Should You Use a Multiple Listing Service

In today’s world, technology has made buying and selling real estate a lot easier than what it used to be. With the availability of tools like Multiple Listing Services (MLS), it is much simpler to find and sell the perfect property. However, before we dive into whether or not you should use a Multiple Listing Service, let us define what an MLS is.

What is a Multiple Listing Service?

According to the National Association of Realtors, an MLS is a private database created by real estate agents to consolidate their property listings. This database allows members of the MLS to share information about properties with other members of the organization. These individuals are typically real estate professionals who have access to the MLS database, including brokers and agents. By using an MLS, sellers can expose their properties to numerous prospective buyers, while buyers can look up properties that meet their criteria.

The vast majority of MLS databases are managed by Realtor or trade associations, which are usually local or regional in nature. This allows these associations to control the distribution of their members’ listings while ensuring that the quality of the data is maintained.

Should You Use a Multiple Listing Service?

Now that we have a foundational understanding of what an MLS is, let us determine whether or not you should use one. Below are some advantages and disadvantages of using a Multiple Listing Service:

Advantages:

1. Exposure to a Wider Range of Buyers or Sellers

The primary advantage of using an MLS is that it provides access to a wider range of potential buyers or sellers. It is not uncommon for real estate agents and brokers to have extensive networks of contacts within the industry. However, these networks can only go so far. By using an MLS, sellers can expose their properties to a larger pool of potential buyers, which can help increase the value of the property.

2. Access to Accurate and Up-to-Date Information

MLS’s usually have strict standards for listing properties. This means that the data provided is likely to be accurate and up-to-date. Additionally, MLS databases are regularly updated, ensuring that new properties are added, and existing listings are removed or updated. Having access to reliable data can greatly simplify the buying and selling process.

3. Professional Assistance

In most cases, individuals who use an MLS will be working with a real estate agent or broker. These professionals will have access to the MLS’s database and will be able to guide you through the buying or selling process. They can also offer advice on pricing, contracts, and other relevant aspects of the transaction.

4. Saved Time and Effort

Listing a property can be a time-consuming and frustrating process, particularly if you are doing it yourself. By using an MLS, you can easily list your property or search for one without having to take on the burden yourself. This allows you to focus on other aspects of the buying or selling process, such as preparing your property for sale or negotiating a contract.

Disadvantages:

1. Costs

Using an MLS comes with a cost. In most cases, sellers will need to pay a fee to have their listing added to the database, while buyers will need an agent or broker, who will typically charge a commission once the sale is complete.

2. Limited Access for Non-Members

Only members of the MLS have access to the database. This means that if you are not a member, you may not have access to all the available listings. This can be a disadvantage for buyers who are looking for a specific type of property or sellers who are looking for a buyer with a particular set of preferences.

3. Limited Availability

MLS’s are primarily local or regional, which means that they may not be available in all areas. This can be particularly challenging for individuals who are looking to buy or sell property outside of their immediate area.

4. Privacy Concerns

MLS’s typically require members to list their information, including contact details, on the database. This can be a privacy concern for some individuals who prefer to keep their personal information confidential.

In conclusion, while there are both advantages and disadvantages to using Multiple Listing Services, the benefits of exposure to a wider range of buyers or sellers, access to accurate and up-to-date information, professional assistance, and saved time and effort far outweigh these disadvantages. Additionally, MLS’s are becoming increasingly prevalent in the real estate industry, with many government resources available to assist individuals who are looking to utilize them.

Overall, if you are looking to buy or sell property, we highly recommend using a Multiple Listing Service. The benefits of increased exposure, reliable information, professional assistance, and saved time and effort make this a worthwhile investment.

A multiple listing service does not necessarily possess the same principles as a multiple agency listing (which rarely ever happen in the real estate industry due to the potential for a conflict of interest and the encouragement of unethical, competitive behavior between multiple agents or agencies).

