How Do Real Estate Commissions Really Work?
When you put your home on the market with a company that is a member of the Multi-List, the total real estate commission is divided between the company that puts your home on the market, “the Listing agency” and the company that brings the buyer “the Selling agency”( not to be confused with the seller’s agent which is the agent with the Listing agency).
For example:
You hire RED COMPANY to put your home on the market. They “LIST” your home for sale. An agent from BLUE COMPANY may produce the ultimate buyer. On a high level, the total real estate commission, would be split.
Using numbers to illustrate Real Estate Commissions
You hire RED COMPANY to put your home on the market for $500,000 dollars at a Total Commission of 5% or $25,000 dollars. An agent from BLUE COMPANY brings the ultimate buyer. RED COMPANY WOULD BE PAID 2.5% or $12,500 and BLUDE COMPANY would be paid 2.5% or $12,500.
What confuses consumers is that the same company may LIST the property and Sell the property.
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The traditional Real Estate Commission is the Single Biggest Cost in the sale of your home and in the past was the only option that real estate companies offered but a new option exists that permits Sellers to save money and pay only for the services that they choose. Throughout this book, ask yourself What Does The Value Of Your Home Have To Do With The Price That You Pay To Sell It?