FSBO For sale by owner advice for selling a home for sale by owner FSBO...without a real estate agent...and pocketing thousands in real estate agent commissions


Real estate commissions

Are Real Estate Commissions Really Outrageous? Real estate article by Noel Peebles, co-author of For Sale By Owner Home Selling Secrets ebook. Explains real estate commissions.

Are Real Estate Commissions
Really Outrageous?

By Noel Peebles
Co-author Home Selling Secrets ebook

Let's face it; no one likes paying thousands of dollars to real estate agents, most of whom drive big flash cars. But, are real estate commissions really a rip-off, or do they simply reflect the value and importance of the transaction that's taking place. I guess, to be fair, it really depends on the final outcome and what each property finally sells for. Anyway, it is a subject that seems to aggravate buyers and sellers alike.

Read on, because here are some points to consider before hiring an agent or deciding to sell your home yourself.

The fact is; real estate commissions can vary from state to state and country to country. The key thing to remember, however, is that commissions are almost always negotiable. In some countries the seller (vendor), pays a flat real estate commission of 3% to 5% and then pays for all marketing costs on top of that commission fee.

In the USA, real estate commissions vary between 4% to 10% depending on the type of property, current market conditions, and the motivation of the seller. Around 6% seems to be the most typical commission rate. But again, this is usually negotiable.

Many people wrongly assume the entire real estate commission goes to one person. Typically in the US, real estate commissions are divided four ways: the listing agent, the listing agent's broker, the buyer's agent and the buyer's agent's broker. Referral fees and franchise fees can also influence the amount paid and the actual dividing up of the commission.

Why then are real estate commissions so expensive? Well, I'm not here to justify what agent's and broker's charge, but to be fair they do have overheads just like any other business. Their costs include: MLS (Multi Listing Service) fees, insurance and membership dues which can amount to thousands of dollars a year for each agent. Then there is the big expense of running office equipment, computers, cell phones and vehicles. And, you may have noticed that most agents like to drive clients around in late model vehicles. Maybe this is extravagant, or maybe it is just their way of saying "I'm successful!" And, not forgetting the cost of signs and advertising which together can amount to a considerable cost.

So, real estate is a business with many expenses and without the luxury of a guaranteed weekly paycheck. It is also an industry that has its ups and downs. Interest rates and economic confidence are just a couple of factors that can have a major impact on the real estate market. Most agents who have been in the industry for some time will have experienced boom times as well as lean periods.

Frankly; at the end of the day real estate agents are out there to earn a living just like everyone else. They need to be competitive in order to survive and prosper. That is why real estate commissions are almost always negotiable. The agent's want your business! They want your real estate commission!

With that said, agent's also want "profitable business." So, when an agent shows a property to a potential buyer, one thing they generally look at is how much real estate commission is being offered. Agents typically will show homes offering 3% before the ones offering 2.5%.

Trouble is the real estate commission system can work against sellers. If your home is offering only 2.5% to the other agents, it may get fewer showings. Your property will therefore be exposed to fewer potential buyers. As a result; you will be helping other seller's get their homes sold first.

Whereas; if a listing agent were to offer 3% to a buyer agent on a 5.5% or less listing contract, it could produce a different outcome. This scenario would reduce costs to you (the seller) along with good marketing incentives for other agent's.

So, let me summarize and review:

1) The real estate commission is negotiable
2) The commission is usually split amongst several parties
3) The agents are entitled to earn a living
4) Know what the commission split is going to be and how it may affect you

Finally, don't dismiss the possibility of selling your home FSBO (for sale by owner). Selling your home yourself could save you thousands in real estate commissions. Thousands of others have successfully sold their own homes - why couldn't you?

© Noel Peebles, Market Leaders FSBO real estate books.

Noel Peebles is co-author of the best selling FSBO real estate book
"Home Selling Secrets Revealed."
For details http://www.forsalebyownerguide.com

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or more in real estate commissions!

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FSBO For sale by owner advice for selling a home for sale by owner FSBO...without a real estate agent...and pocketing thousands in real estate agent commissions