Listing Commissions Explained 

Listing Commissions
As a result of the National Association of REALTORS proposed settlement agreement and related practice changes the following disclosure is required to all buyer/listing agreements:   Notice to Seller: Brokerage compensation is not set by law and is fully negotiable.

Real estate brokers/agents normally charge a commission for listing and selling your home. The rate varies, both by region and according to service level. In most areas the commission is calculated as a percentage of the sales price and rates that are negotiated by that broker and seller.  Your listing contract will specify both the amount of the commission and the timing for when it will be paid.  Like everything else in real estate, commissions are negotiable. We will now ask the seller if they are willing to give compensation to the Buyer's broker and set that in place with the understanding that this is negotiable between the buyer's agent and the seller.

Discount commissions.  You need to be aware though, that lower commissions are nearly always tied to lower levels of service.  No agent will work for free. Just to put it out there that agents costs to listing your home are high, fees, sign rentals, photography, printed and advertising cost, car and gas expenses, cleaning, license fee and more. Most agents willing to list your home for a bargain commission rate aren’t going to do any advertising or marketing of your home.  They will probably just list it with the local MLS and put a sign in your yard, and that’s about it.  Meanwhile, a full service, full rate agent will probably spend considerable time and money to advertise and market your home – particularly to other agents in the area.  So, when considering a low commission rate, be sure you know exactly what you’ll be getting, and what you’ll be giving up. I would never want to work with a discounted agent! Trust our approach and our success to get your home sold! 

Often we only lower commissions in a listing as a part of a package deal where you agree to buy your next home through the same agent that sells your present one.   Or that you are an investor what has bought multiple homes with us. Or that your property is over 2 million dollars. There are some good bargains to be had with these package deals.  But again, it pays to examine the details closely, and make sure the whole package fits your needs.

Paying commissions/ compensation   It’s important to understand how commissions are earned, and when they are paid.  Your specific listing agreement will spell out the details.  In general, a broker is considered to have held up his end of the bargain when he brings you a “ready, willing and able” buyer.  If the broker finds such a buyer, and you change your mind and back out of the deal at the last minute, both the listing broker/agent and the buyer's broker/agent is probably going to expect you to pay the commission anyway, since they did thier job.