Selling Real Estate? Know All About How Fargo Realtors Commission Works
There are many types of costs associated with selling a home. You need to spend on marketing the property and pay closings costs, taxes etc. One expense that most home sellers forget to take into account is the commission of a real estate agent. As per the standard practice in the real estate industry, the seller has to pay the commission to both the agents – the listing agent (the seller’s agent) as well as the buyer’s agent.
An increasing number of home sellers are listing their properties without hiring an agent to save on commission. These listings are called ‘For-Sale-By-Owner’ (FSBO). You too can go ahead and sell your home on your own if you are comfortable with handling the paperwork and stress that is usually caused by the complex home selling process, but if you want a licensed professional on your side to guide you here are a few important things you must be aware of:
- The commission is usually six percent of the sales price. So if your home gets sold for $300,000, you will need to pay a commission of $18,000 to the two agents involved in the transaction. Half of this amount will be paid to the listing agent, while the other half will go to the buyer’s agent. If the buyer is not being represented by an agent, the listing agent will collect the full commission.
- The amount of commission is not set in stone. You can negotiate on how much commission you will pay for representation. You will sign a contract with the listing agent. Your agent will explain the commission you’ve agreed to pay in the contract. While searching for real estate agents, you will find many brokerages offer to list properties at a discounted commission – as low as one percent of the selling price in some cases.
- The listing agent will pay for all the marketing and advertising expenses. He or she will list the property on the MLS and with online property listing websites. The agent will also promote it on social media and via print advertising mediums.
- You can also work with a brokerage that offers listing and marketing services for a flat fee. It doesn’t matter what price your home gets sold for, you will pay a fixed amount of fee to the brokerage.
- Another option is to assign a particular responsibility to a real estate agent. You can ask him or her to just list your home in the MLS or host an open house. The agent will charge you a set fee for that particular service. This is what popularly known as a la carte service fee. La carte is a French phase that means ordering a single item from a menu. People who list their homes as FSBO can hugely benefit from this fee arrangement as they can handle the responsibilities which they are comfortable with, while pay an agent a fixed fee to carry out a specific task.
Paying a commission to sell your home will cut into your profit big time. So get familiar with all the options outlined in this article and shop around for the best deal.