You’re dealing with a lot of money, whether you’re buying or selling a house. One mistake can cost you thousands and cause migraines for months. It’s not surprising that 88% of buyers and sellers prefer to work with a professional real estate agent when buying or selling a house.
How much does a real estate agent cost? Is it worth it? Perhaps you are imagining how you could make more money selling your home if you don’t hire an agent.
We get it. We understand the importance of saving money. You might be surprised at how much you save by having an expert guide you through the process. Before you decide whether an agent is worth it, let’s look at all the benefits a good real estate agent can provide.
How much does a real estate agent cost?
According to most real estate websites, the standard commission for a real estate transaction is usually 6% of the sale price. The commission is split between the buyer’s agent and the seller’s agents (aka listing agents), so each agent receives a 3% cut. If you were to buy or sell a house worth $250,000, the total commission would be $15,000, which is $7,500 for each real estate agent. If you’re anything like us, you expect there to be a good reason to be charged a fee that large.
Real estate agent commission rates vary widely by state and can have a significant impact on the amount of money a real estate agent will receive for their services. Additionally, the commission rate can be affected by the local real estate market and the types of services being provided by the agent. Knowing the real estate agent commission rates by state can help you determine how much you should pay or receive for a real estate transaction.
Now let’s learn – how do real estate commissions work?
What does a real estate commission cover?
The real estate commission covers the cost of selling and buying property. A great agent does much to help you sell or buy a house.
A listing agent will show you how to market your house for buyers. They also know the prices of similar houses in your area so they can help you price it correctly. A seller’s agent can also help you get your home in front of a lot of buyers by using the multiple listing service (MLS), social media, and ads. This allows you to sell your house quickly and for the highest possible price.
A buyer’s agent reviews property listings to find homes that meet your criteria and budget. They will arrange a home inspection and oversee any contract changes or repairs so that you don’t get a bad deal. They will do their best to help you find the perfect home within your budget.
These differences aside, both types offer similar services and give you the assurance that a professional real estate agent is there for you.
Both types of real estate agents are available for the following:
- To meet with you and understand your needs
- Answer any questions you may have about the process
- Inform you about current market conditions
- Access to an MLS – This gives buyers more options and sellers more visibility
- Refer to other professionals (mortgage lenders, photographers, inspectors, and attorneys)
- Make an appointments to see houses that fit your criteria
- Get the best price for you through negotiation
- Represent you during the sale and act in your best interest
- Help you get through the mountains of paperwork
These tasks are what a good agent does every day. You can avoid making rookie mistakes by relying on their experience. You can do it all yourself, if you really want. However, agents can be invaluable when you are in the middle of a real estate transaction.
How do real estate agents get paid?
The seller will usually pay the commission for both the buyer’s and seller’s agents. If you are buying a house, you might get all the benefits that come with using an agent free of charge. The commission is part of the closing costs at the close of the deal and is deducted from the sale proceeds.
Is it worth the cost to hire a real estate agent?
Let’s now answer the question that you have been waiting for: Is it worth paying for real estate agents?
As we mentioned, both the seller and agent commissions are covered by the sellers. So buyers have nothing to lose. What about the sellers?
First, take a look at these stats if you are considering selling your home without an agent or using the “For sale by owner” (FSBO). According to the latest statistics, a typical FSBO home sells for $217,000 compared with $242,300 when it is sold by an agent. That’s a difference of $25,300!
Yes, about $14,500 would go towards agent commissions. But that is still almost $10,000 more than what you would get if you sold your home solo!
Save money with a discount broker
Many people wondering, “how much does a real estate agent cost” search for things like, sell my home cheap, because they want to be able to make as much money from the sale of their house as possible, which is understandable. In fact, depending on their situation, it may be required.
What many people do not realize, however, is that they can save thousands of dollars just by using a discount real estate broker. Discount brokers and agents do everything that a “traditional” real estate agent does, but for a lower commission.
Discount real estate agents leverage technology and a higher number of listings to be able to offer their services for much less money. In the case of 1 Percent Lists, the listing agent’s commission is just 1%.
The buyer’s commission, while negotiable, is generally set between 2.5% and 3%.
That means that in the example above, the total commission on selling the same $242,300 house would be, at most, $9,692. In that example, using a discount real estate agent would save you almost $5,000. That is money that goes straight into your pocket!
Hire an agent who’s worth the money
It is well worth paying for a good agent! A good real estate agent does a lot for sellers. It’s worth learning how to find an experienced agent.
Using a friend who is new to the real estate game may not be the best choice. An experienced agent with a proven track record of success is essential.
Where can you find an agent who is knowledgeable and can save you thousands of dollars in real estate commission? The experienced agents at 1 Percent Lists process far more transactions than the average realtor. Let our experience serve you. Contact us now for more information.