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Commission Talk
Real estate commissions seems to be a hot topic nowadays. There is also a lot of confusion regarding this. Who pays the commissions? How is it distributed? How much is the standard? and on and on..

First of all, there are no “standard” real estate commissions. Every agent has their own way of marketing homes. I charge only 1% commission and it seems to be working just fine for me. Other agents might be charging different amounts.

Who pays the commission?
When the home owners sign a listing contract with a Brokerage they agree to pay a certain percentage. It will state on there on how much will go to the listing broker and how much will go to the buyer broker.

How much is it?
Sorry, since there are no “standard” commissions I can’t really comment on an exact number. You would have to call around and find out how much real estate agents are charging. After speaking with a few of them you will get a good idea of what the going rate is in your area.

How is the commission distributed?
Usually there are 2 agents involved in the transaction. There is the listing agent and then the buyer agent. Pretty self explanatory.

For the purpose of this article the number I will use is 5% total commission. This is just used as an example.So, when the sellers sign the listing they agree to pay 5%. It will state on the listing agreement how much is going to the listing agent and how much to the buyer agent.

 The listing agent might offer the buyer agent 2.5% to bring in a qualified buyer.

The commissions actually go to the brokers of each company who will take the share and cut the remainder amount to their agent. How much the broker takes depends on what kind of split that agent has with his brokerage. 

My commission structure
I charge 1% commission for full MLS service and I pay the buyer agent 2.5% commission. Total commission home sellers pay with me is 3.5%. No hidden fees, No tricks. Other Remax agents are not in any way obligated to match this. This offer is just from me. ”Disclaimer: Different commission rates and fees may be offered by other Remax Franchisees, Brokerages and sales representatives.”
 
What about those FSBO sites?
Some people try to sell their house themselves to save the real estate commissions. That’s not a bad idea if you can pull it off. Just be careful of those FSBO sites that will promise you world wide exposure and to save you thousands of dollars.

A lot of them want a few hundred dollars upfront. This is regardless of whether your house sells or not. They will add your listing on their site and might even send a couple of open house signs in the mail. The problem with that is when you go on Google (or any other major search engine) they are no where to be found when you type in the common keywords. So you just paid $300-$500 to advertise on a site that not too many people will find.

Secondly, the only people who are looking for FSBO listings are bargain hunters. Their thinking is that they will save the real estate commissions by buying directly. So be prepared for low-ball offers.

I’m not saying it can’t be done. It’s just not as easy as some of these FSBO sites make it sound.

Agents on the other hand only get paid when your house sells. So they will work day and night for it if they have to.

Thank you.