If you are looking to sell your home, it is important to know who you are working with.
One of the most common questions people ask is “When Selling A Home How Much Goes To Realtor?”
This is the question that you will ask any Real Estate Agent when they walk thru your door when you are ready to get your property sold.
For you to have a successful sale of your home you must be ready to hire a Real Estate Agent to help you market the property.
In This article, we will explore some of these areas and give you a better understanding of how much goes to your Realtor.
Reasons To Hire A Realtor For Your Home Sale
The process of selling your home can be difficult, but it is made easier by hiring a realtor.
They are professionals who have an in-depth understanding of the real estate market and will be able to provide expert advice when it comes to pricing, marketing, and negotiating.
A realtor is not only a professional that has skills in the real estate industry but also has strong communication skills.
They can offer guidance on how to effectively sell your home and will also assist anyone who would like to make an offer on your home.
So why is it better to hire an agent than to do a For Sale By Owner?
Although FSBOs are more common than ever, It still is a good idea to have that professional opinion to work to help you get a fair deal for your home.
Agents offer a wide variety of services along with extensive knowledge of real estate that FSBOs may not have.
Realtors often know about the area they live in and are aware of any special circumstances that may arise when buying or selling a home.
Reasons to Hire an agent: “Agents offer more expertise on real estate than FSBOs and can sometimes bring you a slightly higher price than if you were to try to sell it on your own.
What is a Real Estate Commission?
A commission is a fee that is charged by the real estate agent when they are hired to sell your house.
The Real Estate Agent is governed by their Local Real Estate Commission. And for the Real Estate Agent or Broker to work for you.
There must be a mutual agreement between both parties.
This agreement or commission amount is negotiated between the seller and the Real Estate Agent.
Please note: That there is a difference between a Real Estate Agent and someone wholesale flipping your property.
A Real Estate Agent will come to you and sign with you a Listing Agreement.
This Listing Agreement will normally spell out the terms of your agreement with the agent.
When you’re dealing with someone who is a wholesale flipper, they can be a Licensed Agent who is buying the property under a company or LLC, or they could be an unlicensed person who has a company that is making an offer on your property.
They will typically sign a contract with you and put an assignment clause in the contract which allows them to assign the property to the new buyer who will then buy your property.
A Real Estate Agent who is listing your property will typically not use a Real Estate Contract but they will use a Listing Agreement.
This doesn’t tie up your property and allows you to market it until a buyer is found that likes it and decides to make an offer. So be aware.
What is The Percentage of Commission Paid To The Realtor?
Realtors are paid on commission. This is when you give the Realtor a percentage of the house price as payment for their efforts.
So the question is what is the percentage of commission that is paid to the Realtor?
The answer: “it is all negotiable.”
There is no set amount. It’s based on what you the seller and Real Estate Agent negotiate it to be.
In the market, there are different types of structures that you are mostly seeing.
Certain realtors will work on a flat fee basis, where they are paid a set flat fee no matter how much the house sale costs.
Others will earn both commission and a set fee for their work.
A third option is to earn solely on commission, with no set fee for the work done.
It all depends on what is negotiated between the Seller and The Real Estate Agent.
How Is The Real Estate Commission Fee Divided?
In a Real Estate Transaction, you will typically have two types of agents.
You will have the agent who represents you as the seller and then you will have an agent who will represent the buyers.
In a typical transaction, there are normally two types of agreements. One Agreement is the Listing Agreement that you as the seller will sign with the Real Estate Agent.
And Buyers Agreement will typically be signed by a buyer who is represented by a Real Estate Agent.
If for example your property is $450,000 and you agree to List with a Real Estate Agent for 6 percent the commission amount would be $27,000.
To figure out the commission you will pay the Real Estate Agent simply take the overall asking price.
Here we are asking $450,000 and multiple it by 6%, we would change this to .06 this will give us the amount of $27,000.
You can do this even if the amount was 5%. Now take out your phone calculator and put in $450,000 x .05 =?
If you got $22,500 then awesome!
Going back to our example Per the Listing Agreement if the percent that is given to a co-op broker is 3% then the 6% would be split in half and the Real Estate Agent that is representing you will receive $13,500 and the Agent that is representing the Buyer will receive $13,500.
If the Listing Agent or Buyer’s Agent are not registrated as the broker of the company, the Listing Agent or Buyer’s Agent would also have to pay a fee or precentage to the Broker. The fee or precentage varies.
I know that might seem like it’s high but what you have to keep in mind is the time spent on the property.
The time spent in showing the property. The time spent consulting with you each week. The time spent emailing you updates. And The marketing expense and the gas mileage.
Also, the buyer’s agent might have spend 2 to 3 months showing the buyer different properties.
The time spent on gas and the time spent on negotiating, emailing, etc. So when they make an offer on your property the buyer agent shares in the overall commission amount of 6%.
