Real Estate Commission

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How to Avoid Paying Real Estate Commission

If you’re going to be selling your home by using a real estate agent then you are going to end up paying real estate commission in some way or another. Your real estate agent is going to charge you a percentage of the final sale price. The seller will pay this commission at the closing, however, the seller will not be paying real estate commission if the deal falls through.

The question then is how much is the commission the seller will be paying?

The percentage is agreed upon between the seller and his agent before the home goes into the MLS listings for your area. However, even though you’re going to be paying real estate commission to the agent, you need to make sure that you are not paying too much. Unfortunately, the percentage is NOT always going to be negotiable. In fact, many (if not most) brokers will NOT allow their real estate agents to negotiate their commission. And, if the broker does allow their agents to cut their commission many agents themselves will not be willing to do so. Therefore, it is very important if you are planning on selling your house that you ask the real estate agent up front whether or not they will/can negotiate their commission. If the real estate agent is not willing to cut their commission, then simply continue your search for a better agent.

Also, when it comes to paying real estate commission, you want to make sure you are not paying too little. Unless you are using a flat fee listing, in which case you are paying no commission, but also have no real estate agent, you want to make sure that the real estate agent is not cutting their commission too much or the agent won’t be as motivated to work for you. They will work harder for their customers who are paying a higher commission. Try to strike a balance where you will get what can be considered a deal when it comes to paying real estate commission, but that you won’t be totally cutting your real estate agent out of the mix.

So what’s the best deal?

First, you need to keep in mind that without any negotiating, a typical real estate transaction has the seller paying 6% of the final sale price with 3% of that going to the selling agent and 3% going to the buying agent. Of course, both those agents must then pay their broker his share. A broker usually receives anywhere from 20% – 50% of their agent’s commissions.

Therefore, even though the seller may be paying out 6% in commissions, only 3% of that goes to the seller’s agent (and that agent only gets roughly 70% of that). So, keep in mind that you are only trying to negotiate down that 3%. If your agent is willing to meet you half way then you have a very good deal. In other words, your agent should be willing to cut 1.5% out of their 3% commission. Therefore, the seller will only be paying 4.5% of the final sale price (3% to the buying agent and 1.5% to the selling agent).

Again, if your agent is unwilling to negotiate when it comes to paying real estate commission, then find a better real estate agent.

Texas Real Estate Commissions

TREC or Texas Real Estate Commission is a government body that was created in 1949 to administer four specific laws such as real estate license act, real estate inspector act, residential service company act and Texas timeshare act.

TREC regulates activities of real estate brokers, salespeople, inspectors, residential service companies, timeshare developers and education providers for real estate and inspection courses. Main purpose of TREC is to protect legal rights of citizens of Texas and provide them with honest, trustworthy and competent real estate service. The commission reviews programs dealing with education providers for real estate and inspection courses. It tries to identify and regulate errors and drawbacks present in it.

TREC has made it mandatory for real estate brokers and salespersons to maintain specified levels of education in order to hold a valid license to work as a real estate agent. Provisions of real estate license act and rules of Texas real estate commission are binding on all real estate agents and professionals in order to provide customers with a competent and honest service. TREC also gives licenses to real estate inspectors, agents, residential service companies and real estate schools. This commission also does registration of timeshare properties.

Texas Real Estate Commission has statutory relations with three state entities namely, real estate center at Texas A&M University, Texas department of savings and mortgage lending and Texas appraiser licensing and certification board. The commission has partnership with Texas A&M University’s real estate center for conducting research along with some education projects. It also appoints two members to mortgage broker advisory committee of Department of savings and mortgage lending. Issues relating to real estate licensees and mortgage brokers are resolved by cooperating with this agency. Commission also has signed a memorandum of understanding with Texas appraiser licensing and certification board under which it provides administrative support to them, which is approved by their governing bodies.

Real Estate Commission – A Corrupting Influence

Real estate commission is the way in which real estate agents are paid for the services they provide. They receive a percentage of the price received for the property. Effectively, the real estate agent requires the seller of a property (the vendor) to sign over to the real estate agent a part of the property being sold.