A multiple listing service is essentially as the name implies, a service that either allows listings from multiple sources or takes a listing from an owner (selling their property without representation) or an agency and places it under multiple listings. While they have always been around in some form, most commonly for apartment rentals or sales, the number of potential multiple listing services have exploded in the last ten years with the rise in prominence of the Internet in the real estate landscape.

Multiple listing services can vary tremendously by their cost, accessibility, and also by their scope of marketplace (some can be global, others can represent only a smaller region or community). Some services usually require a nominal fee for listing, similar to a traditional classified ad, which can be paid by an agency or by an individual seller. Others allow listing for free, and make profits through other means, such as advertising (which is very common in free Internet listings).

Often an agency representing a seller will try to market a property on as many services and listings as possible, but there are cases where agencies will try to keep a listing exclusive to their own listing service in order to privilege other members of their agency (or chain of agencies). Usually, as a way of offsetting this exclusivity, the agency will extend the opportunities to view their listings in the form of a subscription service.

Depending on the size and reputation of the agency, this could have a substantial impact on the level of exposure of a given listing. Usually, most agencies, will subscribe to other agency’s listing services in order to have access to listings to obtain potential properties to show to a client who is looking to buy. However, most individual sellers will generally not pay the subscription rates, thus limiting the market from individual buyers looking, either by themselves or in conjunction with their agent.

More commonly though in the new Internet market, most agencies try to list in as many places as possible, and usually enable traffic to their own websites. This generally manages to ensure as much proliferation of a listing as possible while maintaining exclusivity on the specific details of the actual listing.

What any potential seller or buyer should consider when using any multiple listing service is the desired proliferation level of the service. There are many listing services available, especially with the advancement of the Internet, but that also means that each are catering to a potentially smaller part of the marketplace.

In the case of marketing higher end property, one might consider limited exposure or even restricted exposure beneficial, for it limits the market to only serious offers. Nevertheless, before listing with any agent, and certainly before buying on their own, a seller will want to know where, and how the agent will list their property and whether their method of listing will be the right one for them.

Read Before Finding an Agency and Salesperson

Read Before Finding an Agency and Salesperson in Real Estate

When it comes to buying or selling a property, finding the right real estate agency and salesperson can be a daunting task. With so many options available, it’s essential to do your research before making a decision. In this article, we’ll provide you with a comprehensive guide to help you find the right agency and salesperson for your real estate needs.

Why Research is Key

Before starting your search, it’s crucial to understand why research is essential. A good agency and salesperson can make all the difference in your real estate transaction. They can:

Provide valuable insights and advice throughout the process
Help you navigate complex paperwork and negotiations
Introduce you to potential buyers or sellers
Ensure a smooth and stress-free transaction

Questions to Ask Before Choosing an Agency

Before selecting an agency, ask yourself the following questions:

1. What type of properties do they specialize in? Are they experts in residential, commercial, or industrial properties?

2. What is their experience in the local market? Have they worked in the area you’re interested in for a while?

3. What is their reputation? Check online reviews, testimonials, and ask for referrals from friends or family members.

4. Do they have a strong online presence? Are they active on social media and have a professional website?

5. What is their commission structure? Be aware of any fees or charges associated with their services.

Questions to Ask Before Choosing a Salesperson

Once you’ve narrowed down your agency options, it’s time to focus on the salesperson. Ask yourself:

1. What is their experience? How long have they been working in the industry?

2. What is their knowledge of the local market? Are they familiar with the area and its trends?

3. Do they have a good communication style? Are they responsive to your calls and emails?

4. What is their negotiation style? Are they aggressive or collaborative?

5. Do they have any certifications or designations? Are they accredited by industry organizations?

Additional Tips

In addition to asking questions, consider the following tips when selecting an agency and salesperson:

1. Check for accreditation: Look for agencies that are accredited by industry organizations such as the Real Estate Institute of Australia (REIA) or the Australian Institute of Professional Photography (AIPP).

2. Check their licenses: Ensure that both the agency and salesperson are licensed and registered with relevant authorities.

