How
real estate agents get paid … now and in the future
By Larry Stoller
I have said it many times before and I will say it again now ... "real estate commissions are negotiable, they always have been, and they always will be."
As I write
this article, there are clouds of change surrounding the real estate industry
that may soon bring changes in how real estate agents will be paid in the
future.
In fact,
recent litigation and another upcoming federal law suit could change how much
commission you pay to a real estate agent when you buy or sell a home.
Right now,
seller's pay commissions to both the listing agent and the buyer's agent (well
actually to the listing brokerage and the buyer brokerage, who then pay their respective agents).
For
example, the seller may agree to pay a six percent commission and sign a
listing agreement stating just that.
And the
listing agreement may also state that the coop commission (what is paid to the
buyer brokerage) is three percent.
In the
above example, the commission pay-out model may look something like this:
A home
sells for $500,000, the total commission is $30k, the listing broker gets $15k,
the buyer broker gets $15k, and each agent gets part of that $15k (depending
upon what their agreement is with their respective real estate brokerage).
However, in
the future, the commission pay-out model may look totally different. The Seller
would just pay a commission to the listing broker. There would be no coop
commission paid to the buyer brokerage. In
effect, sellers would pay less to sell their home.
Prospective
buyers would then have to enlist the assistance of a buyer's agent and pay that
buyer's agent (buyer brokerage) to see a property (or properties), write up the
offer, and negotiate the purchase of that property.
That would
require signing a buyer's agreement and the buyer becoming a client of that buyer's
agent (again, the buyer brokerage).
On the
other hand, a buyer might just buy their dream home from the listing agent and
not use a buyer's agent at all. But that could get messy, because the listing
agent is working for the seller, not the buyer (so the buyer would not have any
representation).
When
thinking about selling or buying a homes, and how real estate agents get paid,
there could be many additional payment and/or commission scenarios.
If you are
thinking of selling your home, feel free to contact me if you have any
questions about commissions and/or any other real estate matters.
Larry Stoller is a local Broker and Realtor with Real Estate FIVE
of the Low Country. Larry@RealEstateFive.com, www.RealEstateFive.com.