Frequently Asked Questions - Seller
Questions about selling
Typically, real estate commission is 5%–6% of the home’s sale price. In most areas, the buyer’s agent receives 2.5%–3% in commission and the seller’s agent receives 2.5%-3% in commission.
If you are buying a home, you don’t have to pay real estate agent commission; however, you still have to pay closing costs. On the other hand, if you are selling a home you pay commission to both your listing agent and the buyer’s agent when your house closes.
There are no laws or regulations in the U.S. dictating commission rates – so agents may be willing to negotiate lower rates depending on the type of transaction, the required services, and the relationship. Some agents will also lower their commission fees if they are representing both the buyer and the seller in a home sale. Keep in mind that a lower commission is not necessarily the best option. Part of the agent’s fee covers the marketing budget and other business expenses for the home sale. A smaller budget could mean your agent can’t properly market your home. So while it’s important to consider an agent’s fee, it’s also important to consider the value you will be receiving.
The average realtor commission covers a wide range of services an agent provides during a home sale. These services can include – working with the seller to set a realistic price for the home, marketing it through a variety of online and offline channels, professionally presenting the home to potential buyers (including cost of photography and video), negotiating the transaction details, being present during inspections and appraisals, and ultimately closing the sale.
The commission is typically split evenly between the buyer’s agent and the listing agent. So if a home sells for $400,000 with a 6% commission, the seller’s agent and buyer’s agent will split the total commission of $24,000, with each agent receiving $12,000.
It’s important to also note that after the initial split, the commission may then be divided between the broker and the agent. On average, the actual agent may only get 1.5% of a 6% commission depending on the brokerage.
The home seller pays the realtor commission for both the seller’s agent and the buyer’s agent. But that doesn’t mean that there is no cost to the buyer. Sellers sometimes account for the fee they’ll be paying and pass costs along by raising their listing price.
Technically, an agent’s commission is not included in a home’s closing costs. Closing costs are an assortment of fees – separate from agent commissions – that must be paid at closing. Closing costs typically include but are not limited to things such as: taxes, title insurance, appraisal, lender fees, and other services carried out during closing:
Closing cost amounts vary depending on the buyer’s loan program, but they typically range from 2%–5% of the purchase price.
Probably not, real estate agents are paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission.
However: Read the fine print. Generally, your contract with your agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your selling agent if the contract expires and your home doesn’t sell. However, there may be some exceptions; some examples include:
- Your agent found the buyer: Some contracts state that you still owe your agent commission after the contract period ends if your buyer was a prospect during the term of the agent’s contract.
- You back out of the sale: After an offer is accepted, you are responsible for paying commission to both real estate agents immediately. If you decide to back out of the sale last minute, you still have to pay both real estate agents their commission. If the buyer backs out, you may still be responsible for paying the commission — but can potentially sue the buyer for breach of contract.
We don’t usually recommend large. scale renovations right before selling your home, because cost of it might be difficult to make at the sale. We do however recommend smaller upkeep, such as fresh paint etc. 10 Ways To Prepare Your Home For Sale
As a home owner you certainly have a right to sell your own home. There is no law that states you are required to hire a realtor, however selling a home is not a small task and unless you are absolutely certain that you can manage the tasks involved, we do recommend hiring a real estate agent to market your home. Should I hire a real estate agent to sell my home?