Understanding Real Estate Agent Fees and Who Pays Them

It’s always prudent to hire a real estate agent to assist you with the sale or purchase of a home. Realtors know their local markets well, and the experienced ones are savvy negotiators. In exchange for their knowledge and know-how, realtors receive a commission from the sale of the home. This article discusses how real estate commissions are doled out and by whom.

Whatever you may have been told, real estate commissions are always negotiable. They often fall between 4% and 6%. The agent will most likely receive just half of that amount, depending on their cut of the commission. Also, their brokerage will often take a 50% cut of that profit, so there are many hungry real estate agents out there for a reason.

Here’s how the Commission is Split

If there is both a listing agent and buyer agent involved (one presenting one side and the other representing the other party), the commission will be split between the two agents. After that, their employing brokerage will take a cut of their commission.

Average Commission

Six percent is the traditional or standard fee for real estate agent commission. As of 2019, according to Real Trends, the average real estate commission was only 4.6% which is down from the previous year’s 5.03%.

Since the commission is a percentage of the home’s selling price, the exact amount will not be known until the home is actually sold.

Negotiating Fees

When it comes down to who pays the real estate agent’s commission, the home selling process becomes tricky. This is where an experienced realtor comes in handy. They can save you money and even negotiate a fair commission. If they’re feeling generous, they may even lower their commission. Most of the time, the seller pays the real estate agent’s fee. (The buyer hardly ever pays this.) But that doesn’t mean the listing agent and seller won’t pre-bake the fee with the price of the home.

To get a good idea of how much a realtor’s fee will amount to, think about this: The sale of a $200,000 home will net each agent about $2,500 if the buyer agent and listing agent split a 5% commission.

Are Real Estate Agents Worth the Fee?

Yes, in many ways, they are well worth the commission fee. A good and experienced realtor can save you a lot of time and net you more money than going it alone as an FSBO (For Sale by Owner).

Remember, listing agents and buyer agents don’t get paid until the house sells. Listing agents spend a lot of time helping to prepare your home for sale. They don’t want to lose the listing so they will try as hard as they can to sell the home as quickly as possible for a top-selling price. Their commission depends on it. Now, if you use a flat fee real estate agent, you may not experience the same motivated push to sell your home. After all, a flat fee agent is working for far less and they’re not obligated to offer you the services that a traditional real estate agent would. Flat fee agents may be more affordable, but you’ll experience very limited representation.

Need Help?

At Oak City Properties, we have been helping those in the Raleigh area purchase and sell homes for years! Whether you are a family trying to sell your home or a landlord wanting to downsize your rental portfolio, our full-service property management company is here to help.

If you are interested in learning more about our services or speak to our listing agents, give us a call at (919) 232-9222 or check out our website: https://oakcityproperties.com.customers.tigertech.net

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