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How much should a realtor make on commission? Average?

  • December 18 2013 - Santa Ana
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Answers (8)

Hi Michelle,
Well, it really depends on the amount of work involved in selling the property. Each home is different, for example..
A home that is run down and in need of numerous repairs before it can be put on the market, with an out of state owner will require months of "prep" and time before I can  put it on the market.
A high end home that requires my attendance at every viewing. To get a good idea, it would be best to set up appointments with a few local Realtors to see what the commission charges are. Also, talk to a few friends and neighbors about what they paid for professional Realtor services.
  • December 19 2013
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The short answer is usually 5 - 6% which is split with the buyer's agent. For lower priced homes with selling challenges, it may be higher. It's always negotiable. Just remember that who your choose matters. The better agent with superior marketing and negotiation skills will net you the most profit after all costs, including commission.
  • December 19 2013
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I can't believe someone is actually comparing a Doctor  to a Realtor.

  • December 19 2013
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Good question Michelle!  It depends on several issues.

When you work with a real estate agent you are hiring that person to do a job for you - essentially you become their boss.

If that agent is a buyers agent and you're the buyer you engage that real estate professional to first determine the scope of work - what are your needs.  This means a good discussion of more than how many bedrooms and bathrooms.  Where would you like to be located?  What types of homes appeal to you?  Are there places where you really would not want to live?  Are you willing to do some work on a home aka fixer upper?  Or do you need something absolutely move-in ready?  On the same note what is your time line?  Have you just begun to look?  Or do you need to be in your home in the next 30 days?  Your agent will not be doing financing for you but they had better make sure you understand the financial plan for buying or selling.  If you have a mortage representative you are working with - have they gotten you a preapproval for a mortgage.  When it comes time to look at homes you probably want an agent who lines up just a few potential contenders based on multiple listing searches.  Depending upon your price range the buyers agent may preview the home before she shows it to you.  This way she will be able to point out positives & negatives rather than going in cold & seeing the home for the first time with you.  How long will your home search take?  All of these factors go into the compensation of your buyers agent.

Now if you are the homeowner selling - you're going to want a strong seller's agent - not just an agent who will take pictures and put your home into the multi-list.  A good seller's agent will first give you an accurate representation of the market around your home.  What has sold, what is for sale and what has not sold with possible reasons why not.  A good agent will evaluate your home and make suggestions on things that could be repaired, painted, cleaned, staged so that your home shows it's very best appearance for all potential buyers. A good agent will walk you through the whole selling process so that there are few if any surprises down the road.  A good agent will discuss finances with you to be sure selling is the right thing for you to do at this time.  If you are selling you want to actually sell your property for the best possible price and this means buyers have to see it.  Your home needs to be visible not just from the street but on the internet, on this site, or in any way that homes are best marketed in your area.  This could still be print, it could be any variety of creative ideas.  Will the home be vacant?  Will the agent provide staging?  Will you want an open house?  Again - this requires marketing and dollars - paid in advance by your real estate professional.  When the offers start rolling in your going to need a proactive, intelligent agent who can negotiate professionally to steer the offer into a contract.  After that you need an agent who can confidently navigate your contract to a successful closing - and then get paid.

You asked how much should a realtor make on commission.  This totally depends upon the broker who is running the company where the agent works.  If we discuss commissions this could be construed as price fixing, which is illegal so instead I will tell you that commission is determined and agreed upon by sellers agents and buyers agents and the people who hire them.  Many times there is a 50/50 split of the total commission with half going to a buyers agency and half going to a sellers agency.  Sometimes a home is bought and sold and the whole commission goes to one real estate agency.  It is very important to note that all companies and all agents may have a different commission split once that 50% of the commission goes to the agency.  Sometimes agents may receive 50% of 50% making the commission even smaller.  Other times a company will have a different agreement with agents where the agent pays a monthly fee and keeps 100% of the 50% of the commission.   Sometimes a property is sold with a flat fee commission - again determined ahead of time. Just as there are many different types of agents there are different types of compensation splits.

Who pays the commission?  Well it could be the seller paying the entire commission but it could also be the buyer paying commission or paying a retainer fee that later returns to the buyer when the sale is final.  This is important to determine up front - I like to discuss this early with my clients so that there are no questions.

In the end it really comes down to who do you want to hire so that you feel confident that the job will get accomplished.

  • December 19 2013
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What is the value of the home?  What is the condition of the home?  Is the pricing above or below market?  Does the seller want the full treatment, the basic treatment or the Special package when it comes to selling their home?  

Please advise.
  • December 19 2013
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What is the value of a Realtor? Thats a great question. In some cases its right up there with the 10 minute Doctor visit and the $100 fee for a brief moment in his exam room. But similar to a Doctor, a Realtor has done quite a bit behind the scenes that make it look like his or her value may be less valuable than what is seen. Like most Realtors I am almost always on duty. Countless hours of study and interruptions at all hours. Even though our education dims in comparison to a Doctor, there is a constant flow of information we have to be up to date on, in classrooms and out, to stay up to date in our work areas that help us protect our clients.  
Most Realtors make a listing and or a sale look effortless to their buyers and sellers.  When in reality there is quite a bit happening that the agent has to deal with that goes unnoticed. It is like the old saying that a duck looks so tranquil above the water. Below the surface its paddling like crazy. 
  • December 19 2013
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Somewhere between five hundred and a million dollars. Why?
  • December 19 2013
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Hi Michelle,

A realtor's commission is always negotiable. It's usually 2.5% or 3% of the selling price.
Remember, though, that some agents out there will not even want to show homes with low commissions to their buyers, so a seller runs that risk when they try to save money but lowering the agents' commissions.

Hope this helps and Happy Holidays!
  • December 18 2013
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