Savvy sellers never pay full real estate commission
There's a dirty little secret some real estate agents probably don't want you to know.
You don't have to pay 6% commission to sell your home.
If you do, you're throwing away thousands of dollars that should go into your pocket.
"Technically, there's no such thing as a 6% commission unless the client agrees to it," says Michael Soon Lee, broker-owner of Realty Unlimited in Dublin, Calif.
That's because commissions, like closing costs, are negotiable.
“When your Realtor gives you a broker agreement, it’s usually a form contract and looks very official. Don’t be intimidated," says Kim Knight Perez, a real estate attorney with Perez Arndt in Decatur, Ga. "You have the right to cross out and change any provisions you don’t like, including the commission fee provision."
Perez says the Realtor will likely respond in one of three ways: He or she will agree with your changes, disagree but propose an alternative, or say, “Take it or leave it.”
“In today’s economy, most agents do not want to lose a sale, so the most likely outcome will be a negotiation of the fee," Perez says. "Who knows? Some firms may offer to cut the fee in half."
That being said, when sellers offer a lower commission, the agent is likely to reduce his services accordingly, Lee says.
If you don’t want to negotiate with an agent, there are other -- often cheaper -- options.
Robert Foley, a former real estate lawyer who owns Vermont's Flat Fee Real Estate in Burlington, says technology has enabled sellers to handle many tasks traditionally performed by agents and most markets have firms that charge a flat fee regardless of the home’s sales price.
Instead of the usual 6% commission, Foley charges $3,500 or 2% of the sales price, whichever is less.
It’s even possible to list your property on the MLS without an agent through a company that charges a flat fee of a few hundred dollars, says Foley. Depending on where you live, this fee might cost you a mere $300 to $500.
If you want to forgo an agent and try selling the home on your own to avoid paying a commission, you might want to consult with a real estate attorney.
He or she can advise you on the legal issues involved in selling your home and help you stave off potential headaches and financial losses.
"An hour’s worth of an attorney’s time is a bargain compared to a real estate commission," Perez says.
Without an agent, you’ll save money but put in plenty of sweat equity. You’ll need to research comparable sales and determine a realistic list price for your home.
You’ll also be responsible for staging, marketing, holding open houses, and reviewing and negotiating offers.
Your extra effort might save you thousands.
"Do consumers have to pay the 6% real estate commission? Absolutely not," Perez says.