Understanding real estate commissions and what they cover for home sellers in Philadelphia. Despite the fact that some people sell their homes on their own, the majority of people use the services of a real estate agent – and with good reason. Agents are well-versed in the local market, have exceptional negotiation skills, which make the whole sale process much simpler. However, they come at a cost: real estate commissions. And, contrary to what some Philadelphia home sellers claim, you get a lot of value for your money. Let’s see if we can shed some light on real estate commissions in Philadelphia and what they cover for home sellers.
Overview of Real Estate Commissions
A Philadelphia home seller agrees to pay the fee, which is usually about 6% of the sale price, when she signs a listing agreement with a real estate agent. After that, the fee is typically divided equally between the seller’s and buyer’s agents. After that, each agent usually pays a portion of her fee to her brokerage.
Let’s say a house sells for $500,000 and the total real estate commission is 6%. In this case, each agent (seller and buyer) will receive 3%, which is half of the total of 6%. Then each agent would sign over half of that 3% to her brokerage, resulting in each agent having around 1.5 percent of the initial 6% – or about $7,500.
What this means for you as a home sellers is that your agent is getting even less than 6%, which is a steal given the amount of effort your agent has to put in to gain that 1.5 percent. Contact a Philadelphia agent at (215) 385-3055 for more details.
Who Pays Real Estate Commissions?
On the surface, it seems that home buyers must pay the entire 6% in overall real estate commissions and that their agent is only receiving a small portion of what they must pay. In fact, however, this is not the case. Since the buyer’s share of the commissions is typically included in the home’s price, the buyer pays her share of the commissions indirectly.
“Let’s assume a buyer and seller (each with their own real estate agent) agree on a price of $200,000 for a house. The fee will be $10,000 ($200,000 * 0.05) assuming a 5% real estate commission. The fee is deducted from the home’s expense rather than being added to the selling price. As a result, the seller would gain $190,000 from the deal, while the buyer would pay $200,000.”
Why Real Estate Commissions Are Worth It
The most common criticism of real estate commissions is that they are too large, and that agents do not offer services that are worth the money. Let’s take a look and see if that’s the case.
Yes, on the rare occasions that a home sellers immediately after being listed, these complaints may be valid. The agent’s job is limited to taking a few pictures, agreeing on a listing price, and putting the house on the market.
However, this is a rare occurrence. The majority of the time, very high-end homes take several weeks, months, or even years to sell.
“This can add up to several hours spent by the seller’s agent selling the property, hosting open houses, taking phone calls, and keeping up with other listings and sales in the area. The long-term costs of holding the house on the market, such as signs and advertisement commissions, would be borne by that agent. Under this light, few buyers will be willing to take the risk of paying a real estate agent by the hour.”
The Value of a Philadelphia Agent
As a result, even though an agent usually works hard for a long time to earn her money, you, as a seller, pay the price. Bear in mind, however, that your agent’s resources and expertise are critical to the entire process, and they are numerous and diverse. 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 be looking out for your best interests at all times, attempting to get you the best possible price for your house. In addition, an agent normally operates seven days a week and is also available 24 hours a day, seven days a week.
How to Find a Good Agent
However, a good Philadelphia agent is needed to ensure that you get your money’s worth. To find the right agent for you, you can do exhaustive research and spend hours getting tips and reading feedback. You can also take the simple route and contact a trustworthy organization with knowledgeable officers. Contact us today at (215) 385-3055 if you have any questions about real estate commissions.