Another way of looking at it is to say that the real estate agent, through the wording of the listing contract, effectively has his name added to the title deed of the vendor’s property, so that the real estate agent becomes a part-owner of the property. When the property sells, the real estate agent receives a payment that represents his share in the vendor’s property.

Most readers will be aware of the arguments in favour of real estate sale commissions, so I won’t discuss those here. My focus is on the ways in which the sale process can be skewed against all parties involved, when the motivation to win a commission takes precedence over more important considerations.

Commission is a “winner-takes-all, loser gets nothing” situation. This increases the pressure on the real estate agent to secure a sale. Time is also a problem. If the real estate agent cannot secure a sale within a time acceptable to the vendor, the vendor may take the property off the market, or away from the real estate agent’s agency. This will result in a total loss for the real estate agent.

Finally, the vendor becomes an obstacle between the real estate agent and his commission goal. In order to receive payment for his share of the vendor’s property, the real estate agent must receive an offer to purchase within the available time, but the offer must be accepted by the vendor. If the vendor decides that the offer is not acceptable, then the real estate agent loses.

In order to win the gambling game that is real estate sales, the real estate agent may decide to tip the odds in his favour – and there are numerous ways in which this can be done.

At the listing stage the real estate agent may use improper means to win the listing contract. These include over-quoting on valuation, and offering dodgy sales figures.

During the sale process the real estate agent may be tempted to tell potential purchasers things that are untrue. I have seen many sale contracts with clauses designed to protect real estate agents against the consequences of false statements. Known as “porkies clauses”, they invariably state that the purchaser acknowledges that any information provided to the purchaser by the real estate agent is provided on the understanding that the purchaser will not be relying on it for any purpose.

When a purchaser has submitted an offer, and the purchaser cannot be convinced to increase her offer, the real estate agent may be tempted to pressure the vendor into accepting what would otherwise be unacceptable. Observations, such as “the market has softened” or “the market has spoken to us” are used by real estate agents to convince vendors that the real estate agent’s high estimation of value can no longer be relied upon, and that the vendor should now accept what the vendor believes is an unacceptably low offer.

Your Home Equity and Real Estate Commissions

If you’re like most people, your home is the biggest single investment you’ve got. You expect it to increase in value over time, and you probably have more money tied up in it than in any other investment. This money is your equity, and a large chunk of it disappears when you sell your home using a real estate agent.

In this article, you’ll learn how real estate commissions affect your equity, you’ll see just how many real estate agents make money from a single commission, and in the section called Avoiding the Pressure, you’ll get an inside look at why many real estate agents are so persistent at getting their sellers to accept low-price offers.

A Quick Word to Buyers

Buyers and sellers alike benefit when there is no real estate agent involved. The term “fair market value” has a different ring to it when the middleperson is taken out of the equation, and prices trend to a truer value when they no longer reflect real estate commissions.

Equity

Equity is the value of the unencumbered interest in your home. It’s the difference between the fair market value of your home and the unpaid balance of your mortgage, plus any other outstanding debt on the home.

Real Estate Commissions

Real estate commissions are the fees earned by real estate agents and are based on the selling price of the property. They’re usually in the range of 6%, and they represent an excessive portion of the property’s equity, equaling thousands and thousands of dollars.

Your equity increases in two ways: as you pay off your mortgage and as your home appreciates. It decreases when you borrow against your home. But nothing reduces your equity quite like a real estate commission. You get nothing for it that you couldn’t have got on your own.

Here are three assertions for why you should sell your home yourself:

Lower Cost of Selling

If you sell your home using a real estate agent, the commission you’ll be charged is around 6%. For a $250,000 home, that’s $15,000. For a $600,000 home, it’s $36,000. You have to ask yourself what you’re getting for all that money. The cost of selling your home on your own is negligible by comparison, and the result is the same: your home will sell. If you list your home on a For Sale By Owner real estate wed site, run a few classified ads in the real estate section of your local paper and prominently display a For Sale By Owner sign in your front yard, the cost of selling your home could be less than $1,000. With the amount you’d save in commissions, you could still afford to advertise more, if necessary, in places like local real estate publications and newspaper supplements.

