Real Estate Commissions – the Old Way
Many real estate companies throughout the country charge between 5% and 6% to sell residential real estate. The average commission is dropping but many real estate companies hold onto the old commission fees with a clenched fist.
How The Business is Changing
However, the work a realtor once did is done for them. Approximately 80% to 90% of all buyers begin their search on the internet. Much of the work that was performed exclusively by realtors in the past is now performed by buyers and sellers. Most of the information that a buyer or seller needs to research is available on the internet. The internet, artificial intelligence, digital marketing, search engine optimization and correct pricing are the marketing methods that sell homes.
The Burdensome Overhead to Buy and Sell
Many consumers feel that high commissions coupled with transfer taxes take too much of a bite out of the final net amount that sellers realize at settlement. One of the newer real estate companies that is active in the Pennsylvania and New Jersey real estate markets was founded by a person who was a real estate investor who would sell multiple homes each year but could not earn well deserved profits because the real estate companies charged 6% and the City of Philadelphia charged transfer tax of 2% each time you buy or sell.
On a $500,000 sale price, the seller was charged 8% or $40,000 to sell the home. Add to that the 2% when the investor first purchased the home before renovation and you can easily have another $2,000 to $4,000 in fees bringing the buying and selling costs for the investor between $42,000 to $44,000 for one $500,000 sale plus the cost of renovation. It is hard to make a profit when the fixed overhead is so high to buy and sell.
How I Save You Thousands
Since I like to save consumers money, I have come up with marketing and commission programs that can save sellers 50% to 66% of seller commission fees. These marketing programs require some marketing participation from the seller and one marketing program is a combination of for sale by owner coupled with a limited service listing agreement that can cost the seller as little as 2% plus $675 and at most 3% plus $675 payable only if the home sells and payable at settlement not upfront like some other companies charge. There are other real estate companies in different parts of the country that offer similar or near similar marketing programs that can save you commission dollars. Contact me with your name, full address phone and email address and I can let you know if these programs are offered in your state through different real estate companies.
Consumers can pay 5% to 6% or they can perform some of the marketing work themselves and save.
A $500,000 sale at 6% is a $30,000 real estate commission.
A $500,000 sale at 2% plus $675 is a $10,675 real estate commission.
A $500,000 sale at 3% plus $675 is a $15,675 real estate commission.
Which program works best for you?
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