If you are a home owner and it’s time to sell your home, getting the best price possible is important. Many people will tell you the first place you can look to save money is by negotiating commission rates with your real estate agent, but how much should you push?

Though the commission percentage can seem like a lot upfront, there is a ton behind the scenes you may not know. Keep reading to find out why different commission rates exist and what that percentage pays for. It will probably surprise you.

How Much is a Realtor Commission Rate?

The average commission rate of a real estate agent in the US is between five and six percent. While there is no actual standard commission rate, as they can vary from agent to agent, the five to six percent range is likely what you’ll see.

To figure out what the agent will make, you can use a commission rate calculator and determine the net price of selling or buying a home. What that agent actually takes home from that five to six percent is a different story.

Where Does That Commission Rate Go?

Most jobs will pay an employee an hourly wage, but that is not how real estate agents get paid. Commission rates are where they make their money. All of that money does not go into their pockets, though; there are fees that you as the buyer may not realize.

Real estate agents pay for many things out of pocket that you may not realize, and they also do not get the entire commission to themselves. It’s split between the buyer’s agent and the seller’s agent. Brokers also need to be paid, as do photographers, videographers, websites that hold listings, and they need to pay membership fees to their real estate institutions. In addition to commission rates there are in some cases a transaction fee(s) which covers the cost of the transactional and legal costs associated with processing a contract or the marketing fees with the agreement.

The average home sale can also take anywhere from fifty-five to seventy days from the initial sale to close, and real estate agents are working that whole time. When all the costs are broken down, they may only be making about $12.94 an hour.

Though commission may seem like a lot upfront, having a professional backing you is worth the cost.

The Hidden Costs of FSBO

If you are thinking about avoiding commission rates by going FSBO (For Sale By Owner), you should reconsider. Not only is selling a home a full-time job, but there is a considerable risk and cost that goes into selling a home yourself.

A real estate agent has a vast network of people they can speak to about the sale of your house. They know other agents with people looking to buy and can determine qualified buyers from unqualified buyers. They can also keep emotion out of the equation and speak on your behalf to ensure you get the best price possible.

Though it may seem like you’d be cutting a cost out by going FSBO, you may also not be getting the right price, or you may open yourself up to legal risks you didn’t consider. Hiring a real estate agent who knows what they’re doing can save you headaches down the line.

Commission Rates Are Worth It

Commission rates may seem high when a seller looks at them initially, but when you consider the hours worked and the commission split between all parties, your realtor isn’t getting as much of that money as you think. If you want your house to get the best prices possible quickly, hire a professional who knows what they’re doing.

Are you looking to buy or want to sell your home? St. Louis real and St. Charles real estate areas are booming right now! It’s a seller’s market! Contact our team today and find what you’re looking for!