Monday, November 17, 2014

Real Estate Commissions

Yesterday's Seattle Times reported on a new upstart Seattle brokerage that is slashing traditional real estate commissions for its clients from 6 to 1.5 percent. Buyers already represented by a broker would include their fee as part of their contingency, and it would be up to the Seller to decide whether to pay by accepting it.

While a 6-percent listing commission is traditional, many homeowners do not realize that this commission is negotiable.

The traditional 6-percent commission is typically split between the buyer's agent and the listing agent, so each receives 3 percent on the sales price. Many brokerages will collect anywhere from 10-50% of the agent's commission to pay for overhead, leaving each agent with as little as 1.5% of the sales price on a home. Out of that amount, the agent must pay for all their other professional fees, insurance, marketing and business supplies.

Several local brokers already offer a 1.5% listing commission, with another 3% to the buyer's agent, for a total of 4.5% commission paid by the Seller.

One Seattle brokerage charges clients a flat $7995 on all home transactions below $1million, but collects $1000 upfront from buyers or sellers as a retainer. The balance is paid at closing.

The article went on to state that technology, such as video walk-throughs, make it easier for buyers to select homes without relying as heavily as in the past on their agents.

The real estate industry is constantly changing, and it is well-worth discussing this part of the real estate transaction in addition to other negotiable items.

Happy Investing!

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