If you’re working with a real estate agent in the Maryland location, Virginia, location, Baltimore location, or Washington DC location, you may have wondered how your realtor will be paid. For those buying a home, it’s a surprise to learn that your realtor’s commission comes from the seller’s end of the table. Let’s take a look at how commissions break down and how realtors earn their living.
If you’re unfamiliar with this term, a person who works on commissions is paid a percentage of the final sale price. For realtors, this means that all those hours they put in to help you buy or sell your home are not covered by an hourly wage. If your house fails to close, they don’t get paid for the work they put in. While commissions are negotiable, the standard rate for realtors is 6%. At this percentage, if a house closes at $250,000, the commission is $15,000.
The commission for agents comes from the seller’s proceeds at the close of their sale. As a buyer, if you work with an agent, their fee is also part of that commission. Using the previous example, if the commission is $15,000, that amount is split between the listing and buyer agents at whatever percentage they’ve negotiated. Most often the commission is split evenly with each agent earning 3%, but it can be negotiated differently. Agents work with buyers knowing that they might not see a paycheck because they hope that when it’s time for you to sell, you’ll choose to work with them again.
If you’ve worked with a real estate agent, you’ll know the amount of time, energy, and work they put into each and every house. Realtors know that unless your home closes, they won’t get paid. It’s why they do everything they can to help you find the home you love and close the deal.
You’ve seen it everywhere. On the signs along the road or in advertisements you find in your mailbox or hanging on your door: “We’ll Sell Your House in 60 Days or We’ll Buy It Ourselves!” “Guaranteed Sale – I’ll Sell Your Home Quick or Buy It Myself!” “Sell Your House in 90 Days Guaranteed!”
Is it real or just a scam?
The real estate agents who promise to sell your house within a certain amount of days do sell your home in the perscribed time. However, it’s all the fine print you have to worry about.
You must agree to many concessions, including many expensive upfront costs. In most of these “Guaranteed Sale” deals, you must agree to pay a high realtor commission, a home inspection, a professional home staging, a home warranty, and possibly other concessions. You also must agree to lower the sales price of your home after it’s been on the market for a certain period.
This “deal” is actually only a deal for the realtor, not you.
To sell your home so easily and quickly, you’ll have to agree to let the agent sell your house below market value. Because your home is below market value, it’s likely you’ll get a flood of offers. And, if your home still doesn’t sell, your realtor will purchase your home at an even lower price, stipulated in the agreement you signed, then resell it at market value, making the profit that you could’ve made with a more invested realtor! The most important thing to look for when trying to sell your house is a realtor who will be on your side, trying to get YOU the best deal!
“Guaranteed Sale” realtors are only looking for the best deal for themselves. Don’t fall for this real estate trick! We see this a lot in the Maryland location, Virginia location, and Washington DC location.
The time has come. You have made all of the necessary upgrades, from the new granite countertop to the more visually appealing shower tile in the bathroom. You’ve planted some new flowers to maximize curb appeal, and that clutter that you once had in several rooms is now neatly stored away for another time and place. Now, it’s time to put your home up for sale on the market. Save your hard earned cash by not giving an up to 7 percent commission to real estate agents and their firms, giving you more funds to spend on your new house. Sell your home without a realtor! Here are some tips you can use when you put your home up on the market without having to go through a real-estate agency:
Set your sell price.
Do your research. See what other homes with your size, age and other specifications are going for in your area. Scour the Internet and local listing magazines to establish your price. It’s vital to be realistic during this step. If you ask for too much or too little, you could end up selling your home for less than its worth or waiting a long period of time for your home to sell. This is when you will also decide how you want to accept payments, whether it is direct cash, land agreement, loan, etc. You will also want to think about laws in your area and what you will do during the later negotiation phase of the process.
List your home on the MLS.
The Multiple Listing Service, or MLS, is an extensive guide to all real estate for sale in the United States. If you go through a real estate agency, a realtor will usually do this step for you; however, as an individual seller, you can pay a flat fee of $400 to list your home.
Get the word out about your house.
If no one knows your home is for sale, your research and listing will be in vain. Put up “For Sale” signs in the front yard, leave brochures in key locations within your area, place online ads on Craigslist and in your newspaper and more. Creating a website with your home’s description, photos and other information is also a good advertising tactic when selling your own home. Take some time to really think about what makes your home unique, and highlight those features on your website and other collateral materials.
Host an open house.
This can really work in your favor if it’s done correctly. Before hosting the open house, make sure your home is deeply cleaned, from the floors to ceiling. Scrub the kitchen counters and appliances, clean the bathroom grout, shampoo the carpets… anything you can think of. Make your home comfortable without adding too much of your personal touches. Keep your personal effects tucked away when hosting the open house. The open house is a perfect opportunity to advertise your home and its key features.
We’ll be writing more articles in the future about selling your home without a realtor. Remember, 8 Day Home Sale will buy your home directly without a realtor in 8 days or less.
Your home is more than the place you raised your family, it is also one of the largest investments you own. When it is time to sell you deserve the best return possible, but is a real estate agent worth those huge commissions? For the right one – yes!
So does that mean you need to pay 7% commissions to an agent? Not if you pick carefully. Commissions are negotiable, but sometimes lower fees can mean less service as well. Are they willing to accept a flat fee versus a commission? Will they reduce their rate if you conduct your own open houses?
Treat hiring a real estate agent like any other job interview. No matter what market you live in, there are lots of agents competing for your business. Interview at least three or four as you would for any contractor. Before you meet with them, review the quality of their current listings and call some owners from their recent sales. Review the time on market for their listings, and the percentage of selling price compared to the listing price.
All agents will offer some of the basic services, but what more will they do for you? Have them describe their marketing plan. How will they provide maximum exposure for your property? They need to be more creative than simply listing on MLS. Will they assist in staging your home? Do they use professional photographers? How many websites, and other advertising mediums will they use? How many open houses will they conduct? Will your home be a priority over their other listings?
The first item on a real estate agent’s agenda is the appraisal. It is often tempting to sign on with the agent who promises you the highest listing price, but is their valuation realistic in your market? Have them show you comparable listings and recent sales in your marketplace. How knowledgeable are they about those listings? Can they accurately compare the features of those homes versus yours?
The worst thing an agent can do for you is to overprice your house. In these instances, the house doesn’t sell, so you lower the price. Now it has been on the market longer than desired and people will think either there is something wrong with your house, or you will be open to a lowball offer. In this way overpricing may ultimately lead to a lower sale price!
Time spent in carefully selecting your agent will always be a good investment.