(STL.News) If you are new to the world of buying and selling property, you might not realize that real estate commissions are an important cost to consider when calculating your budget and plotting out your anticipated expenses.
So just how much can you expect to shell out to cover the agent’s commission and what other factors are at play in this arena?
While the amount of commission an agent will take on the sale of a property can vary, on average you can expect that it will amount to around 5-6% of the total price paid for the home in question.
It is also worth noting that this commission will be split between the agents working on a deal, with the agents representing the buyer and the seller taking a piece of the pie at this point to cover the cost of the work they put into orchestrating the key aspects of the transaction.
The good news for anyone who is hoping to buy a home is that you do not need to worry about the cost of commission, as this typically comes out of the buyer’s side of the sale price. There are plenty of other expenses for buyers to bear, of course, but this is not one of them.
Sellers do need to swallow the fact that they will be writing commission checks to agents on either side of the deal, which can be a motivation to up the asking price for the property in order to absorb some of this cost.
Because real estate agent commission percentages are not set in stone, there is a degree of wiggle room available to buyers and sellers. This is particularly true if a single agent is acting on behalf of both parties, where a bit of negotiation can go a long way to securing a discount.
Moving home is already immensely stressful, so you may not want to introduce further strain by trying to bag a discount on agent commission. Even so, looking for a little leeway could save you thousands.
If you are worried about being lumbered with commission obligations even if a deal somehow falls through before completion, the good news is that this is not the way things work. Agents will only receive a commission if a transaction occurs, so if any party pulls out early or some other disruption occurs, there is no financial obligation for buyers or sellers to worry about.
There are some exceptions to this, of course, especially if you are selling a home and you have signed a contract with a particular agency. Always be sure to scrutinize any paperwork thoroughly before you commit to it, as sellers can be held accountable for commission payments even if the sale is not completed, especially if they are the ones who back out of the transaction.
Property law differs not only between countries, but also from state to state in the US, so being up to speed with the obligations of all parties will put you in the best possible position.