When you are entering the real estate market as a buyer or a seller, real estate commission is generally on the forefront of a lot of your conversations with your agent or potential agent, even though the commission really only pops up as a factor at the end of the process when you actually close on a house or on your house.
So while you are aware of commission from the get-go, there are a lot of little fine print details and realities of real estate commission that can be overlooked and then rear their ugly heads right at the finish line.
Here are some of the realities of real estate commission to keep in mind before you even find your agent and list your home.
Not all commission is created equal
While generally speaking you are looking at paying your agent 5-6% on commission, not all commission is created equal.
One major differentiating factor in the real estate market is the commission that is paid by a buyer versus a seller. A seller generally pays the commission to both their agent and the buyers’ agent while a buyer doesn’t pay a commission at all.
Unless you choose to go “FSBO” or for sale by owner, it will be unlikely you’ll be able to bypass this commission since it is usually how your agent gets paid for their work up to that point.
Sometimes, however, an agent represents both a buyer and a seller in a deal and will take their commission down slightly in this case. Finding someone local is helpful. Of course, if you’re selling your home in Miami, beycome is local and here to help you and others save on commission as much as possible.
Read the fine print in your contract
As mentioned above, an agent will not be paid for their work until the sale of your home is complete or the purchase of your new home is complete.
Read any contract with your agent or potential agent carefully, however. Many times, if the term of your contract is over and therefore there was no commission recouped by the agent, there is still a clause that states if your home sells to a buyer who was found during the term of your contract, you still owe the agent a commission.
Pay close attention to the fine print in your contracts so that you know what you are getting yourself into commission-wise should your home not sell during the terms of your agreement with an agent.
Also, as far as fees go, pay attention in your contract to termination fees and the termination clause in general. Should you decide to work with an agent and then change agents, it may not be as easy as you’d like if your termination clause states you owe the agent a pretty penny if you choose to say goodbye.
Even the “typical” agent commission of the real estate agency has some caveats and exceptions. Understanding exactly where your money can and will go during the process of selling or buying a home is critical for saving you money and keeping the above realities of real estate commission in mind will help make sure you are smart about your sale.