Agent’s Commission – How Much Should A Seller Pay?

When selling a house – is it practical for you to have it done through a real estate agent? If you want it sold fast, then the most logical thing to do is have it listed through an agent. These professional experts have experiences that can expedite the sale. But some are wary about employing an agent because of the commission outlay, an amount which could be quite material.

How much commission does a house seller have to pay to his agent? This has been a perennial question asked by a seller? Maybe there had been no straightforward answer given to this. All that has been divulged is that the agent’s commission is a percentage of the total contract price of the property sold. And that the commission is paid upon culmination of the transaction.

The truth about commission- there is no standard and legal commission rate. In reality, the setting of a fixed commission by real estate agencies is prohibited. This could be the reason why the amount of commission is not clear. Each agency has its own rate.

Real estate agencies can actually charge any commission they would want. It all depends on the people, the seller for that matter – how much this seller is willing to share to his or her agent from the proceeds of the sale. The commission can be very high as there is no ceiling. What keeps it down and reasonable is competition. Even in this setting of commission – the economic law of supply and demand seems to penetrate. The presence of many agents keeps the price down.

The commission is internal arrangement between the agency and the agents. The company can set a maximum and minimum rate for the agents and the latter are allowed to negotiate the commission with the clients. If the agent is under a broker, the commission has to be shared between them. Upon listing of the property, the agent already has stipulated the percentage of commission to be set upon sale. If this agent wants to lower this percentage, he has first to seek approval from his supervising broker. This can be done as there really is no fixed commission rate and the arrangement of rate is just internal.

But then there is one restriction – the agent can never divulge to other real estate agents the amount of commission to be put on top of the selling price. And in the same manner, real estate companies are not supposed to expose to any agent outside of the company their implemented rate. The commission earned on the sale is a split between the listing company or broker and the agent. The sharing between them is again a matter of agreement in-between.

Whatever is the amount of commission, a seller should know that he or she can haggle with it. The rate of commission, in this stiff competition, is negotiable. The seller can always search for better deal which will mean less expense for him or her.