There is No Standard Real Estate Commission
Posted on | March 10, 2009 | No Comments
There is no law that states what the standard real estate commission should be, but it is wise to find out the range that the seller broker is going to use. Sometimes they tell you it is between 5 and 7 percent, but some will narrow it down to between 5 and 5.5 percent. Either way, if you are a buyer or seller, it is very good to know the commission that the seller broker is going to use because that may change what homes you see and do not see.
In a sellers market, when there are many more buyers than homes available, it is likely that the commission will be less than average. This is because the agent has to do little work to get buyers to actually look at the home. If there is a higher demand for homes, buyers will find the house by themselves. The opposite is true in a buyers market. Oftentimes, the real estate agent will charge a higher commission because he or she has to work much harder to get buyers into the home as there are too many houses on the market.
If it is a sellers market, you are much more likely to see many For Sale By Owner properties. Sellers do not want to pay commission if their house is going to sell either way. When the supply of homes is low and the demand is high, many savvy sellers find ways to avoid paying up to 7% in commission.
If you are a buyer or seller, it is very important to find out the commission that the seller broker is going to charge. The rate being charged will give you a good indication if it is a buyers or sellers market in that particular area. It may also determine which homes your agent shows you. If the commission is extremely low for your agent, they are less likely to show you that home first.
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