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What You Should Know About How Realtors Make Money

August 5, 2016Marcia GoodmanMain Blog

Once you’ve decided to buy or sell a home, your next decision is whether or not to work with a realtor. The majority of Americans choose to have a realtor handle real estate transactions because realtors are experts in the field. What holds some people back are fears about the fees involved. After all, realtors make their salaries selling homes, and home owners essentially pay those salaries in the process. So let’s look at how realtors get paid. You might be surprised at what you learn!

How Realtors Are Paid

Most real estate agents are paid a commission based on the sale price of a home or property. The majority of realtors have set fees — a particular percentage of the sale. However, sometimes these fees are negotiable. Fees can range from 1 to 6 percent, sometimes higher.

Let’s say on the sale of your home, you pay a total of 6 percent in realtor fees. On a $300,000 home, that would be $18,000. Half of that goes to the buyer’s realtor and half goes to the seller’s realtor. BUT, it doesn’t all stay in the agents’ pockets. They have predetermined agreements with their brokers (the ones who hold the agents’ licenses) wherein they somehow share the money. Their brokerage fees are often arranged via a commission split (like 70/30); brokers can set their terms as long as they are determined and agreed upon up front. Real estate agents are independent contractors who pay their own taxes and expenses. Check out this infographic for a visual explanation of how fees are divvied up.

Realtors and brokers receive their payments at the closing of a home. They are cut checks when the escrow closes. If the sale of a home fails to go through, agents receive no compensation.

Get to Know Your Realtor

Before you venture into any real estate transactions, you’ll want to get to know your realtor and his or her terms. Discuss the fees up front so you can factor them into your transactions. Don’t be hesitant about asking questions. It’s better to know everything before you enter into a signed agreement with your agent. Once you sign and agree to work with him or her, you could be locked in for 90 or more days. Choose wisely and treat your information sessions like you would an interview. Being your realtor is an important job!

When you choose an agent to sell your home, you will sign a listing agreement. This agreement means you will have the realtor list your home during the specified amount of time. If your home sells, you’re agreeing to pay the realtor’s set fees at closing. A good realtor will go through every line of the agreement with you before asking you to sell and should not push you into signing before you have all of your questions answered.

What Are You Paying For?

If you have trouble with the large sum of money that goes to realtor fees, consider what realtors do to earn your dollars:

  • Market your home
  • Handle all showings
  • Seek out feedback
  • Navigate and negotiate contracts
  • Hold open houses
  • And more!

When you list with me, you’ll also receive free staging when we use your furniture. This saves you thousands of dollars AND helps you get the highest price when you sell your home!

Give me a call today. I’m happy to answer your listing and commission questions and to understand what you’re looking for in a realtor.

Warmly,

Marcia

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Tags: Home Sales, Home Selling, Homebuyers, Marcia Goodman, realtors

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  • Buying A Home
  • Select an Experienced Realtor®
  • Qualifying for a Home Loan in VA
  • The Home Loan Process
  • Home Purchase Contingencies
  • Purchase Agreement Contingencies
  • Home Closing and Home Funding
  • Home Buying Survey

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