If you’re a home seller, you’re probably asking yourself an important financial question: What percentage of the sale price do real estate agents charge?
There is no legal guideline stating how much commission you must pay an agent to sell your home. However, there is an industry standard for fees and the percentage given to agents who help during a real estate transaction.
What percentage of the sale price do real estate agents charge?
The percentage of the sale price real estate agents charge is known as a commission. That figure can vary from state to state and among brokerages. You can find your local Realtor® association and ask what commissions generally are in your city or town. But in most areas, the typical commission is 6%; that comes out of the sale price of your home, to be split 50-50 by the agents of the seller and buyer.
For example, a home that sells for $400,000 would generally see a $24,000 commission, $12,000 of which would go to your agent and the other $12,000 going to the buyer’s agent. Note that how the fee is broken down is a separate contract between the brokers and not something the buyer gets to negotiate.
Why do real estate agents take a commission?
The answer is fairly simple: The commission is the fee the agent earns for the work of marketing and selling your home. This could include researching potential properties, spending their own money on marketing, hosting open houses, writing up offers, and being present during inspections. In other words, this is how they get paid.
“Your agent will also have to split a part of their commission with his or her broker for office overhead and other expenses,” says Lee Dworshak, a real estate professional with Keller Williams Harbor Realty in Rancho Palos Verdes, CA.
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Will real estate agents take less than 6%?
As we stated above, a 6% commission is standard, but some real estate agents will charge more or less depending on the situation.
“I can tell you that, personally, I don’t take listings for less than 6%,” says Denise Shur with 1:1 Realty, in San Jose, CA. “Sometimes I even charge 15% if the situation is extraordinary. I do this because I work very hard for my clients, spend lots of money on marketing, network with clients internationally, and take on no more than two clients at a time.”
That said, commissions are almost always negotiable. And what an agent will accept as a commission depends on market conditions, as well as the location and condition of your home. A fixer-upper on the outskirts of town may take more time and effort to sell, so an agent may want a higher fee.
“Talk to several real estate agents and see what you can negotiate,” says Tracey Martin, an agent with Realty World Premier Associates in Salinas, CA.
Commission and dual agency
Let’s say you and your agent agree to a 6% commission to list your home for sale. If your agent represents only you, she will get 3% and the buyer’s agent will get 3%. If your agent represents you and the buyer, she will get the full 6%. Agents representing both sides of a home purchase is known as dual agency.
Dual agency is legal in some states, but not all. There are both advantages and disadvantages to buying a house through dual agency, but ultimately, you want to make sure your agent is representing your best interests.
“You want your listing agent focused 100% on getting you top dollar on your home,” says Shur. So if it is legal in your state, she advises sellers to include language in your listing agreement that states your agent won’t represent buyers.
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