If you decide to list with an agent, there are some expenses you should count on, and agent fees are one of them. Do you know who pays real estate commissions, and how much?
Selling with a real estate agent is the most common method of home selling. Working with a professional who knows what they are doing sounds like the best possible option for many. However, many don’t realize all the costs that come when you’re working with an agent in Milwaukee. This includes not just costs of repairs, taxes, maintenance, and similar fees, but also the dreaded real estate commissions. How high are they, and who’s liable for their payments? Here’s what you need to know!
How High Are Real Estate Commissions?
The price of real estate commissions varies, because they tend to be negotiable. However, some standard fee is estimated to be around 6% of the home’s selling price. This is why it’s impossible to say how much it’ll cost you until there is a definite buyer and the sale is closed.
The exact percentage is determined between buyer and his agent, as well as between seller and his agent. The fee is often split in two between agents, but sometimes one agent gets more than the other one, depending on the contract.
Real estate commissions don’t immediately go to real estate agents. First, they have to go to the listing and selling brokers, who take their own cut. This happens because brokers cover costs of sign rentals, advertising, as well as office space. Each broker will split the amount with an agent. This is sometimes done half-half, but once again, it could vary, depending on the price the broker and the agent have agreed upon. Because of this, real estate commissions tend to vary so much.
Overall, if we imagine everything is split 50-50, a 6% commission would break down in this way:
- Listing broker: 1.50%
- Selling broker: 1.50%
- Seller’s agent: 1.50%
- Buyer’s agent: 1.50%
So, if you were to sell a house for $250,000, each of the four parties would get $3,750, while the person liable for payments will have to pay $15,000.
Who Is Liable for Real Estate Commissions?
This is where it gets a bit tricky. There is no precise answer to who has to pay for real estate commissions. Some standard practice is that the seller has to pay the entire fee. This includes paying for both the seller’s and the buyer’s agent. However, the seller might try to wrap the fee into the home price, so the buyer doesn’t even know they’re paying for the commission indirectly.
How does this work? Let’s say your house is worth $250,000. The 6% commission fee after the sale would be $15,000. To cover it, you can raise the price of your home a bit – for example, if you sell that same house for $270,000, after the commission fees are subtracted, you’ll stay with $253,800, and if you sell it for $265,000, you’ll get $249,100. Of course, that is without counting the closing cost and other costs associated with a home sale.
Any price change, however, can lower the chances of selling your home, especially if you lift it. For some people looking to profit, it might be worth a shot.
Are Real Estate Agent Commissions Worth It?
The answer to this question is yet another one that isn’t easy to answer. If you’re looking to sell your house for as much as possible, you can try working with an agent despite the costs. This is especially true if you have a house that seems like it will sell easily, such as a house in a great location that is in top-notch condition. Such houses can usually find a buyer with ease, and they will sell for a high price. Anything less than this, however, can end up in you losing much more than you’ll profit. When listing with an agent, you don’t only have real estate commissions to worry about. This type of sale includes many other expenses, such as cleaning, maintenance, holding costs, repairs, upgrades, closing costs, taxes, deed fees, and so on. All of this can pile up and you may end up losing thousands.
Can You Sell a House in Milwaukee without Paying Commissions?
Selling with an agent isn’t the only way you could sell your house in Milwaukee. If you don’t have a property that is in the best possible condition, that needs to be sold fast due to reasons such as foreclosure or high holding costs, or that you don’t want to stress about, a good option would be to sell your house with a reliable direct buyer, such as Sparks Property Investors LLC.
Direct buyers are a good way to save money on a home sale. They will take all the costs associated with the sale upon themselves, so you won’t have to pay a dime. They don’t even have a commission fee! Not just that, but direct buyers will buy your property as-is, so you won’t be the one liable for repairs and upgrades. They won’t care if your house isn’t in the best condition possible, they’ll buy it anyway. Also, direct buyers can buy properties much faster than direct buyers, sometimes in just seven days. And the best part of everything is – they’ll pay in cash, so you can get your money as quickly as possible. This makes them a much better choice for anyone looking to sell their house fast and effortlessly.