When real estate agents are engaged in selling off your property, both of you reach an agreement to pay them fees for doing the job. When your house is sold, and the process of settlement is finished, they’re normally paid a percentage of the total sales as commission.
Determining real estate agent commission
How much this commission would be may vary depending on where one lives. Since commission rates of real estate agents vary depending on the state and location, it’s very important that you do your research thoroughly before hiring an estate agent.
In some states, you could find fixed fees & commission structures & others were deregulated. Today, however, all states are deregulated meaning a real estate agent can charge what he thinks the market will stand. Astonishingly, when the market became deregulated, commission rates increased rather than decreasing. Other factors that can influence the amount of commission you pay include the local market turnover and apparent historical success of the real estate agent involved. A higher selling agent will try to increase the commission he charges.
How much commission do real estate agents charge?
In many cases, a residential real estate commission is calculated as a percentage of the total cost of the property. For instance, a 2.5 percent commission, on a property worth $600,000 would be $ 15,000. It’s important to remember that you’ll also have to pay GST on any commission since it’s not GST exempt. There exist handful flat fees sales agents but not many nowadays. The vast majority are agreed on the percentage of sale price.
What are the current real estate commission rates?
In 2014, when all the states were deregulated, this enabled agents to set their rates. The majority of estate agents base their fees on the value of your house, their experiences and demand for real estate in your area. For instance, in an area where home prices are quite low, many estate agents’ fees have shot up to five percent or more. The idea is the total commission earned on a relatively lower value property needs greater compensation to the real estate agent. The average % commission appears to be around three percent including the GST now. The range is a bit wide now at two to five percent. How good you negotiate the commission with the agent will determine what you pay.
As you’ve seen real estate agent fees depends on several factors including the area in which your live, the value of your property as well as the real estate agent whom you choose to work with. It is, therefore, critical that you choose the right agent and finding a reputable one is a huge factor.