There certainly are a lot of things to consider whenever you're selling a house. One of the things that you may wonder is who pays real estate commissions. Is it the buyer, the seller, or some combination of both? The answer to this question may actually surprise you and it might be a little bit more in depth than what you had considered at first.
In a typical real estate transaction the seller of the house is the one who pays real estate commissions. This is usually of 6% of the final sale price with 3% of that going to the selling agent and 3% going to the buying agent. However, you should also know that those agents must then give a percentage of that commission to their broker. Although some real estate agents are able to keep 100% of the commission and only pay a desk fee to the broker, the majority of them are going to have to pay anywhere from 30% to 50% of the commission to their broker.
However, since the seller is the one who pays real estate commissions, that commission is going to greatly effect the cost of the home. The seller is going to try to bump up the price of the home in order to cover the cost of the commission he must pay at closing. This, in turn, has a negative impact on the buyer as the house is going to cost more money to buy. It also makes it more difficult for the seller to negotiate and reduce his price as he has to cover his costs. Not being able to come down in price can often times be the difference between making the sale or not.
So, is there any way to avoid this fee?
Well, yes and no.
Whenever a real estate agent is responsible for selling your house there is going to generally be a fee that goes along with it. The vast majority of brokers will NOT allow their agents to cut their commission in order to make a sale.
However, if you go with a flat fee listing service then it is possible that there won't be anyone who pays real estate commissions or at most the commission will only be 3% to the buying agent. Either way, this is will allow the seller to come down in price and save everybody thousands of dollars.
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