People have been asking me about recent changes in our industry pertaining to commission. Read below for more information, and Masterjohn Realty’s policy.
The NAR lawsuits in real estate refer to legal cases against the National Association of Realtors (NAR) and some major real estate companies. They focus on a couple of key issues related to how commissions are paid to real estate agents. Here’s a breakdown in simple terms:
- How Commissions Are Set: In traditional real estate deals, when someone sells their home, they typically pay a commission to both their own agent (the seller’s agent) and the buyer’s agent. The seller covers both these costs, even though the buyer benefits from the buyer’s agent’s services. Critics argue that this system inflates costs for sellers and creates an artificial incentive for agents to keep commissions high, which hurts consumers overall.
- The Lawsuits: The lawsuits claim that NAR and big real estate companies have been working together (collusion) to keep this commission system in place. They argue that the rules enforced by NAR, particularly the requirement that sellers must offer a buyer’s agent commission, reduce competition and keep prices unfairly high.
- Impact on the Industry: If the lawsuits succeed, it could dramatically change how real estate transactions work. Sellers might no longer be required to pay the buyer’s agent’s commission, which could lead to more negotiation around fees, lower costs for sellers, and potentially fewer incentives for buyer’s agents. It could reshape how agents are compensated and make the market more competitive.
In short, the lawsuits claim that the current system is unfair to consumers and prevents more competitive commission rates in the real estate industry.
Understanding Real Estate Commission, and Masterjohn Realty
REMEMBER – ALL COMMISSION IS ALWAYS 100% NEGOTIABLE!
Commission:
Our office charges 3.5% to list your property
What is a Real Estate Commission?
The real estate commission is the fee paid to the real estate agents involved in selling your property. This fee is typically a percentage of the final sale price and compensates the agents for their services, including marketing your property, negotiating with buyers, and managing the complex paperwork and legal aspects of the transaction.
How is the Commission Structured?
Historically, the commission was taken out of seller’s proceeds, and shared between the seller’s agent (the listing agent) and the buyer’s agent. Things have recently changed. Now, the seller and listing agent negotiate commission percentage which is paid to the listing firm. The seller can also offer compensation to the buyer’s agent, and that percentage would be discussed between the seller and listing agent. This structure incentivizes both agents to work together to sell your property for the best possible price. Our office suggests offering 2.5% compensation to a buyer’s brokerage.
Why Do I Pay a Commission?
The commission covers a wide range of services that are essential for a successful sale. These services include:
- Pricing Strategy: Setting a competitive and strategic price for your home.
- Marketing: Promoting your property through online listings, open houses, professional photography, and more.
- Negotiation: Handling offers and counteroffers to secure the best deal.
- Paperwork: Managing all the legal and administrative tasks to ensure a smooth closing.
- Guidance: Providing expert advice and support throughout the entire process.
Why should I offer compensation to a buyer’s agent?
- Incentivizes Buyer’s Agents: By offering a competitive commission to buyer’s agents, you encourage them to show your property to their clients. This can lead to more showings, greater interest, and potentially more offers.
- Increases Market Exposure: Buyer’s agents are more likely to prioritize showing properties that offer fair compensation. This means your property is more likely to be seen by serious, qualified buyers.
When is the Commission Paid?
The commission is paid only when your property sells. It is deducted from the proceeds at closing, so there’s no upfront cost to you. If the property doesn’t sell, you don’t owe a commission.
Is the Commission Negotiable?
Yes, commission rates can be negotiable. However, it’s important to consider that the commission reflects the level of service and expertise provided. Lowering the commission might affect the resources and effort dedicated to selling your home.
How Does the Commission Benefit You?
By paying a commission, you are ensuring that you have a motivated, experienced professional working tirelessly to sell your property at the best possible price. The goal is to maximize your proceeds, making the commission a worthwhile investment. Also, Masterjohn Realty is family owned and ran. It is not a franchise, and there are no additional expenses or hidden fees charged to you at closing.