The low down on real estate fees and commissions

hand-giving-money-for-housing-webHave you ever spent months with a Realtor, perusing house after house, only later deciding that it wasn’t the right time for you to buy a home? Maybe curiosity got the best of you, and you wondered who paid that agent to walk you through all those homes? Quite simply, no one did.

The real estate industry is unique in that agents do not receive any compensation until an actual transaction takes place. It makes no difference how much time they spend with you, how many houses you see, how many Sundays they smile at the front door of your home at an open house; Realtors do not get paid until your needs are met. This all begs the question, when the transaction does happen, when you do close on a home, who is paying your Realtor?

The basic answer, is that the seller pays the commission. The fees are subtracted from the proceeds of the home sale and then split between the brokerages involved in the sale. It then splits again when buyer’s agent and the seller’s agent receive their portions from their brokerage.

According to the National Association of Realtors’ 2015 Profile of Home Buyers and Sellers, just 8 percent of homeowners in 2015 opted to sell their home without the services of a real estate professional. In short, it means that both buyers and sellers value the knowledge and expertise of a licensed real estate agent. And they’re willing to pay for it.

So what, exactly are you paying for?

You are paying for a professional. For the licensing and education your agent receives on a yearly basis. You pay for their knowledge of the daily changing market, and for their negotiating power and expertise. As explains, “Buying or selling real estate is a costly financial transaction, and the commission is just one part of that. Negotiating a real estate commission may pale in comparison to the extra money you’ll pay over the lifetime of a mortgage if your credit isn’t excellent.” So there are more factors to think about when you consider saving a buck when buying or selling a home.

When considering a lower fee company or negotiating commissions (which is acceptable), consider this: if an agent is quick to accept a lower commission to work for you, is that the kind of negotiator you need rooting for you when your home is at stake?

It’s true that you get what you pay for. And with Realtors, you get what you pay for and then some. It’s true that Realtors are monetarily invested in making your transaction work, but because of the amount of time they spend with you to make your dreams a reality they are emotionally invested as well. Invest well in a professional Realtor, and in turn, they will invest well in you.

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