Though some people take the FSBO route, most home sellers enlist the aid of a real estate agent – and for good reasons. Agents know the local market well, bring to bear negotiating skills, and make the whole selling process much easier. But they come with a price – real estate commissions. And, really, contrary to what some Colorado Springs home sellers think, what you get for your money is well worth it. So let’s see if we can shed some light on real estate commissions and what they cover for home sellers in Colorado Springs.
Overview of Real Estate Commissions
When a Colorado Springs home seller signs a listing agreement with a real estate agent, she agrees to pay the commission, usually around 6% of the sale price. This commission is then usually split about evenly between the seller’s agent and the buyer’s agent. And then each agent typically pays her brokerage a portion of her cut of the commission.
Suppose a home sells for $500,000 and the total real estate commission amounts to 6%. In this case, each agent (seller’s and buyer’s) will get 3%, half of the total 6%. And then each agent will hand over to her brokerage about half of that 3%, each thus winding up with about 1.5% of the original 6% – or around $7,500.
What this means for you as a seller is that your agent is getting far less than 6%, and considering all the work your agent has to put in to earn that 1.5%, you’re really getting a bargain. To find out more, contact a Colorado Springs agent at 719.642.0220.
Who Pays Real Estate Commissions?
It appears, then, on the face of it, that home sellers have to pay the full 6% in total real estate commissions and that their agent is actually getting only a small portion of what they have to pay. But in reality, this isn’t the case. The buyer’s portion of the commissions is usually included in the price of the home, so the buyer winds up paying her portion of the commissions indirectly.
“Let’s say, for example, that a buyer and seller (each with a real estate agent) agree to a deal on a home for $200,000. Assuming the real estate commission is 5%, the fee would be $10,000 ($200,000 * 0.05).The fee comes out of the cost of the home – it is not added to the sale price. So, while the buyer would pay $200,000, the seller would receive $190,000 from the sale.”
Why Real Estate Commissions Are Worth It
The common complaint about real estate commissions is that they are too high and that agents don’t really provide services deserving of the cost. So let’s see if that’s really the case.
On the rare occasions that a home sells right after listing, then, yes, these complaints might hold some water. The agent does nothing much more than take a few photos, determine a listing price, and put the home on the market.
But it seldom happens this way. Most of the time, it takes several weeks or months or even years for very high-end homes to sell.
“For the seller’s agent, this can add up to many hours spent marketing the home, holding open houses, taking phone calls, and staying abreast of other listings and sales in the neighborhood. That agent will also bear the long-term cost of keeping the house on the market, including signage and advertising fees. If you look at it this way, not many sellers would want to take the risk of paying a real estate agent by the hour.”
The Value of a Colorado Springs Agent
So even though an agent typically does a lot for a long time to earn her money, it still costs you as a seller. But keep in mind that your agent’s services and skills are vital to the whole process, and they are many and varied, for example:
- Running comps and determining sale price
- Conducting negotiations
- Managing paperwork
- Overseeing staging and photography
- Managing virtual tours
- Marketing for extended periods (leveraging social media, placing ads, finding buyers, cold calling)
- Being present for showings and hosting open houses
- Scheduling appointments for appraisers, inspectors, contractors, and surveyors
- Delivering checks to the bank, broker’s office, and title company
- Coordinating closings
Your agent will also always be looking out for your best interests, striving to get you top dollar for your home. And an agent typically works seven days a week, often being available 24/7.
How to Find a Good Agent
But you do need a good Colorado Springs agent to make sure you get your money’s worth. You can conduct extensive research and spend hours getting recommendations and reading reviews to find the right agent for you. Or you can do it the easy way by contacting a reputable agency with experienced agents. If you have concerns about real estate commissions, contact us today at 719.642.0220.