How Much Money Do Realtors Make on the Sale of a Home?
Realtors help home buyers and sellers navigate the numerous complexities of a real estate transaction. Realtors must complete a training course and take national and state licensing examinations to offer their services to the public. Realtors generally work for real estate brokerage companies and do not receive payment for any service they provide until closing.
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Commission
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Home sellers pay the listing Realtor's broker -- the company for which the Realtor works -- between 5 and 6 percent commission based on the home's final sale price. For example, if a seller agrees to pay 6 percent commission and lists the home for $100,000 but sells it for $90,000, the listing Realtor's broker gets 6 percent of $90,000. The listing broker generally splits the commission between the listing agent and the buyer's agent, minus the broker's fees. The listing agent gets the entire 6 percent minus broker fees only if he represented both the seller and the buyer in the transaction.
Fee-for-Service
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Some Realtors charge individual fees for services, rather than a flat-rate commission. Such Realtors charge fees that could include, but are not limited to, entering the home in the Multiple Listing Service system, placing a lock box on the seller's door so that buyers' agents can show the property, presenting the sales contract to the seller and attending the closing. Fee-for-service agreements can be cheaper and often appeal to homeowners handling most aspects of selling their property by themselves. In such cases, sellers save money by agreeing to pay commission to the buyer's agent only. Fee-for-service prices vary by region.
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Ethics
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Realtors sign the National Association of Realtor's code of ethics and use it to guide their practice. The code of ethics prohibits Realtors from charging hidden fees, meaning fees about which clients are not made aware. Realtors also recommend services to clients routinely, and the code of ethics indicates that the agent must tell clients if she will receive any monetary compensation for recommending those services.
Warning
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Read listing and buyer agency agreements presented to you carefully, and confirm commissions and fees before you sign. Do not feel obligated to sign any agreements on the spot if you are uncomfortable doing so. Instead of signing immediately, ask your Realtor to give you time to review the agreement, and make an appointment to return the signed agreement to him in the coming days.
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