Many sellers do not understand the importance of real estate commission in the selling process. A commission helps align the goals of both the real estate agent and the seller. The marketing fee or commission is the most vital part of the marketing plan because this is precisely what sets the motivation and enthusiasm for cooperating brokers. Since commissions are negotiable, let’s talk in terms of averages. Let’s say an average commission for a certain area is 7%. The fee is normally divided evenly between the selling office and the listing office. Let’s track the path of this 7% just for illustration purposes. In a $100,000 home, the commission would be $7,000 which is split between both offices – $3,500 for the listing office and $3,500 for the selling office for securing a buyer. This $3,500 is then divided between the office and its respective agent. On the listing side we’ll say $1,750 (50% for illustration purposes) for the office and $1,750 for the agent. From this the agent must pay taxes, MLS fees, expenses incurred on advertising and promotions, desk fees, etc. The agent that procured the buyer would be a similar situation – where their $1,750 would go to pay taxes, MLS fees, expenses incurred with client, time, gas, meals, brochures, etc. A 7% commission may likely net only 1% of the total commission. It’s crucial to offer, at the very least, the average commission for your area. If you list your home for less than the average commission, it will not get the same exposure as a comparable home that does pay an average commission. It is highly recommended you consider offering a 1% higher than average commission for the sale of your home. A one percent raise in the commission translates into a 14% raise to the real estate agent’s paycheck. The increased incentive increases the motivation and enthusiasm for cooperating brokers and ultimately the offer made on your home.
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