3. Get reference: Ask for references from previous clients or colleagues.

4. Check their insurance: Ensure that they have adequate insurance coverage for errors and omissions.

Conclusion

Finding the right real estate agency and salesperson requires research, patience, and due diligence. By asking the right questions, checking credentials, and considering additional tips, you can ensure a smooth and successful transaction. Remember, your agent is your partner throughout the process, so take the time to find one that aligns with your needs and goals.

In conclusion, finding an agency and salesperson before entering into a real estate transaction can be a crucial step towards achieving success. By being informed and prepared, you can navigate the complex world of real estate with confidence and achieve your goals.

Most real estate agents or realtors, unless they specialize in high end real estate, rarely operate on their own, and can generally be found to be part of a larger organization, or real estate agency. The simple reason for this is financial. Most agents generally only make a few sales or purchases per year, and receive only a few thousand dollars on each sale after expenditures (not to mention taxes).

While in a very good year this could provide enough to live on, rarely does it provide enough for an individual agent to form the infrastructure and resources necessary to sustain a business (such as an office, or an assistant) Therefore, most agents find it economically feasible to be part of a larger agency, where they share part of their commission goes with the agency for maintenance of office space and other services, not to mention, ideally, profit.

Most agencies nowadays are also generally part of a larger franchise, and there are cases where selecting a franchise can be almost as important as selecting an agent. Agencies often give an agent access to numerous extra resources, especially in terms of listing services, and can be especially useful if an individual is moving a great distance, which requires them to sell a property in one area and purchase a home or business in another.

In these instances, the agency can oversee dual agency, where an agent in one locale serves as a listing agent to sell the property, while another agent in another locale works as a buying agent for the same individual. (These agencies may be parts of the same agency franchise, or they may simply have other working relationships.)

Agents representing an agency are entitled to provide a potential client with what is called full disclosure. Full disclosure informs the client of the agency’s other relationships, what programs it can provide access to the client, and any and all partnerships that can effect their role in helping the client. Often this refers to partnerships with other agencies, either inside or outside of a franchise, and how and to whom one’s listing will be shown.

It is important to note that agents and agencies do not operate on the whims of their clients, and are allowed to set guidelines to the kinds of property they will sell to an agencies which they will not do business with. These are outlined in the initial disclosure agreement, and should absolutely be taken into consideration by the client before entering into an agreement with the agency.

Nearly all real estate agencies work on an exclusivity agreement with the client to either buy or sell the property, but does not necessarily have to be for both, since some agents work exclusively on listing and some work exclusively on buying, and as mentioned, location and accessibility can be an issue. Nevertheless, the agency and the agent gain the exclusive right to buy or sell the property as a means of protecting their investment.

An important element to note that even if an agent is part of an agency or franchise, generally their agreement will be with the agent, thus only the agent is the one given fiduciary negotiating power, and is bound to keep confidentiality with the client. Transfers of representation to another agent, just as most all decisions regarding real estate transaction, cannot be done without the client’s approval.

What Details Should Be On a Real Estate Listing?

Selling a possible home to a potential buyer involves a lot of details. Therefore, real estate agents have to make sure that they put all the essential details on the property listing to make the buyer informed and interested.

A property listing contains all the essential information about the house such as the property details, its features, and the current selling price. This information is crucial for the buyer to make informed decisions about the property. This article aims to provide insights on what details should be on a real estate listing and their importance.

General Property Information

The first detail that should be on a real estate listing is general property information. This information is meant to provide a brief summary of the house. It includes the name of the street and the address of the property.

Besides, it also includes the number of bedrooms and bathrooms in the house. If the house has a backyard or front porch, it’s worth mentioning in the general information.

Additionally, it’s vital to include the year when the house was built, the size of the lot, and the square footage of the house. This information is crucial in helping the buyer know what they are paying for, and it helps them determine if the property meets their needs.

Property Features

The next detail that should be on a real estate listing is a list of property features. Property features are elements in a house that make it unique and stand out from others. These features can include things like a swimming pool, a fireplace, or a balcony. It’s important to mention these features as they can be a deciding factor for many buyers.

