Buying or selling a home is a costly business. You can potentially save thousands of dollars by minimizing closing costs. One of the most expensive services you’ll hire is a real estate agent.
As a rule of thumb, real estate agents charge 6 percent of the selling price as commission. It’s negotiable in some cases, but most buyers and sellers believe a commission of 6 percent in a property transaction is outrageous. For example, $18,000 will be paid to the agents for selling a home worth $300,000!
This is one of main reasons driving the “For-Sale-by-Owner” (FSBO) movement. Sellers are listing their properties without hiring a listing agent. Not willing to spend so much on a Realtor, buyers also try to go through the painful process of buying a home on their own.
However, you can end up losing a lot of money in a property transaction if you try to buy or sell a home without having an experienced an agent on your side to help you guide through the process.
Wondering What is The Way Out?
The solution is to hire a full-service agent that charges only a fixed fee. At Federated Realty, we offer a full-service brokerage model, including your own dedicated agent, for only $1,000. Let’s discuss some of the benefits of hiring a brokerage that follows the concept of a fixed-fee commission for its full-scale services.
You Can Budget for an Agent
Conventionally, sellers must pay up to 6 percent of the home sale price to the agents involved in the transaction. Under this percentage-based commission structure, sellers don’t know their final costs until the deal is finalized. If property prices in your area fluctuate between the time when you list your property and when you actually sell it -months, in some cases- you will likely need to reduce or increase the selling price accordingly. Meanwhile, negotiations between buyers and sellers also influence final seller costs. So an increase or reduction of just $10,000 in the asking price can increase or reduce agent commissions by up to $600.
But when you are hiring an agent under a fixed-fee structure, you don’t have to worry about how much of your homeowner equity goes into agents’ pockets. Instead, you pay an ultra-competitive, fixed commission irrespective of any increase or decrease in the selling price, enabling you to budget for the agent’s commission right from the beginning.
No Confusion On Who Pays and How Much
The commission split between the listing agent and the buyer’s agent is surprisingly complex and many sellers and buyers don’t understand how the agent fee actually works, including who pays whom, when, and how much. In most property transactions, buyers and sellers negotiate over commission schedules, adding to an already long laundry list of contingencies, clauses, and stipulations.
Fixed-Fee Means Savings
As mentioned earlier, most buyers and sellers consider a 6-percent commission, which translates into dozens and dozens of thousands of dollars, to be an outrageous cost for work that consists mostly of taking photos, listing the home, discussing pricing with the seller, and responding to buyer agent inquiries. In contrast, a flat-fee effectively puts thousands of dollars back into sellers’ pockets.
Say No to 3% Commissions
The fixed-fee commission model is disrupting the real estate business at a time when so many buyers and sellers are starting to see question the value of fixed commissions.