In most of life’s transactions, you’re firmly in the driver’s seat – whether it’s selling furniture online or selling a car through an online marketplace. You market the item, restore it to its former glory and take spiffy photos. And you reap 100% of the profits from its sale.
But then there’s the big-ticket sale: real estate. While a small minority of sellers opt to navigate the complex waters alone, most people engage the services of a listing agent. They do so for various reasons, including convenience, legitimacy and speed of sale. In return, sellers sign a listing agreement.
What is a listing agreement? What are listing agent commission fees, and are they negotiable? And what services can you expect to see outlined in the agreement? In the spirit of seller empowerment, let’s answer those questions. Here’s what you need to know before signing on the dotted line.
What Is a Listing Agreement?
Essentially, a listing agreement is a formal, legally binding document stating that you will work with a brokerage to sell your property for a specified length of time. We say essentially because subtle variations exist; for instance, an “open listing agreement” may engage several agents, while the seller also attempts to sell the home.
Think of a listing agreement as an employment contract. In it, you define the fees paid upon completion of the sale – the agreed upon commission – and the percentage (if any) going to the buyer’s agent. You also set a start and end date in the agreement. Finally, you outline the duties an agent must perform.
How Much Are Listing Agent Commission Fees?
Understandably, a frustrating component of listing agreements is the commission fee. After upkeeping a property, paying monthly mortgage payments and property taxes, it seems unfair to part with a sizable percentage of its value. Think of commission fees as an investment in a quick, confidently-priced, secure sale.
That said, it’s impossible to give a set figure for commission rates; they vary from location to location. Some markets enjoy commission rates as low as 3%, others as high as 7%. The average is somewhere in the middle: between 5% and 6%.
Is There Wiggle Room for Negotiation?
Absolutely there is. Not enough sellers know that you can negotiate commission. Yet, even negotiating a single percentage point from a commission translates to enormous savings. On a $500,000 home, you stand to save $5,000 simply by trying.
One way to spark negotiations is by using the online real estate marketplace Nobul, helmed by real estate expert Regan McGee. On Nobul, you can choose several relevant listing agents in your area, and have them compete for your business by offering lower commissions and/or a more attractive list of services. Think of it like an open interview process.
What Services and Duties Should You Expect?
The listing agreement should detail key duties the agent executes to sell your home, including (but not limited to) a detailed marketing plan, staging commitments, open house arrangements, etc. It’s worthwhile noting that you can negotiate a lower commission rate by removing agent duties (and assuming them yourself), but there’s a good chance you can get a reduced commission while leaving duties intact.
If you’re selling your home, you want to find the absolute best listing agent at the best price. That seems like a tall order, but with foreknowledge and persistence, you can craft the perfect agreement.
Photo Credit: drazenzigic Via Freepik