It's not that mysterious but some sellers (and buyers) are under the impression that there is something a bit sneaky about real estate commissions. If you are ready to sell your home, you might want to move toward a greater understanding of how your agent earns – sometimes more than earns – their pay. Read on and find out what every seller needs to know about real estate commissions.
- Real estate commissions are based on percentages. The higher the selling price of the home the more they get. That doesn't mean that agents are only interested in high-priced homes, however.
- Local practices can play a big part in the commission structure for an agent and that can also influence how the agency sets up the fees. Most real estate agents don't set their own commission fees – their agency provides them with guidelines from which to work.
- You should find out how much your agent will be charging at your first meeting. Also, many don't realize it but that percentage could be somewhat negotiable within reason. It depends on the real estate agent.
- More experienced and successful agents earn higher commissions than those just starting out. In some cases, you may need to use such an experienced agent. New agents, however, are usually eager to earn their pay and will work extra hard to make up for the lack of experience.
- The fee your real estate agent charges comes off the top of the home's selling price and is paid during the closing. They won't be taking home that entire fee, however. Almost all agents work under the auspices of a broker who is paid a percentage of the fee.
- In addition, agents are often responsible for paying their transportation costs such as gas and vehicle upkeep along with other expenses like business cards and more. Along with the broker fee, agents working for large real estate companies may have to pay a franchise fee to use the name.
- You can expect the commission percentage to be anywhere from about 5% up to about 7%. Fees vary depending on the area of the country, agent experience, and more. On a $250,000 home with a 6% commission fee, the seller would pay $15,000 for the services of the Realtor.
- When you discuss fees, find out what the agent will do for you. Ask about advertising, listing, open house events, market research, advice on staging and repairs, and more.
Your real estate agent is an open book when it comes to issues like commission fees and will be happy to discuss that and any other issues with you. Contact an agent in your area if you are are looking for new homes to choose from.