{"id":1278,"date":"2021-03-05T13:00:05","date_gmt":"2021-03-05T18:00:05","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1278"},"modified":"2024-04-25T23:20:03","modified_gmt":"2024-04-26T03:20:03","slug":"how-much-will-you-pay-your-real-estate-agent","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/how-much-will-you-pay-your-real-estate-agent\/","title":{"rendered":"How Much Will You Pay Your Real Estate Agent?"},"content":{"rendered":"\n
\"Image<\/figure><\/div>\n\n\n\n

Homes are among the priciest items most of us ever buy. A\nsignificant slice of the purchase goes into paying the real estate\nprofessionals. Clients should know what they\u2019re paying.<\/p>\n\n\n\n

Listing agents throughout the United States charge sellers 5-6%\nof the home\u2019s sale price. In cold, hard, dollar terms: a commission of 5% on a\n$200,000 house is $10,000. Even after seller concessions, that original figure\nis in your agreement and it is binding.  <\/p>\n\n\n\n

Buyers and sellers alike should know how the fees are\nstructured, and that these fees are negotiable in the initial agreement stage. While\nmany buyers assume the seller covers agents\u2019 fees, at the end of the day, the\nbuyer pays for the asset. In effect, the buyer pays all fees, as the seller\nprices these costs into the home sale.<\/p>\n\n\n\n\n\n\n\n

Where the Money Goes<\/h2>\n\n\n\n

The listing agent usually splits the commission down the\nmiddle with the buyer\u2019s broker. Then, the commission might be divided again,\nbetween agents and their brokerage firms. Firms rely on revenue from fees to\nprovide office space, equipment, insurance and continuing professional\neducation to their affiliated agents. <\/p>\n\n\n\n

After the splitting is done, an agent may end up with\nsomewhere between 1.5% and 3%, depending on the policies of the brokerage firm.\n<\/p>\n\n\n\n

There are still more questions to ask. Some brokers charge\nadditional fees related to deed processing, over and above commissions. These\nadded costs can add up \u2014 sometimes to hundreds of dollars. And some of the\ncharges might be for redundant services \u2014 things already included in the standard\nprocedures of the buyer\u2019s title company. <\/p>\n\n\n\n

This is another reason why sellers and buyers should ask\ntheir agents for breakdowns of costs. It\u2019s important to know where the money is\ngoing. This knowledge helps clients negotiate. If clients can negotiate lower broker\ncosts, the price of the overall transaction can be reduced without the seller\nlosing any money. <\/p>\n\n\n\n

The Agent\u2019s Perspective <\/h2>\n\n\n\n
\"Two<\/figure><\/div>\n\n\n\n

When a state\u2019s real estate commission licenses brokers, it thereby\ndeems them capable of doing business in a way that safeguards the public\ninterest. Reputable real estate agents take their duties seriously. They help\nthe parties come to fair, well-informed agreements. <\/p>\n\n\n\n

And they work hard for their clients. Many agents put evening\nand weekend hours into the success of each transaction, and do not hesitate to\nadvance out-of-pocket costs.   <\/p>\n\n\n\n

For the seller, a good real estate agent is a marketing\nwizard, one who actively uses the most effective available sales tools in\naddition to the listing services. For a buyer, the agent is an informed local\nguide, an adviser and a negotiator. <\/p>\n\n\n\n

\u261b<\/strong> <\/strong>Fiduciary\nduties make your agent into your advocate. Read\nabout the real estate agent\u2019s fiduciary duties here<\/a>.<\/strong><\/p>\n\n\n\n

Agents carefully guide home shoppers through the appraisals,\ninspections, and numerous back-and-forth conversations. Sometimes, all that work\ndoesn\u2019t lead to a deal. If there\u2019s no commission without a closing, they shoulder\nconsiderable risk. <\/p>\n\n\n\n

Agents do have some protection through legal agreements with\nclients, but these contracts have time limits. This means buyers who go through\nwith their purchases are the ones paying realtors for the time and work they\nspend on all their clients. Some contracts compel clients to pay broker fees even\nif they don\u2019t buy in certain situations. For an example maybe the parties didn\u2019t\nclose on a deal, yet they do come to an agreement later, after the agent\u2019s\ncontract expires.<\/p>\n\n\n\n

In short, agents who take their duties seriously are assets\nto their clients. And vice versa. Buyers should be conscious of the value their\npurchase creates for their agents.<\/p>\n\n\n\n

Online Brokers Push for Commission Transparency <\/h2>\n\n\n\n

The real estate industry has been slow to share fee\ninformation with its clients, and many people know little about their choices\nin levels of service, ranging from the full-service to the discount tiers. But\nthe internet is making a lot of this information easier to find, and the\nindustry is changing. <\/p>\n\n\n\n

