About Real Estate Commissions
| 01 December 2009
When you sign an exclusive listing agreement with a traditional real estate broker, you’re instantly bound to pay a commission of 5% - 6% of your home’s selling price, regardless of who sells the home – even if it turns out to be you. For a house that sells for $450,000 that would cost you $22,500 - $27,000.
Normally, when your house is listed on the MLS (Multiple Listing Service), the listing broker who listed your home gets 50% of the gross commission and the selling broker who produces the buyer gets the other half. Your listing broker can also be your selling broker, capturing the entire commission.
What are you getting for this commission? Your broker assumes full control of the home selling process and provides a one-size-fits-all service package that includes: advice on setting list price, placing a “For Sale” sign, listing the property in the Multiple Listing Service (MLS) and on the broker’s web site (if they have one), handling property showings and open houses, overseeing negotiations with buyers and coordinating the closing process. There is usually no guarantee that your home will be advertised in the newspaper.
You pay for all these services whether or not you need them. However, there are a few pioneering firms – including HouseSavvy – that take an entirely different approach based on the premise that home sellers have paid the total cost of marketing and selling homes for far too long, and deserve to pay little or none of that cost. (learn more).