How real estate agents and brokerage fees work

Thinking of buying or selling a house? This is a major financial decision and you need to ensure that you minimize costs when buying a house or maximize your potential when you sell a house.

(For more information on buying a home, see: First Time Buyers’ Guide.)

Brokerage fee

Most houses are sold with the help of real estate agents or brokers, and owner-sale transactions account for about 7-11% of the market. Since agents charge commissions, they only receive payment when the house is sold, and they do not receive payment until after settlement. That broker will work hard for you. (For more information, see: Real estate agents, brokers and real estate agents?)

Most agents charge a 6% commission.This is usually divided into sales agent (listing agent) and buyer’s agent. However, the full 6% is not only allocated between the listing agent and the buyer’s agent. The listing broker and the buyer’s agent’s broker also share the commission.

If you plan to hire an agent, it is strongly recommended that you study their history. If the agent has a good track record, it may be worth paying a premium, which actually means paying the full commission. If you can’t find an agent with a good track record, then at least try to negotiate a commission.

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Buyer Agent Tips

If you are buying a house and plan to use an agent, there are a few steps you need to follow to make sure you make the right decision. (For more information, see how to Choose the right real estate agent.)

  • Shop around and look for agents with the best reputation. Paying a premium to the person who can offer you the best price can save you thousands of dollars or more.
  • Negotiate commissions. The only exception to this rule is that if you work with a top agency, this will make the full commission reasonable because the agency will save you money.
  • Do not disclose to the agent the price you are willing to pay for the house, and the price offered to the seller is much lower. If the agent is more concerned about his commissions, he may use this information for his benefit.
  • use, The website of the National Association of Exclusive Buyers Agents. This website will help you find a buyer’s agent who has no relationship with the seller’s agent. This is also a good way to find a buyer’s agent who works with a fee structure instead of commissions.
  • Be alert to the list of inspectors provided by the buyer’s agent. The buyer’s agent and the inspector on the list may have common interests, but it is not good for you-the inspector may not disclose the actual loss of the house, because the buyer’s agent wants a commission when you buy the house and the inspector wants to get a commission from the buyer’s agent Get repeat customers.

Sales skills

If you want to sell a house, you can also choose not to use an agent. If you sell your home yourself, pricing is the key to success. You can hire an independent valuer for around $200 to ensure that you price the house correctly.

How much will you save? Suppose you will use an agent and pay a 6% commission for a $200,000 house. This is a staggering $12,000. If you switch to an independent evaluator of $200, plus the hypothetical $200 for advertising, you will save $11,600.

The challenges of selling your home without an agent include the time it takes and the expertise required to process real estate procedures and contracts. If you have an unusual property, or the market is weak, you may have to wait a long time.

Bottom line

Buying or selling a house is one of the largest financial transactions that most people will make. It is important to understand how real estate agents at both ends of the transaction get paid. This way you can decide whether hiring an agent or acting alone is your best choice.


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