Real estate commissions are an important part of the cost of selling a home. They are how real estate professionals get paid. Without them, agents wouldn’t be able to market your home in order to sell it. Interestingly, many people don’t think too much about commissions because they come out of the equity of the home when it is sold.
Chris Mochrie, Broker of Record at M1 Real Estate Brokerage, sat down with us to explain how these commissions work.
Commissions Are More Flexible Than You Think
Real estate commissions are generally charged as a percentage of the selling price of a home which means they fluctuate along with the market. “Property prices have tripled in recent years and that means real estate commissions have also tripled,” says Chris. “People are paying a lot of money to sell even an average home.”
What most people don’t realize is that real estate commissions are often negotiable. There is not a mandated rate that must be charged for the service. “Most agents are charging between 2% and 2.5% to sell a home but they are usually willing to negotiate if asked,” explains Chris.
Chris simplifies the process by offering a flat rate sellers commission of only 1%. He says, “I had a hard time charging a family $20,000 to sell their home. That’s a lot of money for most people. Charging a 1% sellers commission is a win-win for me because I get a lot more business and people get a much better deal.”
Even though he charges a lot less than other real estate agents, Chris is still able to offer an incredible suite of marketing services to attract the perfect buyer. “We have a staging professional on staff and own our own staging furniture. We also work with professional photographers for great pictures and have 3D tours and drone work done on every property,” he explains. “We post each listing to the local real estate board as well as the Toronto real estate board.”
Sellers Pay the Buyer’s Agent
On top of paying the real estate agent who will be selling their home, it is suggested that the seller also offers the buyer’s agent a fair commission.
“I recommend that sellers offer 2% to the buyer’s agent event though it is entirely up to the seller how much they want to pay,” explains Chris. “The buyer’s agents do a lot of work, too. They put a lot of miles on their vehicles and they write up a lot of offers. Sellers will also get more action on their property if they offer a good buyer’s agent commission.”
Questions to Ask a Potential Real Estate Agent
In the end, commissions paid to real estate agents when a house is sold can add up. It is important for sellers to really consider who they trust with this important job. Chris suggested asking a few key questions when interviewing potential real estate agents.
“Always ask what kinds of marketing will be done to sell your house. Will the agent be using a professional photographer, will they have a 3D plan, or have any drone work done? Where will the listing appear? Will they be posting it to a variety of social media platforms and other websites as well as advertising in the local paper and in Toronto?” says Chris. “Real estate commissions are a pretty big expense and you should be getting your money’s worth.”
For more information about real estate commissions or to learn more about Chris’ brokerage, visit M1 Real Estate Brokerage online or call/text (519) 803-5420.