An important aspect of working with real estate agents is
to understand how their commission structure works. It
can be divided between
the following:
a.
Listing agent
b. Listing company
c. Selling agent
d. Buyer's Agent
Definitions:
Listing agent - a real estate agent, or realtor, with whom
a property owner signs a contract for the agent to attempt
to sell the homeowners
property. A listing agents commission percentage is usually
dependent upon years of experience, sales volume history or
value to the
company.
Listing
company - the real estate company the listing agent is employed
by. Usually
the real estate companies name is on the "for
sale" sign in the yard.
Selling
agent - the agent that actually finds the buyer for the seller.
Usually
referred to as the agent who is "the procuring
cause of sale". Selling agents commissions are taken from
the total commission paid by the seller.
Buyers agent - the buyers agent is
unique in that they have a contract with and are working for the
BUYER. As a representative of the buyer their duty is to negotiate
the best terms for the BUYER...not the SELLER. You, as a seller,
should be aware of this. Since the BUYER has a signed contract
with the agent, it is the BUYER who is responsible for paying
the commission.
Real
estate agents frequently contact "for sale by owners" in
an attempt to persuade them to list their property with them.
However, selling agents may have a buyer who is interested in
purchasing your home. It may be to your advantage to consider
working with real estate agents in the sale of your home, IF,
they agree to YOUR TERMS!
Three methods of agreement are common:
Agents that request to "list" your home for a specific
period of time and for a specific commission to be paid by you
if your home is sold during the period of time specified in the
listing agreement, even if you sell it yourself! This method eliminates
your FOR SALE BY OWNER effort.
Agents who wish to show your home to a specific, named, prospective
buyer. These agents will probably ask you to sign some form
of temporary or "24 hour" listing agreement (commonly
referred to as a one-time listing or one-shot agreement). READ
THIS AGREEMENT CAREFULLY! It usually states that you will pay
the agreed upon commission to the agent after your "24
hour" listing agreement has expired if you sell to the
buyer specified. The extended period after your agreement has
expired is usually six months or longer. This type of agreement
only pertains to that one specified buyer. The normal commission
rate requested by the selling agent is stated above.
Another
less favorable method is to tell the agent that they may derive
their (agreed upon) commission from your asking price:
however, any reduction in the selling price will be a direct
reduction in their commission.
It is always best to give full and truthful information about
the condition of the property as you know it to be. Provide no
personal information that might be used to your disadvantage by
an agent or buyer (example: we need to sell our home by the end
of the month...).
Decide
in advance if you are willing to work with real estate agents
and, if so,
the amount of commission you are willing to
pay. Be careful of signing agreements that do not allow you to
continue your for sale by owner effort. There is no reason why
you should not keep as much of your hard-earned equity as possible.
Selling your home "For Sale By Owner" will reward you
in thousands of dollars of expensive real estate commissions saved.
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