Whether you are buying or selling, it’s important to understand how real estate
commissions work. It can be confusing, but it is also critical to the success of your
transaction. In this article, we’ll talk about who pays the real estate agent, and how
to negotiate commissions.
The short answer is that the seller pays the commission. Real estate commissions
are typically a percentage of the home’s sale price, and are paid to both the listing
agent and the buyer’s agent. Typically, the amount is negotiated between the
parties involved, and can be adjusted as needed. For example, if you are buying a
high-end home, it may make sense to pay a higher percentage to the buyer’s agent.
Likewise, if you are selling a low-priced home, you can negotiate a lower commission
to attract more buyers. Also read https://www.carolinashousebuyers.com/we-buy-houses-south-carolina/
Real estate agents are generally paid by the brokerage they work with, which is
usually owned by a real estate company or independent broker. The brokerage
usually pays their agents a base salary, and then the individual real estate agents
decide how much to charge for their services. As a result, the rates vary widely
between brokerages, and even within the same brokerage. For example, national
discount brokerage Redfin pays its real estate agents a salary instead of
commissions, while Realty ONE Group, which has over 400 franchise offices across
the country, offers standard commission rates of only 1%.
Unlike other types of employment, real estate is a highly-competitive industry that
requires hard work and specialized knowledge to thrive. Some real estate
professionals are very successful and earn large paychecks, while others struggle to
find their niche and eke out a living. Some may choose to specialize in a certain type
of property or market, while others might focus on marketing their skills and
experience to get more leads.
In order to succeed, real estate agents must be able to sell homes quickly and
efficiently. If they can’t meet those goals, their career will likely be short-lived. To
ensure they’re compensated for their time and effort, many agents rely on
commissions to get them through the year.
It’s worth mentioning that commissions are not included in closing costs, which are
an assortment of fees related to the mortgage, title insurance, appraisal, lender fees
and more. Closing costs can add up to 2%-5% of the home’s sale price.
As a seller, you can always ask your agent to credit some of the commission to your
closing costs. While this is not a common practice, it can be useful as a way to offset
some of the expenses associated with purchasing your new home.
