Do you understand real estate commissions?
Traditionally, a real estate broker hired to sell, buy, or rent a house, gets paid through a real estate commission paid at closing.
While some Flat Fee MLS Brokers like us charge a combination of flat fees and commissions, most pay 5% to 6% of a home’s final sales price. On a $500,000 home, a 6% commission would amount to $30,000. Wow!
Generally, unique for this industry, commissions for both the listing agent and the buyer agent are paid for by the seller. In our example above, with a 6% commission, the seller’s agent and buyer’s agent might split equally split $30,000, each receiving $15,000. Other fees might apply as defined in your listing and buyer representation agreement.
Yes. It is not a regulated amount. However, it is negotiated when the seller executes a listing agreement. Once negotiated, it is fixed and does not vary from offer to offer unless the buyer does not have an agent.
If your listing agreement allows it, the broker may become an intermediary or dual agent to get paid both seller and buyer commissions. It is a shady practice and outlawed in some states. Avoid the conflict of interest it creates. Your listing agent has a fiduciary duty to you and cannot fairly represent both sides. Most often, an agent representing both sides is putting their best interest in front of yours. The agent might discourage other agents and compromise your needs. You might not get the best deal.
There is a long list of activities to sell a home ranging from marketing, showing, negotiating, understanding form and contracts, and transaction management. If you sale it yourself (For Sale by Owner-FSBO), you do it all. Going with a full service agent implies they do anything you ask. Going with a flat fee broker implies not all features of a full service agent are provided. Making sure you understand exactly what your agent is going to do for you maximizes your returns and ensures a smooth transaction.
Yes. No laws set commission fees and rates. Generally, the listing fees, buyer agent commission, and those fees charged if the buyer does not have an agent are negotiated.
All fees, terms, length, and features of the listing service should be outlined in the listing agreement. Keep in mind, rental agreements work differently. Selling a vacant lot takes less effort and should cost less to list and sell.
As a seller, you want a real estate agent who meets your needs. The saying “you get what you pay for” doesn’t always apply. Careful research and due diligence is required.