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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