When listing your home with a real estate agent, a customary percentage is expected by the agent for their commission on the sale of your home. Once you have completed the listing agreement with your agent, the two of you would negotiate and then settle on a percentage that you both can live with. Keep in mind that while regions have customary ranges, real estate agents can reduce their percentage in certain situations, if they want.
Now, when you talk about commission, you are actually dealing with two agents. In this case, part of the percentage would go toward the commission for the listing agent’s company while some goes to the company that represents the buyer. Therefore, if you know the agent, and he or she were to reduce the percentage from 6% to 5%, then the amount of money going into the agent’s pocket would be reduced. In other words, in rare situations when the commission percentage is lowered, that agent is taking a cut in pay.
When you get ready to talk to a listing agent about commission, you want to ask a number of questions. First, make sure your home will be listed in the Multiple Listing Service or MLS. This increased the visibility of your home means more people, both private parties and other realtors will see that your home is on the market. With this, the number of potential buyers increases, which means greater selling power.
In addition, find out the effect on the company that is representing the buyer. Again, with a portion of the percentage generally going toward this company, you want to know the customary amount. Then, ask about marketing. The bottom line is that most homes are not sold through open houses and advertising alone, although it could happen. Instead, this type of advertising will generate phone calls from potential buyers. Therefore, you want to ask the specific means in which the listing agent will tell the world about your home being for sale.
Finally, find out if the listing agent will use other types of services to tell potential buyers about your home being on the market. Many times, a real estate company will bundle services, which allows them to reduce their fees. For this reason, you want to get everything out on the table before you sign a contract with the realtor, understanding exactly what will be done so you know what type of commission you will be paying on the sale of your home.