If for some reason there is no Buyer’s Agent then the Listing Agent will receive the 6%.
The property will now be in what is called an Intermediary Status which means one Broker Firm.
This is the reason you are giving the Information About Brokerage Services. This form is known as the IABS form in Texas.
If you are in a different state then this information will vary. Please keep in mind.
But the above commission split should be something similar in your state.
What is a Listing Agreement?
When you are ready to sell your property and you hire a Real Estate Agent to sell your property there is normally some paperwork that you will have to fill out.
This paperwork is called a Listing Agreement. So what is a Listing Agreement?
A Listing Agreement is an agreement between the Seller and the Real Estate Agent that spells out the commission that you are willing to pay to the Real Estate Agent.
When its time to List your Home For Sale This is the paperwork that you will see present with the Real Estate Agent, Along with a Sellers Disclosure, Information About Broker Services and if your home has been built before 1978, there will be a Lead Base Addendum as well as T-47 Form.
A T-47 form is a notarized form that you will fill out and notarize stating that the current survey that you have on the home has not changed since the last time you had the property surveyed.
If you are selling on a Short Sale there will be some of the same forms but there will be some additional forms that you will have to sign as well.
Listing Negotiations – The Commission Clause in Every Listing Contract
When you are reviewing the Listing Agreement there are some key things that you must make sure you fill out.
At the very beginning of the Listing Agreement, you will have an area called Parties. In this area, the Real Estate Agent will fill out your information.
Along with your current address, Your Phone number, and email address. From there you will see an area that says property.
Here is the property that your listing will be filled in. That would be the Lot, Block, Addition, and physical property address.
The next page is going to be one of the most important parts because on that page you will find the List Price, Listing Date, and Expired Date.
Number 5 of the Listing Agreement is where the agent will put in the real estate commission to be paid.
The other area of the Listing Agreement to pay attention to is Other fees and or Reimbursable Expenses.
In this area, the agent might put Reimbursable fees. A Reimbursable fee example would be a marketing budget of $450.00.
If this fee is in the agreement then there is a reimbursement fee of $450.00 plus the commission amount.
Listing Serivces number 6 Allows the Real Estate Agent to Market the Property On The MLS as well as online.
One of the other important parts to pay attention to on the Listing Agreement is going to be number 8.
Remember when we talked about how the Commission is divided? Under number 8 you will see where it says cooperation with other Brokers.
This is where the Listing Real Estate agent will put how much goes to the other Real Estate Agent who represents the buyer.
There is also a section in here that talks about Non-MLS Brokers this is when an Agent is Licensed in the state of Texas but they are not a part of the local Real Estate MLS.
This simply means they don’t have a membership in that area but they are still considered a Licensed Real Estate Agent in the state of Texas and can receive compensation when they help sell your home.
Section E You would list any known delinquent liens And Then F. You would put the liens you know you have on the property.
One other section to pay attention to would be the special provision section of the agreement. Sometimes a Real Estate Agent might have a termination fee.
Sometimes this fee is either put here or put in the other area that says other fees.
What this means is if you decide to terminate the agreement between yourself and the Real Estate agent a fee is due and payable once the termination is signed.
Sometimes this termination amount might be in a form of a percentage.
What are some of the expenses of the Real Estate Agent?
When Listing Your home for sell the Real Estate Agent might run into other costs associated with trying to sell your home.
The following is a list of other expenses a Real Estate Agent might have to pay to make sure your home is sold successfully.
1 Advertisement and Marketing
2 Drone footage of your property
3 Professional Photos
4 Open House Signs and For Sale Sign
5 Single Landing Page Website or Website
6 Gas in the Car / Gas Mileage
What’s Is The Role of The Real Estate Agent in the Process?
Real estate agents are the people who help their clients find their dream homes.
They are also responsible for answering any questions about the homes that they show.
Real estate professionals provide people with some of life’s most important aspects: a home that they can call their own and the opportunity to create lasting memories.
They know that not every property is perfect for every person and they want to make sure that everyone finds their perfect match, so they dedicate a lot of time to finding homes where buyers might have overlooked them before.
When dealing with a real estate transaction, you have two agents working together to get your home sold!
The listing agent is representing the seller and the buyer’s agent is representing the buyer.
Conclusion
Hiring a Real Estate Agent for Your Home Sale Will Help You Get Top Dollar and Sell Faster. Selling your home is not an easy process.
It will take time, effort, and money. However, there are some powerful reasons why hiring a real estate agent is the right move for you.
Faster sale: Agents can help you with everything from getting top dollar to finding the perfect buyers.
They know how to sell your house for the best price in the shortest amount of time possible.
Safer sale: The agent will be able to negotiate better terms and make sure that all conditions of the contract are met on both sides.
They also know what to do in case of an emergency or any other unforeseen event that may delay or even stop your sale altogether.