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Everything You Need To Know About Realtor Commission Fees

18 March 2020 No Comment

Eighty-nine percent of home sellers are using realtors.

When realtors help to buy, sell, or rent a home on behalf of a client, they make money in the form of a commission fee. Simple, right?

I’m guessing you still have some questions. How much money do they make? Who is responsible for paying them? Is the commission fee up for negotiation?

All good questions. And lucky for you, the answers are all right here.

Below you will find everything you need to know about realtor commission fees.

How Much Are Realtor Commission Fees?

The realtor commission fees are usually based on the price of the house and the location. Five to six percent of the sale price is commonly used to calculate commission fees.

Check out the average real estate commissions from 2019 to get exact information.

The money from the commission fees does not go directly into the realtor’s pocket. Generally, the money is split between the buyer and seller’s agents and brokers.

It is not always an even split between the buying and selling parties and usually depends on each party’s experience and the price of the homes they typically sell.

Who Pays The Realtor Commission Fees?

Even though the realtor commission fees are split between the buyer and seller’s agents, it is the seller that is responsible for paying the commission fees.

The fees are usually incorporated into the closing costs for the seller. This should not be a surprise to the seller. For the seller and the agent’s benefit, all fees should be included in detail in the contract.

Are Realtor Commission Fees Negotiable?

Because there are no laws regulating exactly how commission fees are calculated and paid, the amount is negotiable.

A seller may try to get a lower commission fee by negotiating with the realtor. It is then up to the realtor whether he or she accepts the lower commission offer.

There is no formal etiquette around negotiating realtor fees, but if it makes or breaks the sale for the seller, it may be worth a conversation.

What Does The Commission Fee Cover Exactly? 

This is a common question from the seller because they are anxious about the total cost of purchasing a home. Totally reasonable.

However, the realtor is working hard behind the scenes to get the best possible price for the property being sold.

Realtors offer a valuable service to home sellers which is why most people choose to work with one. The agent researches the market value of the home, markets the home to potential buyers, and handles all the negotiation before closing.

The fees compensate them for the hours they spend with you and in their office handling all the details of the sale.

Now What?

Now that you understand the basics of realtor commission fees you can start to estimate the total amount that will be paid in fees based on the price of the home.

Whether you are the agent, the buyer, or the seller, arming yourself with knowledge puts you in the best position to get the most out of a sale.

For more information on home and real estate check out our other posts!

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