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Paying For A Real Estate Agent

Feb 3, 2008
The seller usually pays the real estate agent commissions, which are taken from the proceeds of the sale and distributed after the close of and by Escrow. Commissions are negotiable -- before listing agreements and sales contracts are signed, not at closing. The percentage typically is set by local custom and the strength of the market. Some buyers hire their own exclusive agent and the seller either does not pay that agent a commission or their commission is negotiated as part of the sales contract. Working with a real estate agent offers many benefits. The only drawback is that you will have to pay them when selling your home. In other words, they will take a cut of the selling price of your home. This is the number one reason that some people decide to sell their home by owner. They want to keep all of the profits for themselves, and this is perfectly understandable. But with that being said, you need to keep in mind that the small fee you will have to pay is usually well worth it. After all, an agent does a lot of work for the money that they make.

The question is: how much money do you pay a real estate agent when they sell your home for you? Generally speaking, this is a question that should be answered by the agent that you are going to do business with. After all, this can change from agent to agent depending on the way that they work, etc. But with that being said, there are some standard commission rates that seem to hold true across the industry.

It is safe to say that you will end up paying your real estate agent approximately 6 percent of the selling price. For instance, if you sell your home for Rs.100,000 your real estate agent will take small portion of this. Does that seem like a lot to you? If you are like most, you probably think that it does. But again, you need to remember what you are going to get for the money that you are paying. Your agent will work on everything from marketing to negotiations and much more. Working with an agent means that you will not be responsible for a lot on your own; and this is a good thing for most sellers.

The commission is split. Usually, the seller's agent's brokerage gets half and the buyer's agent's brokerage half, although other splits are possible. If the agents work for a broker, the broker will get 30 to 50 percent of the agent's commission (minus what they spend for things like marketing, newspaper ads, flyers, internet ads, which comes out of their own pockets - along with many other expenses of the daily operating costs of their real estate business). Commissions are the bulk of the seller's closing costs and the reason many homeowners explore selling without an agent. If they are successful, they'll have either no commissions to pay, or only one -- the buyer's agent -- if they agree to pay the buyer's agent. The percentage to be paid also must be in the contract. You will more than likely pay your real estate agent somewhere in the range of 6 percent if they are successful selling your home. If this is something that you are willing to deal with, you can move forward right away. Before you decide against this because you don't want to spend the money, remember that an agent will bring many benefits to the selling process.
About the Author
James Gunaseelan writes for Mumbai Rental Portal.
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