Apart from the property features, it’s important to indicate the condition of the house. Indicating the condition can help potential buyers know if the house requires any repairs or renovations. This information may help buyers factor the repair costs when making their purchase decision.

Property Price

The property price is another essential detail that should be on a real estate listing. The listing should indicate the asking price and if there is any room for negotiation. Potential buyers can compare the price of the house with other similar properties in the area to determine if the price is reasonable or not.

It’s also important to indicate if there are any additional costs such as homeowner association fees or utility bills attached to the house. This information helps buyers understand the true cost of owning the property.

Real Estate Agent Contact Information

Another crucial detail that should be on a real estate listing is the agent’s contact information. The contact information should include the phone number, email, and website of the agent. This information makes it easy for potential buyers to reach out to the agent and enquire about the property. Additionally, real estate agents can use this information to track leads and follow up on potential buyers.

Furthermore, the real estate agents should include the times they are available for showings and any other relevant information that the buyer should have. This information helps the buyer schedule a visit at a convenient time.

Location and Neighborhood Information

The location and neighborhood of the house are also crucial details that should be on a real estate listing. This information helps potential buyers determine if the property is in a desirable location.

The listing should provide detailed information about the neighborhood, such as schools, nearby shopping centers, hospitals, and parks. It should also include information about the crime rate in the area, transportation options, and any other activities available in the area.

Furthermore, the listing should also have a map indicating the location of the property and the surrounding area. This map helps buyers get a feel for the area and determine if it’s the right place for them.

Recent Upgrades and Renovations

If the house has undergone any recent upgrades or renovations, it’s necessary to mention these details in the listing. This information helps potential buyers know that they are purchasing a property that is in good condition.

If the property has undergone major renovations such as a new roof or a new kitchen, this information can increase the property value. Therefore, it’s essential to include these details in the listing.

Property Photos and Videos

A picture is worth a thousand words. Therefore, it’s essential to include high-quality photos and videos of the property in the listing. The photos and videos should show all the essential features of the house, such as the interior, exterior, and the surrounding environment.

The photos and videos should be taken by a professional photographer and should be of good quality. These visuals help buyers get a feel of what the property looks like, and they can determine if they would like to visit the property in person.

Final Thoughts

In conclusion, a real estate listing should contain all the necessary details that a potential buyer needs to know. These details include general property information, property features, property price, real estate agent contact information, location and neighborhood information, recent upgrades and renovations, and property photos and videos.

Having these details on the property listing can make a significant difference in attracting potential buyers and increasing the chances of making a sale. Therefore, it’s essential to have a comprehensive and informative listing that provides all the necessary details about the property.

Price and Terms of Sale:

In most situations, the pricing of a property is determined by the input of three people or groups, the appraiser, the real estate agent (if their is one), and the seller.

The appraiser is usually commissioned before a property goes on the market to determine the fair market value of the property, which typically determines the baseline for the price that the property will be sold at.

Depending on the property, there are other forms of appraisal as well; in commercial property, there are special appraisals called income capitalization appraisals, which generally determine not only the worth of the property, but also its potential to generate income over an extended period of time.

Multiple Listing Service:

A multiple listing service does not necessarily mean the same as a multiple agency listing (which rarely ever happen in the real estate industry due to the potential for a conflict of interest and the encouragement of unethical, competitive behavior between multiple agents or agencies).

Multiple listing service is essentially as the name implies, a service that either allows listings from multiple sources or takes a listing from an owner (selling their property without representation) or an agency and places it under multiple listings.

While they have always been around in some form, most commonly for apartment rentals or sales, the number of potential multiple listing services have exploded in the last ten years with the rise in prominence of the Internet in the real estate landscape.

Agency and Salesperson:

Learn About Different Real Estate Listings

The Homebuyer’s Guide: Read Before Finding an Agency and Salesperson

Buying a home can be a daunting and overwhelming experience, especially for first-time buyers. With so many real estate agencies and salespeople to choose from, it’s easy to get lost in the sea of options. However, taking the time to research and prepare before ing an agency and salesperson can make all the difference in your homebuying journey.

