Just to reiterate absolutely no money changes hands from the seller to the agent or broker the seller employed at all, commissions are paid from escrow once the property sells. Regardless if you’re buying or selling a home in today’s real estate market, this process will be the same. By the way there should be no reason a buyers agent is paid by the buyer, commissions are always agreed to up front and paid from escrow.
The Skinny On Real Estate Commission
Don’t forget that commissions are negotiable, different agents charge different fees and along with those varying fees often comes varying services. Full service Realtors are the ones that will list your home for sale, market your property till it’s sold and handle all the paperwork, negotiations and other items that come up during the transaction and the typical fee for this service is the 6.0%. Agents charging less are likely cutting corners, for instance you may not receive the full marketing strategy a full service agent provides which can increase your days on market, another way discount agents cut corners is not providing the service during the transaction. This means if there are inspections or other items that need attention or presence by the agent or seller the seller is always the one that has to go. The bottom line is that you really get what you pay for and think about this for a second, if you’re closing costs and real estate fees are tax-deductible, who’s really paying the cost?
To be specific on what items your Realtor is going to do for you for what fee ask them to put it in writing and hold them accountable. You’ll always want to get this information up front before you sign any listing agreement. Get the details like exactly how many open houses will be done each month and when will the marketing reports be provided whether weekly or monthly. Lastly, and perhaps the most important detail to discuss is what happens if the property isn’t under contract in 30 days. This is another item that sellers should discuss with their agents in advance as it takes the emotion out of the discussion if things aren’t going perfectly. The old adage plan for the worst and hope for the best is the best course of action.