Buying or selling a home is a huge financial transaction that typically requires many moving parts. That’s why it’s important to understand how real estate agents are paid so that you can negotiate a fair fee or choose a different option. Unlike salary-based jobs, real estate commissions are generally based on a percentage of the final sales price and split between the seller’s agent and buyer’s agent. However, most people do not realize that these fees are often negotiable.
Traditionally, the seller’s agent and buyer’s agents agree on a commission rate — which is typically around 5 to 6 percent of the home’s final sales price — and that amount is reflected in the purchase price. The buyer is then required to pay that amount at closing, along with other fees like loan underwriting and origination fees, transfer taxes, title filing fees and insurance premiums. Read more https://www.joehomebuyertriadgroup.com/sell-my-house-fast-welcome-nc/
In addition to a commission, real estate agents also earn referral fees and other compensation from their brokerages and vendors. Referral fees are a negotiated percentage of the commission that is paid to an agent for suggesting a client (whether it’s a buyer or seller). Brokerages and vendors may also pay their own referral fees, which are deducted from the overall commission before it’s split between agents.
Another way that real estate agents make money is by selling their services to both buyers and sellers — in what’s known as dual agency. This is where one agent acts as the buyer’s representative and the seller’s agent, although laws about dual agency vary by state. If an agent works as a dual agent, they must disclose this to their clients and abide by the law.
While some agents specialize in certain markets, others prefer to work with both buyers and sellers. Some agents also have a preference for working with a particular type of property, such as homes or commercial properties. Regardless of their preferences, all real estate agents are required to have the necessary training to complete transactions.
Most people who work in commission-based industries are used to large variation in their pay — as shown by the wide range of salaries in the sales and marketing departments at McDonald’s or at Starbucks. However, with real estate commissions based on a percentage of the final sale, it is even more crucial for home sellers to carefully negotiate the amount they are willing to pay to their listing and buyer’s agents.
If you’re not comfortable negotiating your agent’s commission, it is possible to hire an online service that pre-negotiates your listing agent’s rate for you. Clever Real Estate, for example, has a network of top local agents that it works with to provide home sellers with a more competitive commission rate. In a strong seller’s market, this can mean substantial savings. Click here to get started with a free consultation to see how much you can save on your real estate commissions. You can even use our calculator to estimate your potential savings.