While much has changed about the real estate industry over the past few decades, one very important feature has remained nearly unchanged. When a real estate agent helps to sell a home, they almost always do so for 6% in commission. This hasn’t changed despite how much the price of your average house has gone up since the ‘70s. For the most part, helping with a real estate transaction has only become more profitable, even though the job hasn’t changed much.
Obviously, 6% may not sound like a lot of money. No one would consider it a good tip, for example. However, on a $500,000 home, that equals $30,000. That immediately lowers your overall profit, which is especially concerning if you need to make a fairly large down payment on your new home.
Until recently, though, there wasn’t much you could do. Most of us would never dream of trying to work with a broker on our own (you’d also need a license), just for a single sale. This has left the majority of people at the mercy of that 6% commission.
Nowadays, though, that’s beginning to change. Flat fee real estate is becoming more than just a trend. It’s becoming the standard way homeowners prefer to conduct business. In a nutshell, this type of transaction means that an owner puts their home up on the market, but negotiates a fee upfront that they will pay an agent for brokering the sale. Once the fee is set, that’s all the agent can hope to receive.
Obviously, this means that the owner can now expect to make far more from the sale. However, you might think it would mean that they couldn’t expect as much instead. It might seem as though agents wouldn’t be sufficiently motivated to get the most for their property.
This is where the power of the Internet can help out though. You can post your home on an MLS (Multiple Listing Service) site like this one and get offers from numerous agents looking for a property. Thanks to this kind of competition, you have no reason to worry that your home might have problems selling quickly.
Although 6% commissions were once commonplace in the real estate industry, expect that to disappear soon. Flat fee transactions will make them a thing of the past.