ClickCease

The Ultimate Guide to Realtor Commissions (And How to Lower Them)

In 2020, there were 5.64 million existing homes that were sold in the United States. Roughly 90% of people selling their homes hired a real estate agent to assist in the home selling process.

While there are certainly benefits to hiring a real estate agent, these benefits come at a cost. Both the buyers and sellers agent take a percentage of the sales price in the form of a commission, and these costs come out of the sellers pocket, not the buyers.

If you’re selling your home, you might be wondering if it’s possible to reduce or avoid entirely realtor commissions.

Let’s take a look at what you need to know.

What Are Realtor Commissions?

When you first think about selling your home, you are likely more focused on how much money you’ll make rather than how much money it will cost you. However, it can, unfortunately, be quite expensive to sell a property.

When your home sale is completed, the real estate agents that are involved in the transaction will collect their commission. This is the fee they are owed for the services they respectively offered you and the buyer.

Typically, real estate agent commissions are calculated as a specific percentage of the sales price of the home. A common commission rate is between 5 and 6%.

Where does this money come from? Well, it comes out of the seller’s proceeds. The percentage agreed upon when signing the contract is then split between both the listing agent and the buyer’s agent.

How Do Real Estate Commissions Work?

Real estate agents actually usually don’t make a salary. They also don’t charge any money when they sign on a new client. Instead, they make money once the home has sold in the form of a sales commission.

When people talk about commission rates, they typically discuss them in terms of a single percentage. This is usually between 5 and 6%. This percentage of the sales price, though, is actually split between the agents.

While these percentages might not seem terribly high, it really starts to add up when you’re talking about the cost of a home. For example, 5% of a $300,000 house is $15,000! And as the seller, you’re the one who’s footing the bill.

What Do Real Estate Commissions Cover?

In general, real estate commissions will cover all aspects of the sale and marketing of your home. Real estate agents will typically do all of the following when you hire them to help sell your house:

  • Help you properly price your home by performing a Comparative Market Analysis
  • List your house on the Multiple Listing Service
  • Market your house in a number of different ways including sites like Zillow
  • Pay to have professional photographs taken of your home
  • Coordinate perform showings
  • Help you fill out all of the legal work
  • Negotiate the sales price on your behalf

Realtors don’t get paid anything until the sale of your home is finalized. That means that they lose out your home does not end up selling.

How to Save Money on Realtor Commissions

If you’re hoping to profit as much as possible from the sale of your home, you might be wondering if you can save money on agent commission. Let’s take a look at some of the options you have the amount of money (or eliminated entirely) you have to give a real estate agent when you sell your home.

(Are you curious about the difference between listing with an agent and selling to a cash buyer? If so, check out this helpful comparison chart.)

Try to Negotiate

Sometimes, real estate agents will be open to negotiating their fee. Of course, they will likely only want to budge so much. You will have a better chance of successfully negotiating a lower fee if you can promise them repeat business or if you are coming to them during a time when they don’t have a lot of other clients.

Basically, if you offer to buy and sell using the same real estate agent, they will sometimes give you a break on the commission for each.

Shop Around

Another option you have is simply shopping around. You can let all of the potential agents on your list know that you are talking to a number of agents before you sign on. This might make them more eager to give you a break since they know that you might end up giving your business to one of their competitors.

There are also a number of practical reasons why it might make sense to shop around. For one, not all brokerages allow their agents to reduce their commission. You might have to search around in order to find an agent that is able to do so.

Sell FSBO

If you want to save money on real estate agent commissions entirely, you could choose to sell the house “for sale by owner” (FSBO).

Before you get too excited, though, it’s important that you understand what selling FSBO entails. While it’s true that this route can save you thousands of dollars on commission, it still might not actually be the most profitable method of selling your home.

Many people underestimate just how much work goes into selling a house. To sell FSBO, it means that you are responsible for everything that a real estate agent would take care of. Not only will you have to ready your home for sale, hire a professional photographer, and pay to list your home on the MLS, but you’ll also be responsible for all of the legal paperwork and negotiating the terms of the sale.

Negotiation is a skill that simply cannot be learned overnight. What this means is that you will likely end up selling your home for less than if you had a real estate agent even when you factor in the cost of their commission. On top of that, many buyer’s agents will dissuade buyers from even looking at homes that are FSBO because of negative experiences they have had in the past.

It can be difficult for people who are marketing and negotiating the sale of their own home to remain objective. Your home is a place that has many emotions and memories attached to it. It is therefore common for owners to become offended at comments and complaints during the negotiation process and also be unwilling to sell for a fair market price.

Luckily, selling FSBO isn’t the only option you have when it comes to avoiding real estate agent commissions. In the next section, we’ll explore the option of selling your home to a cash buyer.

Sell Your Home for Cash

Another option for avoiding the sales commission that typically goes to real estate agents is to sell your home for cash. When you go this route, it means that you can sell your home “as-is,” without putting in the time, energy, and money towards fixing up the home for sale.

On top of that, you won’t have to take on the basically full-time job of marketing your home. The process of selling your home for cash can be quite simple. However, it’s important to find a reputable company.

When you sell your home to Homebuyers Acadiana, it means that you don’t have to make repairs, don’t have to pay closing costs, and don’t have to pay realtor commissions. The process also goes much quicker then selling your home on the traditional market because you don’t have to wait for a buyer to go through the financing process.

You can learn more about how it works here.

Are You Looking to Avoid Paying Realtor Commissions?

When you decide to sell your home, you’re making a major financial decision. While some people might feel that it’s worth it to hire a real estate agent and sell their home on the open market, others might be motivated to avoid realtor commissions during the process.

When you sell your home to Homebuyers Acadiana, you don’t have to deal with keeping your home in pristine condition and constantly being interrupted by showings. It’s worth understanding that we are investors, meaning that we typically purchase homes below market value. However, the tradeoff is that you get cash, we close very quickly, and you don’t have to pay realtor commissions or engage in costly repairs or home preparation.

At the end of the day, there’s no harm in receiving a no-obligation offer for your home. You can see how much cash we are willing to pay for your home and decide whether or not that’s a deal you want to take. If you don’t, you have absolutely zero obligation to move forward with the deal.

If you’re considering selling your home, you can get a fair cash offer here!

Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

Get Your Cash Offer Today!

We buy houses in ANY CONDITION in Louisiana. There are no commissions or fees and no obligation whatsoever. Start below by giving us a bit of information about your property or call 337-245-1650...
  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *