Selling Your Property
Is the Commission Negotiable?
In some areas of the country there
is a certain percentage that real estate agents expect
to earn as a commission. This commission amount is a
certain percent of the sales price. Or, some companies
will charge a set fee for their services. However, just
like anything else in real estate, this amount is
negotiable. When completing the listing agreement, you
and your agent will agree on the amount of the real
estate commission.
How and When the Commission is
Earned
With the advent of the web, a lot
of agents are offering "cut-rate" commissions. Most of
the time, lower commissions are tied to a lower level of
service. If all you want is to be listed with the
Multiple Listing Service and a sign in the front yard,
then a cut-rate commission may be right for you. If you
want an agent who will actively promote your property to
other agents and spend money on advertising, then you
probably are not going to get that level of service with
a reduced commission.
At other times, the lower
commissions are offered when you agree to tie in to
other services offered by the broker, such as agreeing
to use a specific lender, escrow, settlement, or title
company. The broker (not the agent) will probably have
some type of ownership or profit participation in those
businesses. The problem with agreeing to tie in to these
other companies is that they do not have to be as
competitive in pricing their products or services.
Another common practice when you
see an ad for a reduced commission is that the
compensation is lowered when you agree to buy your next
home through the same agent or broker. Usually, the
reduced commission is not really being offered on the
sale of your existing home but on the purchase of your
next one. The ads are usually unclear on this.
As a result, when you see an offer
for a lower commission, you should analyze what you are
giving up by accepting such an offer. It probably will
not be readily apparent in the advertisement. Be sure to
ask lots of questions.
"Hot" Market Under-Pricing
Strategy - Commission Issues
Your listing contract specifies a
listing price. Your agent’s job is to bring a "ready,
willing and able" buyer to present an offer. If you
reach agreement with the buyer, then the agent has done
his job and earned the commission. Once the sale has
closed, the real estate broker gets paid from the
proceeds of the sale.
If the buyer proves unable or
unwilling to conclude the sale, the house is placed back
on the market and the agent has to begin earning his or
her commission all over again.
However, if the seller backs out
or does not accept an offer that meets the price and
terms of the listing agreement, the listing broker has
still earned the commission. They may want to be paid,
even though you did not actually sell your home.
Therefore, it is very important to carefully consider
every detail when completing your listing contract and
accepting an offer to buy your property.
All articles © 2000
RealEstate ABC. No articles may be reprinted or
displayed without permission.
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