The Best Way To Get Around Paying Real Estate Commission
Adam S. Waxler
If you are going to be selling your house by using a realtor then you are going to wind up paying real estate commission in some manner. Your real estate agent is going to charge you a percentage of the final selling price. The seller will most likely pay the fee at the closing, however, the seller will not be paying real estate commission if the deal falls through.
The question then is precisely how substantial is the commission that the seller is paying? The percentage is decided between the seller and the real estate agent before the home goes into the local MLS or Multiple Listing Service. It’s important if you’re going to be paying real estate commission to an agent, to ensure that you are not paying out too much. However, the percent paid is NOT often going to be negotiable. In fact, the majority of brokers will NOT permit their own real estate agents negotiate their fee. And, if the broker does allow for their own agents to lower the commission, many real estate agents themselves will not be inclined to do so. For that reason it is rather important if you’re planning on selling your property that you check with the real estate agent up front whether they are likely to negotiate the commission. If your real estate agent has not been willing to lower the commission, then just carry on with your search for a better real estate agent. Likewise, when it comes to paying real estate commission, you ought to also make sure you are not paying too little. Unless you are working with a flat fee listing service, in which case you are not paying a commission, but rather a one-time flat fee, you want to be sure that the real estate agent isn’t cutting the commission too much or the agent is not going to be as determined to sell your home. They probably will work harder for the clients that are paying a higher commission. Try to strike a balance where you’re going to get what can be considered a deal when it comes to paying real estate commission, but where you wouldn’t be totally cutting the real estate agent out of the deal. So what’s the best deal? For starters, you should remember that with no negotiating, a typical real estate deal has the seller paying 6% of the final selling price with 3% going to the selling agent and 3% going to the buying agent. Of course, both those real estate agents must then pay their broker their portion. A broker usually will get between 20% – 50% of their real estate agent’s commissions. Therefore, while the seller is probably paying out 6% in commissions, only 3% of that will go to the seller’s agent (and that agent only gets about 70% of that). Therefore, keep in mind that you are just attempting to negotiate down that 3%. If your real estate agent is prepared to meet you half way then you have a good deal. To put it differently, the real estate agent should be willing to cut 1.5% out of their 3% commission. Consequently, the seller will only be paying 4.5% of the final selling price (3% to the buying agent and 1.5% to the selling agent). Again, in the event that your real estate agent is unable to negotiate when it comes to paying real estate commission, then get a better real estate agent.
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