Where does the commission go after a home sells?

When I go out and meet with home sellers in Rock Hill, Fort Mill, Lake Wylie or wherever it may be in York County, the discussion of commission rates eventually comes up.  The seller of the home of course wants to know how much they will have to pay out in order for me to sell their home.  My pat answer to this question is that my office and I typically charge 6 percent for selling a home.

Sometimes after saying that, the customer will say, that is what I expected to pay in commission for a Realtor® to sell my house.  When that happens it saves me a whole bunch of communication as we are already in agreement.  Other times, however, I will hear this line, “well Bob at XYZ Realty told me that he would do it for this much (a lower percentage).  Well, all I can say is that you will get rates all across the board on commissions and service all across the board as well.  Discount agencies are starting to pop up in the York County area and across the country.  However, I would be very cautious of working with a discount listing agent and here is the reason why: 

1.       If you are paying for someone to place your home on the MLS at a discounted rate, you will be getting discounted services.  I know this because I see it every time that I have to deal with one of these agencies.  The seller of the home is left with all kinds of responsibilities and obligations that a Realtor® would normally handle.  Some discount brokers even expect sellers to do all of their own negotiations and paperwork.   

2.      Chances are you will have limited market exposure.  Discounted brokerages usually are not as diligent on the listing pictures of homes, updating home flyers, listing on both of the area’s multiple listing services (Yes, York County has two MLS providers.  Make sure that your agent can list on both.  Otherwise you are missing a huge chunk of potential buyers.), print advertising, online marketing presence etc…

3.      Communication with your real estate agent is bound to be minimal.  You are not paying them to be at your service promptly.  As a result, it is doubtful that they will be.

4.      Buyer agents don’t like to show discount brokerage types of homes.  The reason for this is that the Buyer’s agent knows that they will have to work harder with this property should their buyer want it.  The last one of these home sale transactions that I was involved with, on a property in Rock Hill, left me negotiating with the seller without the agent.  The agent just abandoned the seller and left them to work it out on their own!  The seller had no idea what they were doing or when it needed to be completed.  Communication was a hassle, and I got stuck with all kinds of extra responsibilities.  Needless to say, I wasn’t happy with the situation, and I felt badly for the seller.  My experience with the discounted rate listing was typical, according to other agents that I have spoken with.

During the listing presentation and when you are asking the commission rate question, it is easy to look at a commission and think, “Wow, that sure is good pay for what they have to do!”  Well, think of it this way, for every completed deal that looks like a big payday, think of all of the other efforts and expenses that a Realtor® has to incur to even be able to provide you service and complete that transaction.  Many times the efforts to secure a buyer or seller client fail despite our best efforts.  Other times deals fall through after much effort on the part of the agent at no fault of theirs.  A Realtor® only gets paid based on results and on nothing else.  So, if your real estate agent sells your home on Lake Wylie, Fort Mill, Rock Hill or wherever, he has done his job and deserves to get paid what he makes.  In the type of market that we are experiencing right now, bringing a buyer to the table and getting a deal completed is a good feat.  If your Realtor® gets your house sold, thank them for a job well done! 

So what does an agent’s commission cover?

Typically, agents equally split the commission between the listing agent and the selling agent.  However, commission splits can vary depending upon the agreement of the seller and listing agent.  An agent's commission pays for all kinds of things from advertising (print, signs, flyers, stationary, business cards, postage, online social media sites), to covering their various association fees, company fees, telephone and computer expenses, personal website fees, lead management software and maintenance, desk and/or office space fees, auto and gasoline expenses, occasional meals/gifts, professional clothing, etc...The expenses are significant.  Let’s not forget that an agent shares a portion of his commission with his firm too!  Some agents pay 50% or more of it. 

Hopefully, after completion of a transaction, there is a bit left over from all of those expenses that an agent can call profit.  It is with those funds that the agent pays for the living expenses for his or her family.

Here is the bottom line.  If you want to sell your home for the most amount of money that it will possibly fetch, you should hire an agent that is going to be active in pursing your best interests, marketing your home to expose it to the maximum number of potential and qualified buyers.  Your best bet to get that accomplished is to hire a full service real estate firm.

I hope that your home selling endeavors are successful,

Happy selling

Ross Harkness, SFR

Realtor®/Builder

Palmetto Property Pros

Wilkinson and Associates Real Estate

803-372-8867