Why Should I Pay a Real Estate Commission
If you are looking for a licensed real estate agent to help get your home sold, you may wonder how much the real estate commission might be on the sale. Also, what are you paying for the commission? Finally, what does the real estate agent technically do?
Throughout the transaction, plenty of questions pop into our heads when it comes time to sell our home that home sellers certainly need to be answered. That is why we will discuss the value of using an agent and why it is worth paying a commission when selling your home.
How much is a real estate commission on a sale?
If you sell your home using a real estate agent or buy a home using one of these pros, the person selling your home pays a 6% total commission. Therefore, the six percent commission is split between 3% buyers’ and 3% sellers’ agents.
The agent commission fee can typically be negotiated based on the house’s value. Also, it may depend on the type of agent you are dealing with. For example, if the home is valued over a million, it may help the seller pay only 5% of the total instead of 6%. So, this means the listing agent only takes 2.5%, and the buyer’s agent is. You, your realtor, and the real estate broker will negotiate a commission adjustment.
If you are considering selling your own home for sale by owner, you need to consider the issues you may face when exploring this method of marketing. As homeowners, whenever a plumbing, electrical, or roofing problem goes wrong, we hire a professional to do the work for us. Therefore, the same concept should apply to real estate sales.
Advantages of paying real estate commission to an agent:
- A real estate agent will negotiate your deal for you.
- Handle all of the paperwork.
- Next, list the house on MLS. (Gets more attention)
- You don’t have to do any showings on your own.
Agents earn commission by negotiating the deal
A real estate agent learns how to negotiate with potential buyers. They do it every day when working with or for clients. If you work with a good agent, you should have no problem selling your home quickly.
Licensed agents negotiate with buyer agents to sell your home fast for the most money possible, making it a simple decision to pay them a commission and move on with life.
The Realtor commission covers handling the paperwork
There is plenty of paperwork to handle when a real estate transaction occurs to ensure it goes smoothly. For example, the listing contract alone is 14 pages long.
Real estate contracts protect sellers and hold all parties accountable through the sale. That is why a real estate agent handles the paperwork when you pay to ensure the transaction goes as smoothly as possible.
Realtors will list the home on MLS
When it comes time to sell your home, getting the exposure your home needs is truly important. That is why when you pay a real estate agent’s commission.
An agent will post the property on MLS (multiple listing services). This option is available only to real estate agents, who pay quarterly to use it.
It is a forum that allows the world to learn about your property. MLS exposes the house to your local real estate market and to other agents with qualified buyers ready to buy. It is a fantastic service that only real estate agents have access to.
Don’t have to handle showings when paying agent commission
When you sell your home using a real estate agent, you also receive the help of showing the home. Most agents will do open houses to help gain exposure to your home.
Allowing the agent to handle the open house ultimately makes the real estate commission you pay them well worth it.
Alternative to Paying Real Estate Commission
Although using an agent produces the best results when selling property, there are other feasible real estate selling options. Below, we list the most common alternatives to using an agent and paying real estate commission:
- The main route to avoid paying real estate commission is to approach the transaction with the “FSBO” For Sale By Owner method. As a seller, you must be cautious when using FSBO, considering most homeowners don’t know the exact value of their home. Therefore, for sale by owner is a great way to leave money on the table. In addition to wasting valuable time. Since most sellers don’t know how to properly market the property, they also don’t have access to the MLS.
Common Myths About Real Estate Commission
- Agents pocket the full 3%-6% commission: That’s not true. Agents have expenses such as marketing costs, broker fees, along splitting the real estate commission with the agent representing the other side of the real estate transaction.
- Another myth: Agents have a set commission. It’s vital to know that agent commissions are not set by law. Therefore, the client has the opportunity to negotiate the commission percentage. Recently, a new law by the “National Association of Realtors” states that sellers do not have to offer buyer agent compensation.
Is it Worth Paying Real Estate Commission?
Once we understand all the work a real estate agent puts into selling a home, paying a real estate commission becomes easier to accept. When we sell our homes, we want to ensure we make as much profit as possible.
Expenses include possible money left on the mortgage and any back taxes owed. Also, are there any liens or judgments that we know of? Lastly, it’s better if the agent knows more about the home and what is owed on the property.
Then, they can help better assist your property’s starting asking price. If the home is priced right, the real estate agent’s commission should not affect what you walk away with.
If you have questions or concerns, do not hesitate to contact your listing agent immediately. Agents can answer any question and walk their sellers through the real estate sales process.
The real estate commission covers the agent’s ability to handle and guide the transaction. Ryan Bullock is a real estate agent in Pennsylvania. If you want to buy or sell a home, fill out our form. Please provide as many details as possible so he can better assist you.