How Much Is the Commission?
In residential purchase/sale transactions, the standard commission is 6% of the property's sale value, which is divided into 3% for each agent involved in the transaction (the buyer's representative and the seller's representative).
In residential rental transactions, the standard commission is 10% of the annual contract value or one month's rent. This commission is equally divided between the agents participating in the transaction.
Who Pays the Commission?
The property owner is always responsible for paying the commission, both in the case of a sale and a rental.
Do You Know How a Real Estate Agent is Paid?
Real estate agents are not paid by the hour or upon completion of work; they only get paid if the transaction is completed (closing). An agent can spend days or months working with a buyer or seller, and if the transaction does not go through, they are not compensated for their time.
Where is the Commission Amount Stipulated?
The commission amount is stipulated in the listing agreement. This agreement specifies the commission percentage the agent will receive at closing and the percentage that will be paid to the agent representing the buyer/tenant. This percentage is published in the Multiple Listing Service (MLS) along with the property's other data, so agents are aware of their fees at closing.
The support and guidance of a real estate professional are worth every dollar of the commission. Whether you are selling or buying a property, make sure to work with a real estate agent who has the knowledge, experience, and team necessary to provide the advice you need.
Does the Buyer Pay Commission?
In the vast majority of cases, the homebuyer does not pay any commission to the real estate agent.
As a Seller, Can I Save the Commission?
Eighty-nine percent of all sellers use the advice and support of a real estate agent. Only 8% of sellers attempt to sell the property on their own (known as For Sale By Owner) with the sole purpose of saving the six percent (6%) commission.
However, it is important to consider the following:
According to national statistics, the price achieved by "For Sale By Owner" is 19% lower than what a real estate agent can achieve. If that 19% is reduced by the 6% commission, the owner would achieve at least 13% more if they used the professional services of a real estate agent.
- Cost of printed advertising (flyers, brochures, "open houses")
- Estimation of sale price and market monitoring
- Selection of potential buyers
- Coordination of visits
- Legal implications as a seller
- Security and time-saving, preventing stressful and risky situations for you and your family
Considering that the decision to carry out a real estate transaction is one of the most important in a person's life, we recommend ensuring you hire a professional—a real estate agent with a team capable of providing the legal, financial, inheritance, and tax advice you need.
Enrique Vicente Urdaneta
Real Estate Advisor | eXp Realty | EVU Luxury Homes
305.209.6418
www.instagram.com/evuluxuryhomes
Disclaimer: The information presented in this article is intended to provide a general understanding of the topic. However, please note that I am a real estate agent, not a lawyer, accountant, tax, or financial advisor. This content should not be taken as legal, tax, accounting, or financial advice. The laws and regulations related to this topic can be complex and may change or expand in the future. Therefore, it is crucial to consult with a qualified professional, such as a specialized financial or tax advisor, before making any decision based on this information. As a real estate agent, I can provide various options and professional guidance related to the real estate aspects of your investment strategy, and for matters related to tax implications, legal issues, and financial planning, please consult with the appropriate professionals, which whom I have allies I can refer.
