How Does an Agent’s Commission Work? Info to Set the Record Straight

Some home sellers can be put off by working with a real estate agent because of the agent’s commission. 

It’s easy to think of the commission as an extra expense that you wouldn’t have if you simply sold the home yourself (For Sale by Owner, or FSBO). After all, the thinking goes, you could take a few pictures, list the home for sale on a site like Zillow or Redfin, and the offers will come pouring in—and you get to keep all the proceeds!

The problem is, this thinking is simply incorrect. 

Here’s the information about an agent’s commission that you need to know before you decide to go the FSBO route. 

Homes sold through agents typically sell for significantly more than those sold by owner

The primary reason that most sellers opt out of working with an agent is to save on the agent’s 6% commission.

On a $250,000 home, that commission works out to be about $15,000—a significant amount of money, certainly. 

However, the typical home sold by agent sells for much more than the typical FSBO home. According to the National Association of Realtors, the median sale price for all agent-assisted homes sold was $250,000 as opposed to a median sale price of $190,000 for FSBO homes sold. Simply by going with an agent, the statistics say you’ll take home much more, even considering the commission, than you would without one. 

So if you’re cutting out an agent to save money, you probably want to reconsider. 

Agents put in a lot of behind-the-scenes resources to get your home sold. 

After you list your home, you may hear from your agent just a few times throughout the entire selling process. But that doesn’t mean that he or she isn’t working on selling your home. 

Agents do everything from hire photographers to take professional photos, to work with home stagers, to purchase Google and social media ads for your home listing, to complete virtual walk-throughs to send to prospective buyers. That all takes time and money. 

While it’s true you’d be the one paying for the photographer and home stager, you also get to skip all the work that it takes to find great professionals who will help you sell your home quickly. 

Agents are also doing things like posting your home on their own and their brokerage’s social media accounts, talking to potential buyers, answering questions via real estate platforms, and more. 

To get a clearer idea of what you’ll take home, use a net proceeds calculator.

If you’re still unsure about whether to go with an agent or not, it can help to do some number juggling using a net proceeds calculator.

By plugging in information including your home’s address, how much it’s worth, the real estate commission percentage, and how much is left on your mortgage, you can get a clear idea of how much you’ll take home given a certain sale price. 

This can help assuage your fears over whether working with a real estate agent will be a worthwhile expense or not.
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