The Insider’s Guide to Real Estate / Selling Options / What to Expect From Traditional Brokers

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If you're not concerned about getting the most money

Traditional brokers may have something to offer

The benefits that traditional agents bring to the table are local knowledge, access to the multiple listing service, and super responsive customer service. The downside to working with most agents is the impact on your net proceeds due to the amount of money they require to be involved in your home sale.

Most people work with a traditional real estate agent because it’s easy and they know that person already. We all know of an agent through one or two degrees of separation. And if you own a house, an agent definitely knows you, even if you have not met them yet. Because traditional commissions are so high, agents will spend much of their time on customer acquisition, which means, spending a lot of time to find you and then tracking your needs over time until you transact.

Sellers who work with traditional agents end up paying 5 to 6 percent of the total home sale price in commissions, paid at closing out of the net proceeds. Commissions will be 3% to the buyer’s agent and 2-3% to the listing agent with little variation. Most agents are not allowed to discount their commission by their brokers, but if they can, the discounts are only on the listing side, and rarely on the buy side.

Sometimes an agent will take down both sides of the commission by representing both the buyer and seller which is a practice known as dual-agency. Dual-agency can be more likely when underpricing is employed as a listing strategy, often to try and get multiple offers. However, multiple offers are never good for a seller, and agents don’t go for them when they sell their own homes. So make sure you get a handle on pricing yourself before wading into any discussions about selling one of your most significant assets. Keep in mind that in addition to net proceeds losses of 5 to 6% due to commissions, that underpricing can cost sellers as much as 6 to 8% of their net proceeds as well.

In conclusion, a seller who pays full commissions and under-prices the home could burn up a double digit percentage of their home value in a sale where they didn’t pay attention. And if you are going to work with a traditional agent work hard to avoid underpricing by looking at the sold data yourself.


Improve on the net proceeds of a traditional broker

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