To ask what is a â€œstandardâ€ commission is really to ask â€œHow am I approaching the sale of my property?â€.
If I donâ€™t want to be bothered, then yes, I get an agent and pay what they will charge. There is no â€œstandardâ€ commission because, as the other posters have said, commissions are NOT set by law.
And donâ€™t complain about a commission! BUT....
If you donâ€™t want to pay a â€œfullâ€ commission, you have to become more in charge of your own transaction from the very beginning. And that really is all about price and appearance.
Appearance: CLEAR OUT YOUR JUNK. CUT YOUR GRASS. CLEAN YOUR SHOWER. (Just think of what you were looking for when you BOUGHT your property.) Itâ€™s a no brainer.
Pricing (the Biggieâ€¦): The LOWER the price in relation to VALUE, the faster the property will sell. No mystery here. But the loss to the Seller for every dollar of lower price is far greater than to the agent. On the commission split analysis post, itâ€™s clear that for every $1,000 drop in selling price the selling agent loses only $15 in collected commission! So, a $50,000 lower selling price could mean a fast sale, only $750 less to the agent, but a BIG difference to the Seller. Like $50,000!
If you can, you should wait for the â€œrightâ€ buyer who is willing to pay you what you feel your property is worth. AND in waiting get the agent to work harder to earn more commission for getting you the right buyer!! Thatâ€™s where RE AGENTS really earn their money for YOU. The logic of gain/loss here works in reverse!
But, if you do need a fast sale, research properties like yours in your market, set the price to where it will sell quickly and BE YOUR OWN LISTER, thereby saving at least half of the total commission. Once you are selling a BARGAIN, Buying Agents will flock to you for the chance to earn an easy BUYING commission of say 3%. But, hereâ€™s the bonus, you also might be able to find the bargain buyer yourself and save the whole commission. There's no crime in that.
Use websites like Trulia, Postlets.com and others to research and list your property.
Okay, so I am not going to get a lot of Christmas cards from Realtors for saying this, but as was the case with buying and selling stocks before Charles Schwab came along, real estate is long overdue for an overhaul of the process.
This is an excellent question. Although I see many answers, I still wanted to put in my two cents' worth. No, there is no standard commission, and of course it is all negotiable. That said, when you are considering using an agent, there are steps you will want to take. Although I am an agent, I understand that you might want to explore the option of selling or buying on your own. Do some research about everything involved in those processes, and then go from there.
You may want to contact an agent or two and speak with them. Through their preparedness for the appointment and by talking to each of them, you will know whether working with an agent is right for you. You will also most likely know who you want to trust with such a big decision and part of your life. Just like when you find the right house, it will feel right... the same thing will happen when you find the right agent.
Best of luck and have a great summer!
p.s. as an aside, Gina makes a good point about how that commission check gets broken down!
What is most important to remember is no matter what the commision you generally will get what you pay for, As in all businesses attorneys, auto repair, retail, exc, real estate professionals get paid for their experience, hours and services they provide. If you meet two agents and one is offering drastically differing commision structures generally the ansewer is what do they offer, how much and where do they advertise, how about office and professional support services, web marketing, multiple lisitng services, signage, television advertising, national presence, mail services and how about the agent him/herself? do you trust them, are they knowledgeable, how many other transcations or revelant experience in your market, are you comfortable with them, these are all important and at the end of the day commision should boil down to value, not just the percentage or price.
The fact is that we pay commissions everyday, whenever we buy anything - a commission is paid. I actually think the problem here is to even consider the fee you pay a broker/agent a "commission". Really, as someone else mentioned it is a "service fee" - like what you pay a Lawyer, for example, the "fee" a lawyer charges is typically 33%, 33% - RIGHT? So if something horrible happens to you - and you get some sort of financial restitution for your pain and suffering, your attorney gets to earn a 33% fee, and NO ONE says ANYTHING.
Where are the chants of price-fixing in the legal industry? Every lawyer I ever saw has the 33% typed out ahead of time with big black bold letters and will SUE you afterwards if you don't pay. As a matter of fact THEY receive the check, clear the funds and then give you your share.
So please, do not blame or crucify the Real Estate Industry for a NEGOTIABLE fee for their services. If you do not want to pay the service fee, then you sell on your own. Like around less than 20% of the home sellers out there - yup, 80% of homes are sold through a Real Estate agent, so I suppose they are providing their services to someone.
The same reasons we may choose DIY Stock brokers and Travel to full-service are the same reasons people choose to pay a higher brokerage service fee or a lower one. There are different things that you give/get along the way, different levels of service and more.
Just be sure that the agent, broker, Realtor (c) etc, is knowledgable, reputable and has your best intentions in mind. In the end, if you do not see the value for the brokerage fee, you won't use that agent.
I have read some wonderful answers here but I have not heard the standard that you get what you pay for. Understand that a Realtor that is willing to work for a reduced commission does not think much about himself or his carreer. It takes money to advertise and market a home correctly. Especially in this market where you need to have an edge to be noticed. Advertsing not only in print but on the internet and enhancements like virtual tours all take money. In short if you are considering a low commission Realtor find out up front what you are getting for your money and if you find out that you need to pay extra for virtual tours or enhanced lisitng options - I would suggest that you run away and find yourself a reputable Realtor that has a great work ethic and reputation for SALES not just listings.
Linda J Sears
Coldwell Banker Ellison Realtor
Terry please keep in mind too when agent's earn a commission it does not necessarily all go to that agent. The commission structure is broken down dependent upon which brokerage they work for. For example in my office if the commission was 6% of a $200,000.00 home and they are on a 50/50 split with the broker the commission would break down as follows:
3%($6,000.00) would go to the buyer's agent leaving 3% ($6,000.00) to your list agent.
Then out of that 3% a franchise fee would be taken out (8%-$480.00 for my office).
Now 50% of the remainder would go to my broker and that would leave me with $2760.00 in total commission.
Which of course you must take out for taxes, money spent advertising and hours spent marketing the home. So it's not necessarily a lot of money to the actual agent. Especially when you start factoring in business expenses.
Please note that every brokerage firm is different and that is just one scenario.