The real estate market has changed dramatically over the past decade or so and one of the biggest changes has been the way commissions are paid when a home is sold. In earlier years, buyers had basically two choices when selling a home. First, they could hire a real estate agent for the standard 6% commission and pay off the sale price when the house is sold. Typically 3% would go to the selling agent and the other 3% to the buyer’s agent. The other option has always been to do it all yourself and keep the whole sale price, listing the home as for sale by owner (FSBO). A FSBO meant doing everything yourself, from marketing and advertising to negotiating to organizing the paperwork–a tall task for someone without experience in selling real estate.
Today, those selling their homes have many more options and the commissions vary greatly from sale to sale. In recent years, the average commission paid for each home sale has been about 5.1%, much lower than the standard 6% that used to be charged. Here are some keys to reducing and controlling the amount of commission you pay.
Old-Fashioned Negotiation: Real estate agents have had a tough couple of years and at this point they’d like to simply get their name on a sold property. As discount options have become more available and easier for homeowners to use, real estate agents have learned that their fees need to be negotiable. Before you select your agent, interview several and ask them for the price they would recommend for listing your home, the marketing steps they would take to attract potential buyers, and the lowest commission that they would work for. You can’t expect them to sell your house for free, but it’s not unreasonable for an agent to knock a portion of their commission off in order to get the listing, especially on a higher-end home that will fetch a bigger price.
Use A Discount Realtor: There are several realtors out there who advertise themselves as discount realtors. You may give up some of the personal service you get from a local real estate agent but you can generally save a lot of money and find that the discount agent will still do most of the work. Many discount realtors will give you additional rebates and incentives if you use them both for the sale of your old home and the purchase of your new home and these discounts could add up to thousands of dollars in savings.
Pay A Flat Fee: There are some real estate agencies who will accept a nominal fee to list your home on that national Multiple Listing Service (MLS) and put a sign in your yard. Most have a menu of options that you can add if you need or want additional services, such as help with processing documents when an offer is accepted. This option will definitely be the cheapest, but it also takes a lot of effort and time on the part of the seller. It’s a strategy that you have to be ready for and committed to. One risk is that after paying the fee to list the property, a seller may get discouraged and give up, hiring a real estate agent and paying the commissions on top of the fees that have already been paid.
