16 Aug 2019

Is 6% Commission of An Agent Justifiable? Find Out the Facts to Get an Appropriate Answer!

Is 6% Commission of An Agent Justifiable? Find Out the Facts to Get an Appropriate Answer!

It is a fact that the commission of a real agent removes a considerable amount of your take-home cash at the time you sell your home. In the meantime, going alone indicates you’re on your own for the entire work.

Top 1% agent in Corpus Christi, Texas, Kim Erwin stated:

“sellers have a mindset that they’re about to save money by staying away from the commission, so they intend to sell their home somewhat cheaper. However, would you say you are truly saving money in case you’re selling your home for not as much as what you could’ve gotten with the right agent?”

Eventually, you need to skip the commission path dependent on your presumptions. However, in such cases, you could end up dealing with legal contracts filled up to your neck or end up with the money on the table with a buyer who takes you to the cleaners.

The Fact Is, Your Agent Doesn’t Keep the Total Amount of Commission

At the time of getting an estimate regarding evaluating the amount that the agent’s commission will cost you, it appears expensive. For instance: on a home that sells for $300,000, the 6% commission of a real estate agent will cost you $18,000.

As per the revelation of the report issued by U.S Bureau of Labor Statistics, a real estate agent gets $60,000 on an average as an income. Does it indicate that agents just require to sell four homes per year to make their yearly income?

The answer is a Big No!

First off, as per the fact, that entire 6% commission doesn’t go into your agent’s pocket. The commission has to divide 50-50 between the seller’s agent and the buyer’s agent.

Despite the fact, as per 3% on a $300,000, the agent still gets $9,000, correct?

The technical answer here is, yes. However, the agent is not the only person who puts the entire amount in his pocket.

The participation of a licensed real estate broker is also required in each home sale transaction, who should be paid, as well. Now, in this case, the amount of that 3% seller’s commission goes to the broker fluctuates somewhere in the range of 10%-50%.

After making the payment to the broker, your real estate agent still has to bear some other overhead expenses. There are some membership dues to deal with, such as NAR and MLS, in addition to the technology expenses such as their website.

Furthermore, there’s a requirement to bear certain expenses while selling your home. There is also the fact that the agent doesn’t get paid until the point your home finally sells; as a result, the agent has to bear the marketing costs from their own pocket. At the time of selling your home, they have to pay for certain things which include the cost professional photographers, digital and direct mail marketing materials, thus considerably more.

After deducting all expenses that an agent has to bear from his commission, the take-home pay remains somewhere in the range of $1,000 to $3,000. Now, split that between the number of hours they’re working for you and that winds up around $28 per hour.

Fact Check! That 6% Commission Isn’t Fixed

You can survey any online seller’s net proceeds calculator, and you’ll observe that the pre-set rate of agent’s commission is 6%. At the time of an inquiry, you will usually get a reply of 6% commission from any real estate agent.

In any case, that doesn’t imply you have to pay a 6% commission rate.

As per the US laws and regulations, there is no dictation regarding the agent’s commission rates as yet. This implies 6% is up for negotiation.

This reality hasn’t gone unnoticed.

As per the revelation of recent studies, there is a decline in an average national real estate commission rate. As per the recent statistics, the average is close to a 5% national commission rate.

After going through these facts, does this imply that the agent is bound to accept a 5% rate, or, on the other hand, you’re getting ripped off in case the agent demands a 6% commission rate?

The answer is again a Big, No!

It actually refers to the fact that the commission rate is negotiable. At the time you’re working out your deal, you can ask your agent whether they’re eager to accept a lower commission, and let them ask the buyer’s agent too.

Considering the majority of the work real estate agents have to do to make sure you get a good amount for your home and the process is done in a timely manner, you will finally realize they deserve every single penny.

Another Fact Check! Smart Agents Are Able to Sell Homes Quicker and For More Money

Here, you should reconsider the advice above from Kim Erwin ‘’top real estate agent,’’ who stated: “Would you say you are truly saving money in case you’re selling your home for not as much as what you could’ve gotten with the right agent?”

The point to take a note here is that she didn’t only state “agent.” She put “right” before it.

On average, only in the US, there are more than 2 million active real estate agents. You’d be silly to hand over 6% of your home sale profits to an agent who wasn’t top-tier.

Therefore, you need the best real estate agent who possesses an incredible set of skills. They’re smart when it comes to negotiating and great marketers who can bring you 1-20% more than your home in less time as compared to an average agent.

Author’s Bio:

Patrick Felix is a MacDonald Highlands area full-time real estate investor who entered in the business at 22 years of age, and whose portfolio today incorporates commercial offices, apartment buildings, and residential homes.