Tackling Common Myths About Estate Agent Commission

Real estate agents are the kings and queens of the real estate market. They know how to make or break the deal. It may take some time to find a trusted real estate agent but it is possible. One way to tip the odds of finding a good agent in your favor is to educate yourself as much as you can about the real estate market before selling or purchasing a new home.

What’s the Role of a Buyer’s Agent in a Real Estate Deal?

An agent’s sole responsibility when working with a buyer is to find the property that best fits their specified criteria such as location, building type, etc. Real estate deals are complex, and one of the main jobs of the agent is to not only educate the buyer about the property but also about the overall process. Including the purpose of certain legal documents and the steps necessary before a deal is finalized.

Buyer agents also handle scheduling property inspections, accompany the buyer for property tours, and provide an unbiased view of the property. The agent is also responsible for submitting the offer to the seller on the buyer’s behalf and facilitating any negotiation that occurs between the two groups before finalizing the sale.

Buyers may also benefit from securing other professionals like a home inspector, attorney, or mortgage broker. But agents are often well-connected and can refer buyers to such professionals during the buying process.

Managing an Agent’s Commission:

The good news for the buyer is that their buyer’s commission generally comes out of the seller’s total settlement payout. This amounts to roughly 6% of the total sale amount that’s split between the seller and buyer’s agents. Some buyers have reported losing money because the agents’ commission was somehow worked into the final sales price.

While it’s not a common practice, be mindful that it could happen. So do your homework and get an understanding of the line items that make up the final price.

Should the Buyer’s Agent Get a Higher Percentage of the Commission?

Generally, the seller pays the commission for both the buyer and seller agents; this is usually allocated at 3% for each agent. But some buyers have reported their agent still required commission directly from the buyer. Why? Well, when the seller asks the agent to put their home on the market, the agent’s commission is included in the contract.

One thing to remember here is that the broker’s commission is negotiable and there is no rate set by the law. When the seller doesn’t agree with the agent, the agent can withdraw the offer which makes the situation tricky.

My Agent Asked for a Higher Commission – What do I do?

The first thing that you need to do is let the agent know that you have already included the percentage in the listing. Most of the time the agent would agree to it, but some more aggressive agents may push for a higher commission. Technically, the seller is the one who would set the final rate. If you’re the seller, you need to play smart here.

If the market is hot and you are already getting multiple offers. It may be wise to consider some of them and disregard the increased commission request. However, if the market is slow or if there is an issue with the property that could adversely impact a sale. Negotiating with the buyer’s agent would become a wiser decision.

FAQs

What is an Estate Agent’s Commission?

An estate agent commission is a fee paid to a real estate agent for their services in buying or selling a property. The commission is usually a percentage of the final sale price of the property.

What are Common Myths about Estate Agent Commissions?

Common myths about estate agent commission include that it is fixed by law, that it is always a percentage of the sale price, that it is not negotiable, and that it is always paid by the seller.

Is the Commission of an Estate Agent Fixed by Law?

No, estate agent commissions are not fixed by law. The commission is negotiable between the seller and the real estate agent.

Is the Estate Agent Commission Negotiable?

Yes, the estate agent commission is negotiable between the seller and the real estate agent. It is recommended to discuss commission rates with multiple agents and negotiate the rate that works best for both parties.

Is the Estate Agent’s Commission always Paid by the Seller?

No, estate agent commissions are not always paid by the seller. In some cases, the buyer may be responsible for paying the commission, or the commission may be split between the buyer and the seller.

Are there Any Alternatives to Using a Real Estate Agent to Buy or Sell a Property?

Yes, there are alternatives to using a real estate agent, such as selling the property yourself (also known as “for sale by owner” or FSBO), using a discount or flat-fee real estate service, or using a real estate lawyer for legal guidance.

Conclusion:

Remember, commission rates aren’t regulated–as a seller, you can offer any percentage which suits you best.