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Buying or selling a home is not an easy feat. In fact, according to a Redfin survey, 59% of U.S. homebuyers think purchasing a home is more stressful than dating. Despite this stress and high prices, real estate remains a valuable investment. Working with a realtor can help alleviate some of this anxiety by guiding you through the process, but it’s also crucial to ensure you are paying a fair fee for their services.
Key Takeaways
- Before entering negotiations with a realtor, clients should define their objectives.
- Your realtor should be a true partner in the process, not just an intermediary.
- A realtor commission is a negotiable number that is typically around 5%.
- Changes in commission structures, climbing mortgage rates, and housing construction are other factors to take into consideration.
What I’m Telling My Clients
The desire to buy a home quickly is risky, as a lack of due diligence can lead to significant financial losses. First and foremost, I want my clients to have a clear goal beyond “buy” or “sell.” Before any agreements are made, they understand closing costs, contingencies, and agent fees.
Realtor commission, typically around 5%, is a negotiable number that clients should discuss in advance, and a strategic listing price should be part of that conversation. For example, a 5% commission on a $250,000 home sale would be $12,500.
However, I remind clients that the realtor’s commission covers valuable services. In addition to getting properties listed on the multiple listing service (MLS), agents market, stage, and show properties.
Tip
A good realtor will also know about counter offers and how to interpret inspection results. When handled properly, this is a very beneficial relationship.
Additional Considerations
Here are a few other points people should consider before entering realtor negotiations:
- A federal lawsuit and subsequent ruling have impacted how sellers’ and buyers’ agents can approach commission structure. Mainly, it eliminates the requirement for home sellers to pay both their own agent and the buyer’s agent. Thus, if a home buyer wants an agent, they may have to pay for one themselves.
- With mortgage rates climbing and home sales declining, home prices are expected to continue downward, which could make markets more competitive. Having a realtor in this situation may help you.
- Housing construction has risen with the decrease in mortgage rates, which can—over time—affect the competitiveness of negotiations.
The Bottom Line
Despite price fluctuations, real estate has historically been considered one of the more reliable long-term investments. By understanding how realtor negotiations work and approaching the process carefully, buying or selling a home with support can be a smart financial decision, no matter the time of year.