You are getting ready to sell land fast. It is the first time you have ever owned, so this is also your first sale. You contact the listing agent to get the ball rolling. Now is the time to do a little research on how home sales work. Look into everything, including real estate agent fees. These will play a role in how your home is marketed and, ultimately, sold.
Agent fees are one of the hidden aspects of real estate transactions. They are hidden in the sense that agents do not spend a whole lot of time talking about them. When a house finally does sell, lawyers handle all of the financial details. Buyers and sellers are rarely part of the agent fee equation.
If you are planning to sell, here are five things to know about real estate agent fees:
1. Fees Constitute Their Income
Whether you call them agent fees or commissions, the money paid to real estate agents and brokers constitutes their income. You are paying them for services rendered. As the seller, you are also covering the listing agent’s marketing costs. It’s really no different than paying for any other kind of service. All of the listing agent’s costs are built-in to the commission rate along with some profit.
2. Agent Fees Are Negotiable
There are no federal or state laws requiring a set commission rate for real estate agents. Industry standard is 6% in most states, though you’ll find rates anywhere between 5% and 7% if you know where to look. The most important thing to note is that agent fees are negotiable.
The professionals at Salt Lake City’s CityHome Collective suggest that agents and brokers are sometimes willing to negotiate a lower commission rate on luxury properties. The higher the listing price, the more willing they are. Having said that, negotiating a lower rate might mean that you don’t get the full suite of services normally offered by your agent.
3. Sellers Pay Both Agents
Next, it is important to understand that sellers pay the commission for both agents. If you sell your house with a commission rate of 6%, that amount is divided evenly between the buyer’s agent and your own. You pay the whole thing through the proceeds of the sale.
4. Fees Must Be Included in the Contract
Agents are required by law to disclose their fees in the contracts they offer to clients. This is just one of many reasons real estate experts encourage both buyers and sellers to carefully read contracts before signing them. A listing agent’s contract should stipulate the total amount of commission you will pay upon sale of your property, represented as a percentage of the final sale price.
Any other fees must also be listed in the contract as well. It is wise to not sign a contract if you don’t fully understand what it says. Rather, have an attorney look it over first.
5. Rental Agents Work Differently
Finally, note that rental agents work a bit differently than purchase agents. Rental agent fees are normally paid by the landlord. However, there are instances in which tenants pay the fees. Landlords and tenants decide among themselves who pays the bill. This is mentioned only to put it on the table should you decide to rent your home rather than sell it.
It is not uncommon for sellers and buyers to complete a real estate transaction without knowing anything about real estate agent fees. If you were ignorant before, you no longer are. You now know the basics of how real estate agent fees work.