Real estate agent fees and commissions are some of the most controversial points when buying or selling real estate. As these fees are deducted from the final sale price of the property, a lot of people see it as money lost from the sale. They’re also often considered as unnecessary costs, especially since a large amount is involved. Some look at these professional fees as potential savings, which makes them even more hesitant to pay for it.
It should be noted, however, that these fees are the only ways real estate agents make money. They don’t receive a salary so they rely on commissions to make a living. Granted, the rates they charge seem big. But considering the kind of work they do to help their clients sell or buy homes, it can be easily justified.
No matter where you stand in the transaction, you might still be wondering whether paying for their services should be deemed an extra or a necessary expense. The points below should help you decide for yourself.
Hiring a Real Estate Agent
Both buyers and sellers are always recommended to hire a real estate agent to make the transaction simpler. These professionals will handle the technical aspects of the process so you don’t have to.
For example, buyer’s agents can help you get pre-approved, narrow down your options, negotiate with the seller, pick a reliable home inspector, and monitor the closing transaction. Many first-time buyers find it challenging to do this all alone; so it’s important get a professional buyer to help.
Seller’s agents, on the other hand, will help you set a good price for your property, add some appeal to your home, advertise the sale, and negotiate on your behalf. They can make the whole process more manageable for you, allowing you to do other things while your house is in the market.
By hiring these professionals, they can help you buy or sell a house without a hitch. Their expertise can come in handy for a lot of regular folks who are not familiar with the process.
Some might think that they can go through the process on their own but without the know-how to handle the steps and transactions, they can end up spending more time and money than what’s necessary. These professionals’ help prevent you from making such costly mistakes, so working with them is highly recommended.
What and How Much are the Real Estate Agent Fees that You Have to Pay For?
In general, the only real estate agents fees that you have to pay for is their commission. Sellers are the ones who usually shoulder the amount as it’s taken out from the total sale amount. This means that you don’t have to shell out cash for their fees. Their commissions also rely solely on a successful sale, so you only need to pay when the sale is finalized.
There are no standards, sealing amounts, or other restrictions when it comes to the commission rates that agents and brokers can charge their clients. This is allowed by the Canadian Competition Act to create an open and free market.
Real estate agents typically charge about 5% of the sale amount for their services. It’s not a fixed amount, however, so it’s very likely to find agents that charge lower or higher rates.
What are Your Other Options?
If you want to make some savings from buying or selling a house, here are a few techniques that you can try:
1. Choose an agent carefully.
Some agents are well worth their commission rates while others aren’t. This is why it’s very important to choose the right agent that can really help you out.
2. Learn how to negotiate.
Commission rates are not set in stone so there’s a good chance that you can still negotiate this with your agent. A lot of them are willing to compromise, especially if it can ensure that the transaction will push through.
3. Try the For Sale By Owner (FSBO) route.
Because sellers are the ones who will need to pay for a real estate agent’s assistance, some of them choose to sell their properties on their own. “For sale by owners” is also called FSBOs, and a good number of homes for sale in Winnipeg fall into this category.
This method can help you avoid shelling out for agent fees but you’ll also need to do everything to facilitate your home’s sale. Experienced sellers might not have a problem with this method but first-timers should prepare themselves for the challenges ahead.
4. Opt for commission-free services.
Some real estate brokerages also offer fixed-rate, commission-free services. So instead of paying for a commission, you just need to pay a specific amount and you’ll still get the assistance you need from a real estate professional.