By Kevin Chiu
Anyone selling a home these days is some what lucky unless it’s a discounted foreclosure, but it often takes a lot more than luck for real estate agents to sell homes. That’s why commissions on selling homes are moving back up, and may even rise further as more consumers realize the value of being represented by agents.
Discount commissions ruled the market when home sales were booming and anyone could sign their name on a mortgage. Some homes sold for as little as a 2% commission. But today when things are the opposite agents are working hard for most of their commissions. Despite the foreclosure crisis and falling home prices, sales commissions are rising.
Most homes have been selling at 5% commissions listed by agents with a national average of 5.4%, up from 5.04% in 2005, according to Real Trends, a publishing company that provides data for agents and brokers. Commissions are negotiable, but the standard used to be 6%, which may soon be the case again.
In most states, the seller typically pays the fee, but as agents have been forced out of the business due to the real estate bust and collapsing economy many consumers have grown with appreciation for the work agents do, and don’t mind paying higher commission fees.
Agents also work harder these days and spend more time marketing the homes they list and on each transaction. They also work to find financing options for buyers a lot more in this tight lending environment. After all, if a transaction doesn’t close, the agent doesn’t get paid working only on commission.
The return to so-called full price commissions has also driven some discount firms out of the real estate business, but many of the big firms are still returning commissions to some home buyers.
A full 6% commission may seem like a lot to pay on a $300,000 home, but if it sells for the most money that a homeowner is able to get it may seem like a bargain at the closing table.