What Are Real Estate Commissions?

Many people don’t understand the concept of real estate commissions and how they are determined. It is essential to understand the basics of real estate commissions if you are considering buying or selling a home. Here is a closer look at some of the basics of real estate commissions, who sets them, and how to avoid them. 

What Are Real Estate Commissions? 

Real estate commissions are fees paid to agents when they facilitate a transaction between buyers and sellers. Typically, these fees range from 3-7% of the total purchase price of the home. The commission is paid by the seller at closing, however, in some cases, it may be split between both parties. 

Who Sets Commissions? 

The amount that is charged for the commission is set by individual states or local jurisdictions. These amounts can vary greatly depending on where you live and who you choose to represent you during the transaction process. The part that is charged for commission also depends on the quality of services provided by your agent or broker. 

How to Avoid Commissions 

It is possible to avoid paying commissions if you decide not to use a real estate agent or broker when buying or selling a home. You can do this by negotiating with potential buyers directly without involving any third-party representatives in the transaction process. The most common and easiest way to do this is to sell your home to a cash home-buying company. Additionally, there are many online resources available where you can search for homes without needing to pay any commissions or fees for using their services. Finally, if you decide to use a realtor, it may be possible to negotiate lower rates for their services so that you save money on commission fees.  

Real estate commissions can be complicated but understanding them does not have to be difficult! It is essential to understand what constitutes a real estate commission and who sets them before entering into any transaction involving buying or selling property. Additionally, it is possible to avoid paying these fees altogether if you decide not to use an agent or broker during the process or negotiate lower rates with one that you do hire/work with directly. Ultimately, understanding what constitutes a real estate commission will help ensure that you make informed decisions when buying and selling property!

Want to know the nitty-gritty of a cash home sale to avoid commissions on your home sale? Learn more about how you can do just that at Bob Homebuyer!