What Do Realtors Actually Make?
When you're looking to sell your home, one of the most important decisions you'll make is choosing a real estate agent. But with so many agents to choose from, how do you know which one to go with? One factor that often comes up in this decision is commission rates - what do realtors actually make, what exactly are they doing for that commission and how does that impact your decision?
Firstly, it's important to note that there is no set commission rate for real estate agents. Each agent sets their own rates and fees. This can range from a flat fee to a percentage of the sale price, and can vary depending on the services offered & the individual agent.
So, what should you be looking for in a real estate agent when it comes to value? Direct marketing is an important consideration - things like photos, video, floor plans, and online promotion can all help attract potential buyers. It's also important to consider availability - will the agent be able to show your home to buyers whenever requested? Additionally, you'll want to ensure that your agent has a good understanding of the property and can answer questions accurately - not just to help sell the property, but to keep you out of any potential legal issues.
Experience also counts when it comes to selecting an agent. Does the agent have experience in selling properties similar to yours, both in terms of property type and price point? How long have they been in the industry, and what is their general knowledge base? These are all important factors to consider.
Now, let's talk about commission rates. Full-service brokerages typically charge a percentage of the sale price, with the listing agent keeping 51% and the buyer's agent receiving 49%. Common rates for entry-level agents are 7% on the 1st $100k / 2.5% on the balance. For a $1 million sale, this would result in a total commission of $29,500.
More experienced realtors may charge a higher commission rate, such as 7% on the 1st $100k / 3% on the balance, with 60% going to the listing agent and 40% to the buyers agent. The highest commission rate we've seen is 8% on the 1st $100k / 4% on the balance, which would result in a total commission of $44,000 for a $1 million sale.
Discount brokerages, on the other hand, may charge a flat fee of around $10,000 on properties under $1 million and a tiered amount above that. While this may seem like a good deal, it's important to note exactly what discount brokers may not offering for that fee and if its close to that same level of service or marketing as full-service brokerages.
Ultimately, the decision of which agent to go with should be based on value rather than just commission rates. A higher commission rate may be worth it if it means your property is marketed better and attracts more potential buyers. It's also worth considering the experience and track record of the agent, as well as their availability and understanding of your property.
In conclusion, choosing a real estate agent is an important decision that should be made based on value rather than just commission rates. Consider the level of service and marketing offered, as well as the agent's experience and track record, to make the best decision for selling your home.