Buyer Agents, Listing Agents & Commissions. Oh my!
Real Estate transactions can be intimidating and confusing. There are a lot of terms and after a while, everything sounds the same.
All agents are REALTORS®, right?
Actually, all Licensed Real Estate Agents are not by default REALTORS®. The word Realtor is a trademark referring to someone who’s an active member of the National Association of Realtors (NAR). In the United States, a real estate agent is licensed to help consumers buy and sell commercial or residential property.
For a more comprehensive understanding of the different types of real estate agents in North Carolina, check out this Working With Real Estate Agents guide.
For now, here are the basics:
BUYER’S AGENT (SELLING AGENT)
A real estate agent who represents only the buyer of a property in a real estate transaction. This type of agent agrees to exclusively represent the best interest of the buyer, under a formal contract. In most cases, there are no upfront costs and the commission earned by a buyer’s agent is paid at or after closing and deducted from the selling side of the transaction. However, some agents can charge an upfront fee (which can be deducted or provided in the form of a rebate at closing) to cover the out of pocket costs incurred to perform the search like administrative expenses, gas, meals etc.
LISTING AGENT (SELLER’S AGENT)
A listing agent is a real estate broker or agent who represents a homeowner or seller in the sale of a home. A listing agent’s duty is to look out for the seller and obtain the best possible terms for the sale. A listing agent works together with a buyer/selling agent to come to sale terms that are agreeable to both parties. Listing agents may charge an upfront fee to cover the cost to help prepare your home for sale. These costs may be deducted or given back in the form of a rebate at settlement. A listing agent may also provide additional services like staging, painting, cleaning, etc. for a fee or offer it complimentary depending on the level of service agreement or specific needs of the client.
Be careful with this one. Dual agency occurs when a real estate agent works with both the buyer and the seller, combining both roles into one. It may be difficult for a dual agent to advance the interests of both the buyer and the seller fairly and equally.
How much are Real Estate Agent commission rates?
In North Carolina, most licensed real estate agents are independent contractors and are compensated 100% by commission.
Which means, everything they pay upfront from marketing costs to continuing education, state licensing and fuel, to cookies and bottled water at an open house comes directly out of their pockets, ahead of any contracts being signed.
We often hear “My agent is helping me buy and sell my home. I shouldn’t have to pay commission twice.” Well, that depends on the type of service you contracted for and what you have worked out with your Agent. Many agencies offer package deals with rebates and consolidated fee’s. Just be sure to read the fine print and shop around before you sign a contract.
In most transactions, agents do not get paid until after the settlement date (closing). On average, it takes anywhere from 30 to 90 days from the start or after a transaction for agents to receive any compensation at all.
Further, most agents work for a larger firm or teams within a firm that take a percentage directly off the top before they receive the portion they earned.
An important aspect to selling your home is how much you are willing to offer in total commission with the understanding that the firm and agent that represent you will need to share at least 50% of that total with the agent that brings you a qualified buyer to purchase your home. Many sellers are frustrated by this and there is a popular debate as to whether or not that is fair.
We suggest an open conversation with your agent before you enter into an agreement to outline expectations (from all sides).
At the end of the day, your goal is to sell your home for as much as you can and most buyers want to purchase a home for as little as possible. Each agent plays a role in negotiating the best possible outcome for each party to the transaction and earns the right to receive compensation for the time, skill, and care they put into making that happen.
We would love the opportunity to tell you more about what makes us stand out from the rest. Our team of agents and staff are committed to being the best in the industry. I’m confident that we’ll be able to meet your goals better and faster than any other agent in the area.
All the best, Colette