“I don’t want to pay realtor fees.” We hear it all the time. As real estate professionals, we understand that sometimes our jobs are mistakenly undervalued. The moment a novice property owner attempts to sell their property without a real estate agent, they usually find out they’re in over their head.
When deciding who pays for which fees at the closing table, realtor fees and commissions are usually the most questioned. Who is supposed to pay them and how much they will be are common questions asked by both buyers and sellers.
The team at Harris Real Estate University is dedicated to helping agents achieve success (and get paid by the proper party at closing)! Here’s what you should know about realtor commission, broker fees, and who is responsible for payment at closing.
What Real Estate Agent Do To Earn Commission
The average person likely thinks a realtor simply gets their foot in the door of a property they’d like to see or places their home for sale on the MLS (Multiple Listing Service). In reality, real estate agents do a lot more work to earn their paycheck.
Shopping for Properties
Agents work for their buyers by connecting them with potential properties that might be a good fit. At the same time, they also visit new listings for potential clients. They may spend an entire day seeing new listings, putting together open houses, and making notes about areas that are experiencing growth or decline.
Assessing the Market
Your real estate agent always has their eyes on the market trends. Whether they see retirees interested in a particular area or notice that single-story homes are more marketable in their location, your agent always knows how to properly list your home and offer a competitive price.
Real estate agents also know how to keep a buyer from overpaying for a property that won’t hold its value or is overpriced. Unless you are paying attention to real estate trends yourself, it could be very hard to determine whether the price listed is fair market value.
Submitting Offers and Counteroffers
No one likes this part of the deal, but it’s what real estate agents do best. When a buyer is ready to submit an offer, a realtor helps ensure the offer is respectable and submitted formally. For a seller, the realtor helps them decide if the offer submitted by the buyer is acceptable, and if not, can help them create a counteroffer.
The real estate agent handles the back-and-forth haggling process, ensuring everything is done legally and efficiently.
Marketing
There are plenty of real estate agents in your area, but savvy realtors spend some of their time marketing, typically with their own money. Marketing helps get their name out and build their client base, but it takes time and money to market.
Continuing Education
Most real estate agents choose to become REALTORs. As a REALTOR, agents hold themselves to a higher standard of ethics and conduct. REALTORs are members of the National Association of Realtors and are required to continue their education.
Additionally, state licensing requirements mandate certain numbers of continuing education hours each year prior to license renewal. For example, California requires 45 hours of continuing education each year your license is renewed.
Attending Inspections And Closings
You might not know what to ask a home inspector, but your real estate agent does. Your agent will attend a home inspection to represent you as a seller or buyer to help ensure the right questions get asked.
During closing, your real estate agent can help if there are any bumps at the closing table. Having your agent present can give you peace of mind that everything is going as planned.
Who Decides Who Pays?
Generally, real estate agent commission fees are a seller’s cost. This means that the commission paid to both the seller’s agent and the buyer’s agent will be paid by the seller on the closing statement.
There are a few caveats to this rule. Some states and even some counties have different customary rules. You may live in an area where the buyer and seller each pay for their respective agents’ fees.
Ultimately, the contract for purchase and sale of the property reigns supreme. Just because the commission is generally paid by the seller does not mean that it must be paid by the seller. Your agent can help you negotiate a commission split. The key term here is “negotiate.” Commission can and will change; expect the unexpected.
How Much To Expect
Again, this commission is based on negotiations: you will rarely see the exact same situation twice. To speak most generally, commission on residential real estate might typically be between 6-7% of the sales price of the property.
The commission is split between the buyer’s and seller’s agents, with the seller paying the total commission cost. Keep in mind that commission costs are an average; they can fluctuate along with market trends.
If you think that sounds unfair to the seller, be aware that most sellers are factoring in commission into the sale of their home.
There may be other fees payable to the real estate agent’s brokerage at the time of closing. Brokerage fees are paid directly to the real estate agent’s realty company and may be paid by the buyer, seller, or both.
How Can I Learn More?
Whether you’re an agent who wants to launch your career to the next level or a broker who is struggling to give your agents the tools to be successful, the Harris Real Estate University team can help.
Our premier coaching is the easiest way to:
- Change your mindset. Reframe your thinking patterns to help your career grow exponentially. See more opportunities for investing in your future and increasing your income potential.
- Learn more. Whether you’re a green agent or a seasoned professional, there’s always room to learn. Our qualified coaches offer their insight based on their decades of real estate transaction experience and help you overcome both common and complex hurdles.
- Generate leads and talk to prospects. Never hear “no” again. Our lead generation system, prospect scripts, and objection handlers give you the tools you need, so you’ll always have the right response.
- Ensure your earnings are consistent. Market trends fluctuate, but your paycheck doesn’t have to. No matter where you live or what the market is doing, learn how to earn a consistent income and build job security into your career.
In addition, you’ll get access to one of the largest networks of like-minded professionals who want to see you succeed. There’s no better way to invest in yourself and your career as a real estate professional.
Earn Your Check
As a real estate agent, you know the amount of work and dedication you give to each of your clients. You earn your commission and want your clients to be happy and satisfied with their transactions.
Help your clients better and give yourself a leg up on the competition by enriching your career and adding to your toolkit. Harris Real Estate University is the way successful agents continue their education, keep their fingers on the pulse of market trends, and learn everything they can about buying and selling real estate.
Sources:
8 Things Real Estate Agents Do to Earn Their Commission | Realtor.com
The Real Estate Commission: How Much Are Realtor Fees? | Realtor.com
Tips for a Successful Open House | The Balance
