Are you looking to sell your house?
You’ve probably been advised that hiring a realtor is the best way to go about it. A realtor is a real estate agent who will help you sell the house quickly and at the right price. If the house needs repairs, staging, and marketing, you can count on your realtor to take care of all the tasks.
For their service, though, you’ll pay. Realtors are paid a commission, which is usually a percentage of the house’s closing price.
How much is this commission? Continue reading for a guide to realtor fees for selling a house.
Average Realtor Commission
There really isn’t a standard real estate agent commission as there are a number of things that can influence the rate, but there’s an industry average. Although it’s been fluctuating through the years, most realtors will charge you 5 to 6% of the home’s closing price.
To put this in context, if your home is listed at $520,000 but ends up selling at $500K, you’ll pay your realtor anywhere from $25,000 to $35,000. You can see just how a big of a difference a percentage point makes when it comes to big amounts.
As such, negotiating the rate from 6% to 5% can mean ending up with $10,000 more in your pocket.
So, now that you know the average rate across the U.S., let’s focus on the various factors that can influence the rate a realtor decides to charge you.
The State of the Real Estate Market
Realtor fees are subject to the forces of demand and supply.
If your local real estate market is hot, meaning there’s an increased level of activity, the demand for realtor services increases. And when there’s an increase in demand for a particular service, the price of that service is likely to trend upwards.
In such a market, you’ll find that most realtors aren’t charging anything less than 6% and your effort to negotiate on the rate will fall on deaf ears.
However, if the market has cooled down, which means there isn’t much real estate activity in the market, the demand for realtor services goes down, and so does their price. At this time, most realtors are struggling to find regular work, so they typically lower their rates.
That being said, don’t expect the rate to go lower than 5 percent. The National Association of Realtors strongly recommends that realtors charge no less than 5 percent on any buying/selling transaction.
If you’re pressed for money and can’t afford to pay a realtor however low the fee gets, you have options. Read this blog to learn more.
The Realtor’s Costs
Whether or not the realtor pockets the entire commission depends on a few things.
If the realtor is an employer of a real estate firm, they have to split the commission with the employer. The split can range from 30 to 50 percent or even more. So, if a realtor needs to split a higher percentage with the employer or any other dealer involved in the transaction, they’ll be more reluctant to lower their rate.
Independent realtors who get to keep everything might be more flexible – depending on the state of the real estate market.
Realtor Fees for Selling a House: Should You Pay?
Now that you know the average realtor fees for selling a house, should you pay? It depends on your personal circumstances. A realtor will make your work much easier, but if you want to make as much money as possible from the sale, you can take the FSBO path.
Explore our blog for more realty tips and advice.