by Michael Ertem
Buying or selling a home is a major financial decision for the majority of us. When we are buying a home, we would like to minimize the costs and do the opposite when we are selling a home, we all want to maximize our profits or in real estate terms our net proceeds. Net proceeds are the amount seller receives after sellings costs and loans on the property is paid off. So the higher the sales price, the higher the net proceeds. Same true for saving on selling costs. The lower the selling cost, the higher the net dollars seller receives.
Listing Broker Fees
Over 80% consumers hire licensed real estate professional (agent or broker) when they are buying or selling a home. Real estate agents are compensated by performance; therefore, they are commissioned professionals. They receive their commission when home sells and escrow settlement finalized by recordation.
6% commission is standard in real estate industry. This fee usually evenly split between the listing agent's broker (also referred as selling agent) and buyer agent's broker. Then, each broker compensates his agent depending on their contract from 50% to 90% of 3% he receives.
As a seller, you can negotiate this fee. Usually down to 5% is a general rule. In some areas, agents charge as much as 7% too.
Buyer Agent Fees? How About Homebuyer Rebate?
If you are a homebuyer, why would you not use a real estate agent? There is no cost to you; his commissions are paid by the seller through listing agency. You get the representation and his or her knowledge about the neighborhood. Real estate agent will help you navigate the process with ease if you hire an experienced, skillful, ethical and knowledgable agent. Some buyers think they will negotiate a better deal without an agent, and overwhelmingly they don't get a better deal since the listing agency will keep the entire 6% commission. There are also agents will help you with your closing costs. We do offer home buyer rebates to our clients in Berkeley, CA and surrounding cities.
When you are hiring a real estate professional whether buying or selling a home, first use your common sense. The first impression is the most important. You need to be comfortable with the relationship. Like all relationships, it must be based on trust. If your gut feeling is telling you something either good or bad about the person, you are most likely right. Listen to your little inner voice.
Then, look for reputation, knowledge, experience, and negotiation skills.
Selling your home without an agent has many difficulties such as, the time spent as well as the expertise needed to navigate real estate procedures and contracts. Esspecialy if your property is unusual in your area, or the market is soft, you could be in for a long wait, and it could be costlier than hiring a professional real estate agent.
What is the bottom line? As a seller and buyer, you are trying to maximize your profits. Shop for price, knowledge, experience, and skills and decide what is best for you. Sometimes you can't get all you want and sometimes you can get everything you want. If you are a San Francisco Bay Area resident, we can give you savings, experience, knowledge, and skills.