For those considering a move and thinking about selling their home, you may be wondering about how an agent who works for you gets paid. A real estate agent offers their services to home sellers on a contingency or commission basis. This means that you won't owe anything to the agent until the home actually sells and it's time to close the deal. Read on to learn more about real estate commissions and how they affect your deal.
What determines the commission?
There are more than just a few factors that can determine the actual percentage your agent will receive.
Local customs and practices are just one factor and you should understand that any amount quoted to you is negotiable. The amount the agent ends up with is not the same as the commission, at least in most cases. That is because most agents work under the auspices of a real estate broker and the broker earns a cut of the percentage. Some agents are top in their class and can command more with good reason, and some agents work part-time at the job and will garner less.
Taking a look at the typical commission structure demonstrates how it might work: A home sells for $150,000 with the commission being 7%. Of that $10,500 the broker might get 4%, or $4,500. That leaves the agent with considerably less and sometimes they must pay a franchise fee to use the brand name of the agency. They are often also responsible for business supplies like business cards, vehicle usage, gas and for paying the taxes on that money.
You get what you pay for...sometimes
Basing the value and skills of a real estate agent on commission alone would be a mistake. The merits of an agent go far beyond that when you consider the skill set they might bring to your home selling experience. There are as many agents who provide a high value at a low commission as there are who provide a superior level at a higher commission. Agents should be evaluated on the good fit with your situation, their experience selling homes at your price range and in your area and what they promise in terms of marketing and customer service.
What to know about negotiating a commission
The agent may be willing to drop the percentage a bit if you can do something in return, such as promises more referrals from friends and family that you know are about to put their own homes on the market. You should also keep in mind the opportunity to present the agent with more business from your own efforts to buy another home once your present one is sold.
Your local agent is happy to discuss not only more about how commissions work but how to get your home sold for a great price. To learn more about buying or selling a home, contact a business like C Edwards Real Estate.