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Estate Agent Commission, is it Too High?

estate agent commission

The average estate agent commission is six percent of the sold price of the property. That’s quite a lot to pay someone for a listing.

Have you worked with a realtor or real estate agent? If you have purchased or rented a home, chances are you have.

Hiring a realtor is by far the most popular way to sell and buy homes.

But does your realtor work for you, or commissions?

Many agents are surrounded by a good team to help them perform well and increase the chances of closing deals.

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Real Estate Agent’s Team: Estate Agent Commission

An agent’s team might consist of a mortgage broker, appraiser, and inspector.

Here is a quick synopsis of each member:

mortgage broker is an intermediary who brings borrowers and lenders together.

A home inspector is a person who examines the condition of a home often in connection with a sale.

A home appraiser is a person who determines the value of a home to ensure the price reflects other comparable properties.

Here is where the tricky part that many unsuspected potential buyers aren’t privy to.

The purchase of a home by you generates cash flow in the form of commissions for the agent and their team.

The agent is basically the conduit for all others on their team being compensated. This is where we can have the potential for a conflict of interest.

Example: If I am an agent and I consistently bring houses to an inspector that finds the minutest of issues and reports on them. That might scare away my clients from purchasing the home and reduces my chances of making a commission.

The inspector is doing exactly what he or she is trained to do. But what is that doing to the bottom line for the agent?

Will the agent continue to bring the inspector houses or will they go with an inspector that is more inclined to oversee minor issues for a faster sale?

As a home buyer, you really won’t know.

You can also run into a similar issue with the mortgage broker. Keep in mind that a broker’s interests may not align with yours.

Similar to an agent, a broker gets compensated by commissions/fees paid to them by a lender.

Their goal is to get you into a mortgage that maximizes their compensation.

The real estate crash of 2008, revealed that many brokers got clients into mortgages they couldn’t afford.

Related: 5 hidden costs of working with a Houston real estate agent.

So how do you avoid getting stuck with an agent and their team that looks to maximize their compensation for you? It’s simple, diversify your team.

Ask your friends and family for recommendations of people who they trust and have worked with before.

It’s not a good practice to go with only the people an agent recommends, do some leg work for yourself.

You want to make sure all parties involved in the transaction align with your interests and not their own.

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