In this article, we’ll explore the importance of doing your due diligence before finding an agency and salesperson. We’ll also provide valuable tips on what to look for and what to ask to ensure you find the right partner to help you navigate the complex process of buying a home.

Why Research Matters

Choosing the right real estate agency and salesperson can be a crucial decision. A good agent can make all the difference in your homebuying experience, providing valuable insights, negotiating skills, and expertise. On the other hand, a poorly chosen agent can lead to frustration, disappointment, and even financial losses.

By doing your research, you’ll be better equipped to make an informed decision about which agency and salesperson to work with. Here are some reasons why research is essential:

Knowledge and Expertise: A good agent has extensive knowledge of the local market, including current trends, prices, and regulations. They’ll be able to provide you with valuable insights and guidance throughout the process.

Communication: Clear communication is essential in any business transaction. A good agent will keep you informed every step of the way, ensuring that you’re always up-to-date on the progress of your sale or purchase.

Network and Connections: A well-established agent has a network of contacts and connections within the industry, which can be invaluable in securing your dream home or selling your current property.
Reputation: A reputable agent has a proven track record of success, with positive reviews and testimonials from previous clients.

What to Look for in an Agency

When researching an agency, consider the following factors:

Experience: Look for agencies with a strong track record of success, with experienced agents who have worked in the local market.
Reputation: Check online reviews, testimonials, and ratings from previous clients to get a sense of the agency’s reputation.

Services: Consider what services the agency offers, such as property management, commercial sales, or mortgage broking.
Awards and Recognition: Look for agencies that have received awards or recognition within the industry.

What to Ask a Salesperson

When interviewing potential salespeople, ask the following questions:

What’s your experience in the local market?
What’s your approach to finding the right property for my needs?
How will you keep me informed throughout the process?
Can you provide references or testimonials from previous clients?
What’s your commission structure?

Conclusion

Finding the right real estate agency and salesperson can be a daunting task, but by doing your research and asking the right questions, you’ll be well-equipped to make an informed decision.

Remember to prioritize knowledge, expertise, communication, network connections, and reputation when choosing an agency and salesperson. By taking the time to research and prepare, you’ll be able to navigate the complex process of buying a home with confidence and ease.

There are numerous forms of real estate listings available to an individual selling their property, all of which entail differing degrees of obligation and compensation on the part of the seller and any relevant agents or brokers. Method of listing is often the most important tactic used in selling real estate, as it is equivalent to advertising a product, with the product in this case, being the property.

The two key forms of listing are always entirely dependent on the manner in which one decides to sell their property, and is usually directly determinate to what part the seller desires for the real estate agent to play in the process. The two major forms of listing, with rare variation, are the open listing and the exclusive agency listing.

Open listings generally occur in a “for sale by owner” situation (FSBO), where an individual selling their property has decided to forgo the inclusion of a real estate agent, and opts instead It is entirely legal for an individual to act as an estate agent for their own real estate (the law in most states mandates a realtor’s license only when someone intends to represent another seller’s property.)

While these situations are comparatively rare, they can be beneficial to individuals who want to sell their home and retain as much of the proceeds as possible-since by foregoing the use of a real estate agent the seller can save what is typically a five percent commission on the sale.

However, this means that the seller is ultimately responsible for all aspects of the sale, including negotiation of the sale price, performing background checks on potential buyers, and determining whether they have the means to actually purchase the property, and then seeing to it that all forms of transaction details, such as the appraisal and the inspection are completed.

Also, it is often likely that the seller, especially in negotiating or attempting to close a sale, will often still have to deal with an agent on the buyer’s side. Also, unless the buyer is also self-represented, the seller will still have to part with at least a partial commission to the buyer’s agent, though it would in theory, be only half of what it would be if the individual was selling through their own agent.

The primary tool of the FSBO Open listings are also generally disliked by full service real estate agencies, and there have been anecdotal instances where agents will refuse to show open listing homes to their clients, for a variety of reasons, including professional loyalty, and the perception that an “amateur” seller will be difficult to agree with.