Retaining Your Equity

Let’s say a couple decides to sell their home. It has a fair market value of $300,000 and they have $60,000 of equity in the home. They decide to use a real estate agent and agree to pay a 6% commission, or $18,000. The house sells. After the closing, the couple realizes they’ve lost 30% of their equity. The $18,000 commission paid at closing meant that instead of walking away with $60,000, they only walked away with $42,000. So they have much less to put down on their next home.

Avoiding the Pressure

The economist Stephen D. Levitt and co-author Stephen J. Dubner wrote recently in their book Freakonomics (HarperCollins Publishers, Inc.) of Levitt’s study showing that when real estate agents sell their own homes, those homes stay on the market an average of 10 days longer than their clients’ homes. The same study shows that the selling price of real estate agents’ homes is on average 3% greater than that of their clients.

Here’s why. A couple who lists their home with a real estate agent for $250,000 may hear from the agent that someone has offered $240,000 for the home. The agent will typically insist that this is a good offer and that the sellers should take it. Why would the real estate agent be so eager to accept a price that’s $10,000 below the seller’s asking price?

It’s simple. Agents split their commissions: half goes to the buyer’s agent, half to the seller’s agent. Then it’s usually split again: each agent gives half of their commission to the agency they work for. So the agent representing the seller is only getting 1.5% of the sales price of the home (6% ÷ 4).
With a $240,000 offer, the price of the home is reduced by $10,000, but the commission is reduced by only $600. The real estate agent’s cut of this is $150. It will cost the seller’s agent only $150 to accept the low-price offer. What does it cost the seller? An additional $9,400.

This situation happens every day. There is a strong incentive for real estate agents representing the seller to entice their sellers into accepting offers well below their asking price.

Real Estate Affiliate Program – Get Huge Real Estate Commission

Setting up a real estate affiliate program enables real estate agents boost sales because affiliates are anxious to send them leads. In return, the affiliates get paid the agreed commission per lead by the estate agent.

The agent and her affiliates benefit. They are partners in sales.

However, you will notice that real estate commission paid by most real estate affiliate program network fall within $5 to $15 per lead. This is a far cry from what is offered by many digital vendors especially vendors associated with clickbank.

Many Clickbank ebook sellers routinely offer as much as 50% of the sale price as commission to affiliates. Needless to say, such ebooks vendors get the most affiliates willing to promote their ebooks.

Why, you ask.

Well, a bigger commission percentage means more money for the affiliate. And more money means more people willing to sign up as affiliates.

Now to the question of huge affiliate commissions and real estate affiliate program.

Can real estate affiliate program managers similarly pay high real estate commission to their affiliates?

The answer is . . . YES.

Sure, affiliates cannot get 50% of the sale or rental price of a property as commission as they do with ebooks affiliate program. But it is possible to pay affiliates a large percentage of what the real estate agent gets as commission.

Remember: Huge commission = huge motivation

The bigger the reward, the bigger the effort affiliates put for at getting the rewards.

Greater motivation = Greater effort = Greater number of leads = More money for you the agent

Affiliates have the potential to drive sales through the roof . . . if you let them.

A City of Huge Affiliate Commission

Lagos Nigeria is a city of huge real estate affiliate program commission.

Agents routinely pay as much as 40% real estate commission to partners in sales.

Let me break down the real estate commission structure in Lagos Nigeria so you get the big picture.

Estate agents in Lagos Nigeria charge 10% of the value of the property as commission. This is a standard anywhere you go. It’s almost like an unwritten rule.

These agents network with other agents to promote property at their disposal and in the process make sales. In return for this affiliation, the agent in charge of the property pay the affiliate (or agent) who engineered the sale 20% – 50% of the commission from the property.

In most cases, this sales partnership is informal in nature. It is usually based on simple gentleman agreement between the estate agent and other agents. It has not been structured into a formal affiliate program yet.

However, it is worth copying.

Remember: The greater the commission, the greater the motivation and the resulting sales.

