Real estate is an industry that most of us are only involved in a few times during our lifetimes. Yet, many people talk about real estate and real estate agents as if they are experts. With so many myths circulating about the industry, it can be difficult to realistically prepare yourself for working with a real estate agent.
Cost is one aspect that tends to take people by surprise in their first experience working with a real estate agent. If you are thinking about or have already decided to sell your home and/or buy a new one, remember that working with a real estate agent does cost money.
Types of Fees you Might Encounter:
Listing agent fees are the most common type of agreement between sellers and their agents. Paying this fee grants your agent exclusive marketing rights to your home. This fee is generally reflected in the listing price of the home, and will go to the listing broker or will be split between the listing broker and the broker who brings in the buyer.
Commission is a portion of the sale price that will go to the real estate agents after a property is sold. This sum, typically between one and six percent of the sale price, is usually split between the buying and selling agents and is determined by the homeowner and selling agent at the time of listing. The percentage can be negotiated up until the homeowner signs a listing agreement with their selling agent. The seller traditionally pays commission, but the two parties can negotiate a buyer-seller split or a deal in which the buyer shoulders the burden of commission (this is the least common scenario).
Generally speaking, the more you pay in commission, the more you will get from a realtor. Agents getting paid higher commissions will do more in the way of showcasing a home, helping with staging, and advertising, than those receiving low or flat rate commissions.
In addition to listing fees and commission, you will also encounter fees for escrow costs, title insurance costs and any title insurance counsel you seek, and miscellaneous costs for things like repairs, home inspection issues, and short-term rent (if there is any overlap in the buying and selling processes).
How do Real Estate Commissions Work?
Only a real estate broker can pay commission or sign a listing agreement with a seller. So, all real estate agents must work with a broker, through whom all fees paid to the agent will pass.
The amount of commission the agent receives from the broker varies depending on a number of factors. Experience is one factor that plays into the amount of commission a real estate agent gets from the broker. In some cases, new agents may receive as little as 30% of the total transaction commission. Performance is another key factor in determining how much of the commission the agent actually gets to keep. Top-performing agents may get the entire commission and owe the broker just a small desk fee.
Whatever percentage of the commission kept by the broker is generally used to cover miscellaneous costs like advertising, sign rentals, and office space.
When all is said and done, it is important that you not only ensure you have budgeted properly for your new home itself, but that you have also set money aside for any fees owed to your real estate agent and the other fees you will undoubtedly encounter in the transaction process.
Stress is one of the largest concerns when selling a home. Staging, managing finances and documents, and simultaneously juggling the rest of your life can be completely draining. However, one thing is certain about selling your home: it’s a lot easier when you have a solid real estate agent to handle it. Remember, No-One Works Harder to Sell your Home more than Joe! Contact Joe today by calling 813-908-7293 or visit https://josephlewkowicz.com/