Exclusive agency listings occur when a seller opts to use a real estate agent to sell their property.

Multiple agency listings almost never happen, and are typically forbidden under real estate law as it restricts the potential for unethical behavior on agents placed in direct competition with one another.

Though an exclusive agency listing provides an agent/agency with exclusive right to sell, the agreements are usually not difficult to break if the seller feels will be better represented elsewhere (or instead prefers to go with an open listing).

Usually real estate agents simply want to be in a mutually beneficial relationship, often for the very practical reason of protecting their reputation and preventing any charges of ethical misconduct on their part.

Deciding which listing is the correct one is important decision for a seller. If the seller wants to make sure that the sale is executed exactly to their needs and specifications, wants to keep more of the overall proceeds of a sale, and does not mind the extra work and effort, that they may find “for sale by owner” and open listings right for them. In either case, the final decision in nearly all situations, remains with the seller. If you need legal advice and assistance, contact real estate lawyers.

Understanding the Price and Terms of Sale

Understanding The Price And Terms Of Sale: A Buyer’s Guide

When making a purchase, whether it’s a big-ticket item or a small everyday product, it’s essential to understand the price and terms of sale. A simple misunderstanding can lead to costly mistakes and buyer’s remorse. In this article, we’ll break down the key components of a sales agreement, helping you make informed decisions and avoid common pitfalls.

Price: The Bottom Line

The price is the most obvious aspect of a sales agreement. It’s the amount you pay for the product or service. However, there are several factors to consider when evaluating the price:

List Price: The manufacturer’s suggested retail price, often printed on the product or marketing materials.
Discount: A reduction in the list price, which can be a percentage off or a fixed amount.
Promotion: A temporary price reduction or special offer, often tied to a specific event or holiday.
Taxes: Sales taxes, VAT (Value-Added Tax), or other government levies added to the final price.

Terms Of Sale: The Fine Print

The terms of sale are the conditions under which you agree to purchase the product or service. These conditions can significantly impact your purchase experience and financial obligations:

Payment Terms: The method of payment, including cash, credit card, check, or financing options.
Shipping and Handling: The cost of transporting the product, including delivery times and estimated arrival dates.
Return Policy: The process for returning or exchanging products, including any restocking fees or time limits.
Warranty: The manufacturer’s guarantee or promise to repair or replace defective products.

Understanding The Fine Print

To avoid misunderstandings and ensure a smooth transaction:

Read Carefully: Take your time to read the terms of sale carefully. Don’t rush through it; instead, take notes and ask questions if needed.
Ask Questions: Clarify any doubts or concerns you may have. Don’t assume anything; get answers from the sales representative or customer service.
Check for Hidden Fees: Some prices may include hidden fees, such as shipping costs or taxes. Make sure you understand what’s included in the price.
Research: Research the product and seller before making a purchase. Check online reviews, ratings, and complaint history to ensure you’re dealing with a reputable company.

Case Study: A Real-Life Example

Imagine you’re buying a new laptop online. You see an attractive price of $800, but upon closer inspection, you notice that:

The price is listed as $1,000, with a 20% discount applied.
There’s a $50 shipping fee.
The return policy is 14 days from delivery.
The warranty is 12 months.

By understanding the price and terms of sale, you can:

Recognize that the actual price is $1,000 (not $800).
Factor in the additional $50 shipping fee.
Plan your return window accordingly (14 days).
Understand the duration of the warranty (12 months).

Conclusion

Purchasing products or services requires careful consideration of both the price and terms of sale. By understanding these components, you can make informed decisions and avoid costly mistakes. Remember to read carefully, ask questions, research the seller, and check for hidden fees. With these tips in mind, you’ll be well-equipped to navigate complex sales agreements and make smart purchasing decisions.

In most situations, the pricing of a property is determined by the input of three people or groups:the appraiser, the real estate agent (if their is one), and the seller. The appraiser is usually commissioned before a property goes on the market to determine the fair market value of the property. Such a value, typically determines the baseline for the price that the property will be sold at.

