Yes, I ‘m calling out the elephant in the room! Let’s have real talk about real estate agent commissions. “How much do you charge” is one of the most common questions people ask when choosing a listing agent and in a fast selling market. Some sellers use commission alone to decide on which agent to hire. Here is some straight talk about Denver metro & boulder county real estate agent commissions and 5 things to consider as you decide on an agent.
1. THERE IS NO STANDARD COMMISSION RATE
The amount a listing agent charges varies between both agents and companies. It depends on the agent, the company, and what services they provide.
2. YOU GET WHAT YOU PAY FOR: FOCUS ON THE NET PROCEEDS
Like any service you pay for, some charge more and some charge less. Have you ever experienced a bargain sale & were sorry for the product/service you purchased because it just wasn’t what you thought it was going to be? The same is often true in choosing a listing agent. When considering commission, the most important factor to focus on is NOT how much an agent charges, but how you can NET the most amount of money from the sale of your home. If a broker charges more, see if they can justify their fee….meaning will you NET more from the sale vs a cheaper agent?
3. GETTING AN OFFER IS EASY: GETTING THE BEST BUYER, BEST TERMS, HIGHEST PRICE, & JUGGLING CONTINGENCIES, & ENSURING IT ALL GOES AS PLANNED IS THE HARD PART 🙂
In the hot seller’s market we have presently in the Denver Metro & Boulder County real estate market, finding a buyer and getting an offer isn’t the major challenge. It’s no secret that there are more buyers than sellers. Putting a cardboard lemonade sign might catch a buyer, but sellers need the BEST BUYER and their real estate agent needs to be on their “A” game to negotiate the best terms. Here is a short list just to name a few:
- Does the buyer have a home to sell in order to close on your home.
- Has the buyer only been pre-qualified or actually pre-approved for a loan & what are the outstanding conditions for final loan approval?
- What happens if the home doesn’t appraise for the sales price? Will you, the seller have to lower the price or does the buyer have the means to pay the difference?
- What happens if you can’t find a new home to purchase?
Not all agents who charge more are worth it, but the ones who are will have a strong listing marketing program that maximizes the interest in your home. Just because the market is “hot” and your home will likely sell quickly, don’t just settle for it selling. Unless you recently won the lottery, you likely want THE MOST $ possible from the sale of your home. The cheapest agents don’t have the resources to invest in marketing that generates the highest interest in your home. The more interested buyers & and the better your agent’s negotiating & transaction skills, the higher price and net you will receive. Plus, like many professional services, it’s hard to put a price on experience. The cost of your home NOT selling for the highest net proceeds or falling through due to their lack of experience can be tremendous….often much more than the difference in % commissions between agents.
5. IS IT TOO GOOD TO BE TRUE?
EX: We’ll Sell Your Home For A Flat Fee, or 1%, or blah blah blah
Yes it is to good to be true. Here’s why:
- They Sell Your Home For Less: They are selling their own services at a bargain price….so be careful because it’s very likely they will sell your home at a bargain price too.
- It’s Paid Up Front (No Service Guarantee): You pay these guys up front so after you sign the listing agreement they often disappear. The fee is not enough to cover any marketing so they just pop your home in MLS and hope it sells.
- Bait & Switch: You’re Stuck W/Them As Your Buyer’s Agent: If you are lucky and it does sell and for the price you hoped….you are locked into using them as your buyer’s agent to purchase a home. If you don’t buy a home with them their listing fees are much higher than you thought!
- Who Is Working For Who? Blurred Lines w/Agency: It’s best to hire an agent with an Exclusive Right To Sell agreement. This is just a fancy way of saying you both are mutually committed to one another. Your agent is looking out for your interests and you agree to sell the home through the agent exclusively. However, in a volume driven discount business model, they cannot put your needs first when also needing to get your home sold quickly while providing the minimum service. It’s in fact conflicting goals,is a recipe to be taken advantage of, and rarely ends well for both parties.