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Realtor Fees: What You Should Expect?


One of the most common reasons many people initially decide to try to sell their home on their own is that they wish to avoid paying a commission to a realtor. In many cases what ultimately happens is that they pay the fee anyway because they either end up selling the home through the assistance of a realtor or because they finally list the home with a realtor. In either case, it is important for homeowners who are considering selling their home to have a solid understanding of how realtors are paid and what they can expect.

The first and most important element of the realtor fee that prospective sellers need to understand is that all real estate offices are independent and as a result, commissions can be negotiable with each company. The standard commission in many parts of the country is around 6%, but once again that is only an average and can vary somewhat.

Using this as an example; however, suppose you have a home that you are listing for $200,000. The realtor is charging a 6% commission. This means that the commission on the sale of the property would be $12,000. As a seller, it is important to understand that when the home sells, you will be responsible for paying $12,000 out of the final proceeds to the realtor for their commission. You might sometimes hear a real estate agent referring to the 'side' of a listing. This refers to the listing part of the sale and the selling part of the sale. In our example, let's say that one realtor lists the property for sale and another actually acquires the buyer who purchases the home. For the sake of simplicity, suppose the agents are from two different real estate offices. In this case, the real estate agency that listed the home would receive half of the commission, $6,000, and the real estate agency that found the buyer would receive $6,000.

Most real estate agencies have agreements between the broker of that office and the agents employed at the office regarding the way in which commissions are split. The broker receives a percentage and the agent receives a percentage. This percentage can vary, but to make things easy, let's say the agreement in both offices is a 50/50 split. Therefore, in this scenario, the listing agent would receive $3,000 and the listing office would receive $3,000. In the office that brought the buyer to the transaction, the real estate agent would receive $3,000 and the broker/office would receive $3,000.

You will also be responsible for several other fees that are part of your closing costs on the transaction. These fees are not paid to the realtor, but to other separate entities. For instance, one of the fees you will typically need to pay is the state transfer fee. This is usually around $3 for every $1,000 of the sale. This fee is paid to the state treasury as a form of sales tax. So, in our example the fee would be $600. You will also be responsible for paying a fee to the title company. Like most other fees in the sale of a home, it is also based on the sales price. In addition, you will find that this fee typically varies from one company to another. This fee is paid to insure that the title provided to the buyer is free and clear of any incumbencies. The fee is also used to pay for the research the title company conducts on the title to the property in order to ensure there is a clear title available to be transferred to the buyer.

You will also be responsible for paying prorated taxes at the time the home is sold. This is the amount of taxes that is owed by you as the seller for the period of time you owned the home during the year in which it is sold. If you owned the home for six months out of that year, you will be responsible for six months of taxes.

Of course, if you owe a balance on the mortgage to your home then you will also be responsible for paying that at the time of the closing as well. The title company will be responsible for sending a check to the lender that holds the mortgage. The amount will be taken from the proceeds of the sale. Once all of these fees have been paid, you may also be responsible for some other minor expenses as part of the closing costs.


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