The appraisal and market value of the property provides data that is then used by the seller, usually under the advice of an agent, to determine how to price the property. In some instances, an appraisal can indicate that there are aspects of the property (such a building condition or repair requirements) that are effecting the value of the property, at which point in can be the decision of the seller to decide to forgo extra expense to restore or improve the asset. If they do make improvements, they may have the property reappraised in hopes of obtaining a better figure.

Usually a seller and their agent will decide to sell a property well above its fair market value, in order to obtain the maximum profit possible, and allow for some leeway if the asking price needs to be adjusted (many homes rarely go for their asking price, and are nearly always sell for less). Most agents recommend to sellers they represent that they generally have a “real” price and an asking price, with the real price being the one they will accept and the asking price (always much higher), being the one they would desire.

The asking price is always negotiable, but the real price is usually the one that should not be undermined. Generally speaking, both prices are above market value, as market value is viewed as the point where one can sell a property at a profit. The perception is that selling below market value is selling at a loss.

The property price is generally negotiated by the individuals representing the buyer or seller (either agents for each party or the buyer or seller themselves). Once a price is agreed, the two parties must still negotiate the terms of sale. While there are particularities that can vary from agreement to agreement, the general points that are included with the terms of sale for any property do not waver.

The seller forgoes all future rights to and use of the property, promises that the property will be in the agreed upon condition at the time of transfer, and guarantees that individual selling the property has the full right to do so. There are other particulars that can be worked into terms of sale, especially when a buyer and seller agree to improvements in the property that must be completed before a property can be transferred.

The final terms of sale always take the form of a legally binding agreement, generally processed by attorneys, with the property due to be transferred on pre-agreed closing date. At that time, all aspects of the sale are to be completed, and all funds used in the purchase of the property are to transferred to the seller, at which point the deed and title of the property are transferred to the new owner.

How An Agent Makes Money from Real Estate Commission

A seller is obligated to provide a commission to any individual agent involved in the transaction of their property-whether they are the agent assigned to selling the property, or the agent representing the buyer of the property. When working under the assumption that most commissions are generally between 3-5 percent of the purchase price of the property, a seller should always work consider that they could part with up to 10 percent of the proceeds of their sale in commission to agents (provided both parties are using agents).

While ten percent of property’s price can appear to be an exorbitant amount (if one works under the assumption that most properties sell for hundreds of thousands of dollars), the fact is that a commission usually serves as an agent’s return on what has always been a somewhat risky proposition.

When an agent or agency agrees to represent a seller and their property, the only thing they are guaranteed is the exclusive right to sell the property. They then undertake, at their own expense, the advertising and marketing of the property-not to mention expend the time on the process without any guarantee of compensation until the property is sold. This means that the agent or agency undertakes the agreement with the hope that the property will sell, because if it does not, and the seller ultimately opts to got with another agent, the original agent foregos both time and money.

Most individual agents rarely take on more than a few properties at a time; the process of selling is proportional to the demand of the property in question. The typical process is usually tedious, for an agent, often escorts their clients, to various properties as they make their decision on which piece of real estate they would like to purchase. Therefore, an agency commission on either end, is usually the return on months, even years of an agent’s time, effort, and resources.

There is no true industry standard regarding commissions; they are generally considered negotiable. However, as stated, an exclusive right to sell always represents a risk on the part of the agent or agency, and therefore if one does try to negotiate a commission down, one must be sure that the property being sold or being purchased is ultimately worth the agent’s consideration.

Therefore, an agent or agency will usually only entertain a decreased commission if the potential return on a property can be great (in other words, if it is going for a high enough price that even a reduced commission can yield a substantial return. If the demand is strong enough that they can turn it over quickly (thus they need to spend a minimum of time or resources to its sale), or in the case of representing a buyer, they are of the understanding that the buyer would like to spend enough that there can again be a potentially higher return.

Unless the property being sold or purchased fits these or other very specialized circumstances, it is rarely advised by industry professionals to try to negotiate a commission down.