If you’re selling your house and wondering how much it’ll cost you to sell it, you may want to continue reading this information on how to utilize a real estate calculator. It will help you determine your selling costs. If you’re wondering about the cost to hire a real estate agent, you may continue reading this article. You will learn about real estate commissions and their processes.
People hire a real estate agent such as Brookfield Real Estate Agency for several good reasons, regardless of whether selling or buying a property. Notably, house buyers hire realtors or real estate agents to help them find the right house within their budget. They also work with the mortgage bank to complete contracts and other paperwork. And negotiate several good terms with the seller’s agent.
Conversely, as the listing agents, they help sellers price their properties accordingly. They also negotiate in support of the seller’s best interests, and stage houses to showcase the home’s best assets. They have an impressive appearance.
Also, real estate agents such as Finlay brewer work with other real estate professionals such as lawyers, inspectors, and brokers to coordinate several aspects of buying or selling a house.
Real Estate Agent Commissions Explained
Keep in mind that real estate sellers and buyers don’t pay agents based on the time they work with them. Instead, agents get paid based on commissions. The sellers’ and buyers’ contracts with their real estate agents states the commission fees.
Even though the contract can specify that one agent shall receive a higher commission than the other, real estate commission fees are usually split equally between the seller’s and buyer’s agents.
Moreover, once it’s time to pay the real estate agent, it’s worth mentioning that the commission fees don’t go directly to the real estate agent. It’s initially passed to their brokers.
These listing and selling brokers work with real estate agents and cut the commission fees. These cover expenditures such as sign rentals, office space, and advertising.
When it comes to splitting the total commission fees with the agent, there are times when it’s a 50/50 split. Then there are occasions when it’s a 60/40 split. In essence, the amount could be any portion upon which the agent and broker have agreed.
For instance, if a house gets sold at a USD $150,000 selling price with a commission rate of 5%, and there’s a 50/50 split. Then the listing and selling brokers and the seller’s and buyer’s agents would receive USD$1,875 each.
Percentage Most Real Estate Agents Charge
Generally, real estate agents charge 5% to 6% of a property’s selling price once it gets sold. The home sellers are the one who pays the commission. Although that’s the usual case, the seller and buyer can also decide to negotiate a split.
Real estate transactions can also involve two real estate agents. One representing the buying party—also known as the buyer’s agent—and the other representing the selling party called the listing agent. That means if you’re a seller and considering working with an agent, you have an option not to pay the total percentage of commission to a single real estate agent by negotiating with the buyer.
However, even if sellers don’t negotiate a split and decide to pay the total commission fees, they typically factor the commission into the property’s listing price. Thus, the buyers still indirectly cover some of the commission at any costs due to the higher listing price.
Negotiating The Real Estate Commissions With Agents
The contract between the listing broker and seller—called the listing agreement—specifies the listing conditions. And even though the generally agreed commission is 5% to 6%, the law states that the commission rates should be negotiable.
Therefore, real estate sellers can negotiate lower commission fees for the real estate agent’s services. However, the agent has the option to decline the collaboration.
Keep in mind that negotiating the real estate commission often depends on the selling potential of the house on sale. If the agents see all the exemplary qualities of the property to sell and they realize that it can be sold instantly, they’ll likely decide to accept a lower commission.
However, if they see that the property has several features that make it challenging to sell, real estate agents may ask for a higher commission.
Overall, real estate buyers usually don’t need to worry about real estate commissions as the sellers are the ones who cover this cost. But even though the sellers pay the real estate commissions, they wrap the costs into the home’s listing price. So technically buyers still pay a percentage of the cost for some real estate fees.
Furthermore, while the real estate commission fee comes from the home’s listing price, it’s also worth noting that this fee is separate from the closing costs that the home buyers need to pay, including the taxes, paperwork, and loan processing fees.