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Why does the seller pay all the commission?
It seems unfair that the entire commission falls on the seller. Why do they have to pay their agent and the buyer's agent?
Asked By Adelina | Buffalo, NY | 367 views | Selling | 1 year ago
Answer(2)
Chris Yochum
Dickson Realty
Adelina, it a great question and natural for most sellers to question. Over the years the real estate industry has developed to include the total commission into the purchase price to account for a retail home sale for the reasons Jaclyn mentioned just prior to this posting. Many homeowners are not familiar with how this came to be and want to try wholesaling their home for a retail price. When selling a home with minimal exposure to buyers, without experienced representation and without expertise on the specific market the home is being sold in, the home generally sells for significantly less. The last extensive study I reviewed recently had a difference between wholesale price and full retail value being 17% on average more money for sellers that sell with a realtor and pay a full commission that accounts for both agents. In reality you are paying out 1 commission and the listing broker offers out a portion to buyers as an incentive to bring any and all buyers that may have interest in a home like yours.
- 1 year ago
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Jaclyn Mayse
EXP Realty
The way that I view it is this....sellers have closing costs yes, but buyers not only have to have downpayment, closing costs, and then adding the realtor commission fees on top - most can not do that. Lenders will not allow for buyers to add commission costs into closing costs on their loan, so the only other way would be to increase the purchase price, then get the sellers to do a seller concession for the closing costs, Sometimes this may push that buyer out of even being able to buy the house. It really is in the best interest of the seller because that way the buyer is also getting proper representation and this helps ensure for a smoother transaction and that the sale gets to the closing table. Also, as always, commission in negotiable between the list agent and the seller. It could also be viewed as a marketing cost. The end goal is that you have someone who wants to sell, quickly with limited hassle-a buyer wants to buy, we (both agents) facilitate the transaction and get paid for you. The buyer is paying for their realtor one way or another. Appraisals are also done with the consideration of the commission being part of the purchase price. How many buyers do you think will be putting offers on houses without this type of process? In my area, it will greatly reduce the number of buyers or cause them to buy properties that are much less in value. Hope this helps!!
- 1 year ago
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