Real Estate Agent Commissions and Fees: How They Work and How To Pay Less

WaLaw's Seller Commission Savings and Buyer Agent Commission Rebate

Seller Commission Savings and Buyer Agent Commission Rebate: Click to see the full infographic

Real estate agents have been charging a commission for a long time. This post will explain the process by which real estate agents get paid a commission, and what you can do to reduce that commission — and thus your costs — if you are thinking of buying or selling a home.

Real Estate Agent Commissions are Paid by the Seller

When a seller decides to sell her house, she signs a “listing agreement” with a real estate broker (commonly known as a real estate agent or realtor). That agreement gives the seller’s agent (known as the “listing agent”) the right to list the house for sale on the local Multiple Listing Service. The agreement shows the total commission to be paid by the seller, including how much of that commission will be shared with an agent who represents the eventual buyer (known as the “selling agent”).

Commonly, but certainly not always, the total commission is 6% to be split equally between the listing agent and the selling agent. Accordingly, when the sale closes, the seller pays 6% of the sale price to the seller’s agent, who in turn pays 3% of the price to the buyer’s agent.

Given this system, a buyer has no say or control over how much is paid to the buyer’s agent.  Accordingly, there is a good argument to be made that the whole real estate commission system actually works against buyers. But regardless, the buyer has virtually no direct input into the commission paid the buyer’s agent.

The Washington Lawyer's Realty Buyer's Agent Commission Rebate - You save big!RELATED POST: Compare our Buyer’s Agent Commission Rebate to traditional real estate agent commissions and fees:
We offer Significant Savings for Buyers.

A Real Estate Commission is Negotiable, Whether Directly (Seller) or Indirectly (Buyer)

It’s an old adage in real estate that everything is negotiable. This holds true for a real estate broker’s commission, although it’s a lot more complicated on the buyer’s side.

Sellers Can Pay the Listing Broker Less

There are many, many real estate brokers out there who will list a property for sale on the MLS for much less than the common 3% commission to the listing agent. One such type of broker is the “flat fee” or “discount” listing broker. Just google “flat fee listing broker” or some variant and you’ll find lots of them. These brokers typically are for the “DIY’er” who is willing to do virtually all of the work and who simply wants access to the MLS.

But there are other alternatives as well. There are a few brokers who charge a “fee for service” and will provide a variety of services (such as staging, photographs, assistance in negotiating, etc.) for certain fees. And of course there is WaLaw Realty, where you pay a flat fee (currently $7995) and get all the services you need from both a real estate broker and an attorney. So on the seller side, it’s pretty easy to reduce the costs associated with a commission paid to the listing agent.

Buyers can Hire a Broker who Rebates the Commission

Given the commission system, it gets a little trickier to save money if you are a buyer, but it’s not impossible. The easiest — and perhaps only — way for a buyer to save money is to hire an agent who will agree to rebate a portion of the commission paid to the buyer’s agent. Indeed, the United States Department of Justice has long recognized that commission rebates are an excellent way to reduce the costs of buying a home.

Commission rebates are growing increasingly popular. A large, essentially national brokerage has, since its inception, rebated a portion of the buyer’s agent’s commission back to the buyer. We don’t want to promote a competitor here, so we’ll only say that the name of this large brokerage begins with an “R” and ends with an “edfin.”

But even that large, national brokerage is not the biggest rebater. That honor? Why, WaLaw Realty, of course! We work on a flat fee. The commission we earn as your buyer’s agent is rebated to you in full at closing after payment of any fees due us. Since we charge a flat fee, but rebate a percentage-based commission, the savings increase as the purchase price goes higher. The more you buy, the more you save.

Finally, how do we know we’re the biggest rebater? Well, do you know any other brokerage that’s rebated more than $65,000 to a single client? Or that has saved its clients more than $1.3 million to date with average buyer client savings of more than $14,000 each? We didn’t think so! It’s why we’re the smart choice for the savvy buyer (and seller too!).

Posted by Marc

Tags: , , , , , ,

Leave a Reply

=