3 minute read
If you’re considering selling your home, you’ve no doubt heard all about real estate commissions and how expensive they can be. Usually, the standard real estate commission is about 6 percent of the total sales price. While this doesn’t sound like a lot, it can add up quickly.
If you sell your home for $750,000, your agent would receive $45,000 of that — dropping your possible proceeds down to just over $700,000. Even slightly lower commission fees can make a big difference… so why are so many sellers still paying a 6 percent commission?
In the past decade, many countries have seen a significant decline in real estate commissions, but the United States has been holding steady at around the 6 percent mark, making it one of the highest averages in the world. If you want to avoid this large commission payout, you’re in luck. There are a number of tools out there to help you pay less in commissions but first, you need to understand your options, as well as how real estate commissions work.
Real estate commissions have long been the backbone of the residential real estate industry. When the seller pays this commission, it gets split between different parties involved in the transaction — usually a 50/50 split between the buyer’s agent and the listing agent. However, if the agent is working with a broker, he or she will receive a portion of the commission, as well. And, sometimes, sellers have to pay even more fees on top of the commission, to help cover other expenses, such as marketing your home, any open houses, other costs associated with the sale, and more.
Considered to be the industry standard for more than 50 years, the 6 percent commission has been around since the NAR, or National Association of REALTORS®, engaged in price-fixing in the 1940s. Even though the Supreme Court later ruled that this practice was illegal, the standard was set — leading local real estate boards to continue to suggest this commission structure, without fixing it outright (and despite a number of lawsuits).
Of course, there are some situations in which real estate agents agree to charge a lower fee. For instance, higher-priced properties often net a lower commission, sometimes in the range of 4 to 5 percent. Also, during unpredictable markets, commissions tend to shift downward. Today, the average commission is hovering somewhere between 5 and 6 percent, and insiders agree that recent changes to the industry will likely continue to drive this number down further.
Today, sellers have the option of picking and choosing which real estate services they want, which can often lead to a smaller payout in commissions. You can get professional help with some services, such as staging or photographing your home, while saving money on DIY options for other services, such as hosting your own open house.
Additionally, online listing services have made it easier than ever to connect buyers and sellers — without involving a real estate agent at all. And some real estate agents and agencies are feeling the pressure, agreeing to work for a lower commission rate or to operate under additional alternative pricing models, such as a flat or fixed fee structure.
The bottom line is this: when it comes to selling your house you have options. Don’t feel that you have to pay a 6 percent commission just because it’s the “standard.” Learn how the system works and decide what is most important to you, and you could save thousands of dollars. Determining what’s important for you as a seller is just a part of what to expect during the home selling process.
With Reali, you can sell your home for as low as a 1% fee. To date, our sellers have saved an average of $12,000! Selling your home with Reali means thousands of dollars kept in your pocket. Reali agents are located all across California and are committed to providing an honest and transparent home selling experience. Want to learn more?