Fees and commission—- ‘let’s talk about it’.
Once you’ve decided to enlist the services of a real estate professional to help you sell your home…….the most important question home owners have is, how much will it cost?
The short answer is; whatever you and the listing agent agree on is the amount that you will pay.
There is a general percentage rate that most residential brokerages and real estate professionals charge that ranges between 5%-8% however; by law commission rates are negotiable. Most stick to the same margins in order to remain competitive.
Usually you pay more for ‘full service’ real estate professionals vs ‘flat rate or discount’ real estate services. Also, if you use a REALTOR® vs using an agent without the designation, there may be a slight difference in the fees and/or commission charged depending on the circumstances.
Whether you hold the coveted designation of REALTOR® or not, it’s unfortunate that agents ‘as a whole’ tend to get ‘a bad rap’. Since we are all under the same general umbrella, the innocent and ethical somehow suffers for the not so innocent and unethical.
Please be mindful that just as in any other profession, there is ‘good and bad’ among us, and hopefully you will find your way to the good ones that are proud to be REALTORS® and take the designation and the services they provide very seriously.
Below is a summary, broken into two main categories of fees and commissions charged by real estate professionals.
Full Service Brokerages
In my opinion, real estate professionals that offer ‘full service’ usually offers everything from fiduciary duty to helping you move and settle comfortably into your next home. It is not unusual for ‘full service’ agents to clean and/or straighten up your house before a showing, or to pay for landscaping and similar services ‘out of pocket’ if necessary.
Basically, they oversee and manage everything regarding the sale of your home from start to finish, as well as all of the particulars in between. In essence, you have access to concierge service and the only finger you need to lift is to sign the closing documents, vs the opposite of that, which is more like a DIY situation….where you typically get your hands dirty.
Flat Rate or Discount Brokerages
These Brokers and their Agents offer ‘flat rate’ fees or rebates obviously as a strategy to attract business. In doing so, they discount the level of service that they provide to the seller.
Some brokers models consist of a combination of the following scenarios:
- You pay a flat fee to get on the MLS
- You pay the listing agent 1%-2%, plus 3% to the selling agent
- You pay the listing agent a base or flat fee, plus 3% to the selling agent
Since most buyers are represented by agents due to the fact that they’re not comfortable undertaking such a huge financial transaction on their own, you will end up paying 3% to a selling agent regardless of the model you select.
If you pay a base fee of a few hundred dollars to be listed online somewhere and/or on the MLS, eventually you may request additional services which will result in added fees and/or commissions. Sometimes these types of fee based models are also contingent on the seller hiring the flat fee broker/agent to buy their next home and receive a rebate or credit at closing.
The flat fee to get on the MLS is attractive since it is usually advertised as ‘get your home on the MLS and top websites such as Zillow, Trulia, and REALTOR.com’ for a nominal cost. Note that third party sites automatically feed from the MLS. Property information is digitally extracted, and this is why more often than not, there is a lag in accurate information because it is not in ‘real time’.
The most accurate information you will ever receive regarding real status on properties will be directly from a real estate agent. It is also important to note that houses hardly ever sell themselves, so just paying to be online is usually not as effective as having hands-on targeted marketing efforts. At the end of the day you end up wasting valuable time, missed opportunities, and your home gets lost among the thousands of other homes that are ‘for sale’.
I encourage you to connect with a real estate professional and address the proverbial ‘elephant in the room’. Realistically, there are costs associated with selling a home, and once you have truly explored all of your options you will be in a position to make an informed decision.
At the end of the day, you are always in control of the transaction. If you sign a listing agreement and things are not going as you expected, you are always welcomed to terminate that agreement and move on.
It is advised that you read and understand what you’re signing. Standard listing agreements always allow ‘for an out’ for both the seller and the listing agent. However; it’s what is amended or stipulated that could have you bound to an agreement longer than what’s standard.
As previously mentioned, real estate commissions are negotiable and only you can determine if engaging the services of a real estate professional will benefit you or not, and to what capacity.
Some questions to ask yourself and help you decide are:
- Can you truly hold down a full time job, manage your household & take on the tasks & responsibilities involved in selling your home?
- Can you dedicate the time to read & fully understand the real estate contract & associated documents?
- Do you have trusted advisors & real estate related resources that you can call & talk to if something comes up that needs an immediate solution?
- Do you have access to the current real estate contract that is required to legally transfer title in the state of Georgia?
- Do you know the best way to ‘vet’ potential buyers & only engage the ones that are truly ready, willing & able to buy your home?
- Are you available at the drop of a dime to show your home to perspective buyers & provide access to the home inspector & appraiser?
- Do you know what to do if the appraisal for your home comes in below the contract price?
- What will you do if the unthinkable happens and the buyer threatens to sue you for not upholding the terms you agreed to in the contract?
Food for thought……….Did you know that even the founder of ‘for sale by owner’ used a full service REALTOR® to sell his home?