Therefore this is a wake up call to real estate affiliate managers. The message is simple: Wise up. Stop paying affiliates peanuts. Drive sales ten fold by offering irresistible commissions.

How to Save Thousands of Dollars in Florida Real Estate Commissions

In today’s economic environment, particularly in states such as Florida, we find ourselves in a serious buyers market. The simple fact of the matter is, selling a home in the state of Florida is extremely difficult unless you have a great real estate agent standing by your side. However, even with the best real estate agent in the world you are still going to have to worry about the amount of money you’ll need to pay in Florida real estate commissions.

The commission that you are going to pay needs to be decided before your home gets listed on the MLS. A typical commission that is paid is going to be 6% to the real estate agent, but many people are negotiating for a much lower percentage than that. You just need to make sure that you give your real estate agent enough of a percentage that they will be sure to work in your corner and get your home sold. However, the one thing that you should know about Florida real estate commissions is that the percentage that you are going to pay to your real estate agent may NOT always be negotiable. Many, if not most, brokers will not allow their agents to cut their commission. If this is the case, the agent has no choice, but to charge you the full price. However, you always have the choice of choosing a different real estate agent…one who IS willing to cut their commission.

However, don’t forget that although nobody wants to pay Florida real estate commissions, a real estate agent needs to make some money for their job the same as anybody else. The fact of the matter is, they are finding you a buyer in a market that is very difficult at the moment. Because of this, they earn every penny that they make.

Your only other option to get it on MLS is to look into the possibility of doing a flat rate listing. If you do this, you’re going to pay a one-time flat fee of somewhere in the neighborhood of $299 – $799 in order to be listed in the MLS. Your home will be searchable on a variety of different websites and through any real estate agents that are looking for homes in your area for some of their buyers. This can save you thousands of dollars. You at least save the 3% commission that would have gone to your agent (selling agent) and if you happen to sell the home without a buying agent, you don’t have to pay any Florida real estate commissions.

Boost Your Real Estate Commission

Are you looking to boost your real estate commission? If so then this article is for you. Boosting your real estate commission doesn’t have to be a hard thing to do. One thing that I like doing to increase my knowledge about real estate is to watch TV. There’s a channel on television called “HGTV”, and it stands for Home and Garden Television.

I watch this show almost everyday, and it gives me great real estate selling ideas. One of the things that this channel emphasizes is home renovation. There’s a show called Designed To Sell that is all about sprucing up your home to make it appealing to potential buyers.

To boost your real estate commission, one thing that you will want to be sure to do to make your home sell is to straighten up the curb appeal of the home. Even if the interior of the home looks good, the sale of the home can be lost if the buyer isn’t attracted to the layout of the outside of your home.

Curb appeal is all about staging the exterior of your home to make it look attractive. You can consider the curb appeal to be the precursor to the inside of your home. You can easily add value to a home by fixing the walk way to the home, adding flowers or a small garden, and mowing the lawn. Believe it or not, a lot of people try to sell their home without these things in order.

You either have the option of doing the repairs yourself, or having someone else do it for you. If you want to get more real estate commission, then you probably will want to do it yourself. There are pros and cons of doing it yourself and hiring someone else to do it for you. And they are obvious. If you do it yourself, you will save a lot of money, but you risk not having it done professionally. If you hire someone else to do it, you will pay more for the job, but you know that it will come out the way that you want it to.

No matter what option you choose, you will need a strong marketing plan. You may have a good looking house, but it’s worthless if no one is looking at it. Do your research about competitive homes in the area. Look in your local newspaper to see ads for other homes in your area.

You will typically find classified ads in your local newspaper for people selling their home. Study the ads and pay close attention to the ones that catch your attention. Figure out which ones drew you in the most and emulate the parts of these ads to incorporate into yours.

Boosting your real estate commission doesn’t have to be hard at all. It takes a bit of market research and a strong marketing plan to get the sales need, but once you have these things in order boosting your real estate commission is as easy as pie. Hopefully you will use the tips in this article to boost your commissions today.

Good luck with having real estate success.

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