The Pacific Northwest Multiple Listing Service was an early adopter of commission split details for buyers. In 2019, listings on Seattle-based Redfin\u2019s website started displaying the buyer agents\u2019 cuts. Seattle\u2019s agent commissions slightly declined once fees became public, Redfin says<\/a>. Then, the burning question was whether other Multiple Listing Services would also allow publication. Notably, the Department of Justice backed fee publication, while a major real estate association opposed the practice. <\/p>\n\n\n\n

Redfin says buyers\u2019 agents net, on average, 2.7%. The\ncompany refunds a slice of the agent\u2019s fee to the buyer at closing. Pushing for\nrebates, as Redfin has done, encourages price competition. Also among the wave\nof brokers pressing for fee transparency is Houwzer<\/a>. The company pays its own agents. It charges $5,000\nfor its services, plus 2.5% to the buyer’s agent at closing. <\/p>\n\n\n\n

These companies believe that commission-based fees can sway agents<\/a> to prioritize certain houses and areas. They say invisible business incentives shouldn\u2019t be limiting the customer\u2019s options.<\/p>\n\n\n\n

Commissions Versus Flat Fees<\/h2>\n\n\n\n

Flat fees and rebates may be the way of the future. First, this\nsystem is transparent and easy to anticipate. Home buyers can get a better deal\nwith the arrangement, depending on what level of service comes with it. A flat\nfee is not antithetical to full service. An agent can handle everything for a\nclient from renovation advice to staging to closing, and do well with flat fees\nif they work with a high-volume company.<\/p>\n\n\n\n

Agents\u2019 opinions will vary, with some seeing value in the\nflat-fee structure. Remember, agents with traditional brokerages depend on a\nfew serious buyers and get nothing from the rest. The flat fee could fix that problem,\nrelieving both the agent and the serious buyer of an unfair burden. But today,\ncommission-based transactions are still the norm, and rebates are only gradually\nbeing accepted by states. <\/p>\n\n\n\n

In short, a client should understand the fee structure, the\nlevel of service, and where the money will go. This is the case no matter if\nthe client selects a company with a flat fee and rebate, a traditional 5-6%\ncommission split structure, or a discounted commission framework.<\/p>\n\n\n\n

Knowledge Is Power<\/h2>\n\n\n\n

The more you know, the better negotiator you can be. If\nyou\u2019re selling your home, it\u2019s wise to check the fees as you choose your real\nestate company. Find out if the agents are able and willing to negotiate. You\nmight ask what actions on your end could make the agent\u2019s job easier in return\nfor a half percentage off, for example. Or you might choose the same agent to\nbuy your next home \u2014 negotiating a concession can be easy in situations like\nthis. <\/p>\n\n\n\n

The overarching point? No fee system is written in stone.\nThe fee you pay is the fee you and your real estate agent put into that listing\nagreement you both sign! <\/p>\n\n\n\n

If you\u2019re a buyer, understand how a given agent\u2019s fee system\ncould potentially influence the areas and homes you\u2019ll see. Discussing this\nwith your agent is entirely fair and reasonable. Know that clients have the\nright to choose third-party services such as mortgage specialists, title\ninsurers, and settlement agents. Clients do not need to go along with every\nrecommendation made by a brokerage firm or real estate agent \u2014 unless that\u2019s\nwhat they want to do.<\/p>\n\n\n\n

We hope this article inspires and informs. It is, of course,\nfor our readers\u2019 general information only, and not financial advice. If you\nhave concerns about financial strategies that suit your particular situation,\nor need guidance with listing or purchase agreements, consult with a financial\nadviser or a local real estate lawyer who has experience in the type of\ntransaction you\u2019re doing. <\/p>\n\n\n\n

Best wishes for a smooth and fair transaction!  <\/p>\n\n\n\n

Supporting References<\/strong><\/p>\n\n\n\n

Houwzer: Reports Expose How the Brokerage Industry Is Ripping Off Home Sellers<\/a> (Jan. 2020). <\/p>\n\n\n\n

Redfin: How Real Estate Commission Works<\/a>.<\/p>\n\n\n\n

Zillow: Tips for Negotiating With Real Estate Agents<\/a>.<\/p>\n\n\n\n

Photo credits: Marten Bjork<\/a> and Christina<\/a>, via Unsplash. <\/p>\n","protected":false},"excerpt":{"rendered":"

Homes are among the priciest items most of us ever buy. A significant slice of the purchase goes into paying the real estate professionals. Clients should know what they\u2019re paying. Listing agents throughout the United States charge sellers 5-6% of the home\u2019s sale price. In cold, hard, dollar terms: a commission of 5% on a […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[71],"tags":[],"class_list":["post-1278","post","type-post","status-publish","format-standard","hentry","category-general"],"yoast_head":"\nHow Much Will You Pay Your Real Estate Agent? - Deeds.com<\/title>\n<meta name=\"description\" content=\"A significant slice of the real estate purchase goes into paying the real estate professionals. 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