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The Evolution of Real Estate Fees
Realtors today are often faced with this line of questioning from sellers: "Will you accept a lower commission?" It's not that the seller asking wants to undercut their realtor. The seller is asking because realtor commissions are hard to understand. In order to get a good sense of how the commission system works, let's start with the basics.
The industry norm for realtor sales commissions is 5-6% of a property sales price. With a commission-based system, the person being compensated for his or her services takes a high risk in exchange for a "high" reward. For realtors, the risk is not making a sale and earning nothing, no matter how much time, money, or effort a realtor puts into the transaction. The seller is therefore paying a "high" reward in exchange for the high risk the realtor takes on for a guaranteed outcome. The assurance to the sellers is that if the desired outcome is not received, the seller pays nothing.
As most Geo friends know by now, in a former life I was a practicing attorney. As a lawyer I was paid, depending on the case or client, in three different ways (well, 4 different ways, if you include the ... more
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