Buying or selling real estate can be an expensive affair. Along with the cost of a home and associated closing costs, there is often the expense of paying a real estate commission to an agent or brokerage for their work on behalf of the buyer or seller. Real estate commissions are a common element of home sales and are typically split between the listing and buyer agents involved in the transaction.
Historically, real estate commission rates have tended to hover around 5%. However, the National Association of Realtors recently agreed to change its commission rules as part of a settlement with the federal government over allegations that the fees stifled competition and drove up housing costs. These changes could significantly reduce the cost of homebuying for some consumers. For more info https://www.fastlandoffers.com/we-buy-land-tennessee/
Most real estate agents are employed by realty companies that employ a team of brokers who collectively earn a commission from each property sale they oversee. These brokers, in turn, distribute the commission amongst their agents based on their individual contributions to each sale. In some cases, the broker and agents also receive an additional base salary. For instance, Redfin pays its real estate agents a bonus for each home sold and, as of this writing, has one of the highest real estate commission rates in NYC.
The question of how much is real estate commission and whether it is worth the cost is a controversial topic in the industry. Some critics claim that the commissions are too high and argue that the services provided by real estate agents are not worth the fees charged. Others point to recent changes in the real estate market that have led to higher sales prices and lower homebuyer interest, making homes less affordable.
A big reason why buyers may not be able to afford your home is because they have to pay their own real estate agent’s fee. Many buyers simply cannot afford to add that cost on top of the down payment and closing expenses they already have to take on. By offering to cover the buyer’s real estate agent commission, you can make your home more attractive to buyers and boost your odds of receiving multiple offers.
Precisely who pays a real estate agent’s commission is another point of contention. Standard practice is for the seller to pay the fee, but sellers generally wrap it into their asking price, so the buyer ultimately pays it, albeit indirectly. This is why it is important to carefully consider your real estate agent’s compensation model before you sign a contract.
Most brokered sales are recorded in private inter-broker databases like REBNY’s RLS Broker Database, Hudson Gateway MLS or Long Island MLS and these databases do not disclose commission amounts to the public. As a result, it can be difficult to get an accurate picture of what real estate commission rates actually look like in NYC. In the future, as more agents and brokerages offer different types of commission packages to attract clients, it is likely that real estate commission rates will continue to decline.
