When a Realtor successfully markets a home for sale, he or she earns a percentage commission for their work. Homeowners are often not aware of how much money their Realtor spends upfront in the marketing of their home. Since Realtors are independent contractors, they are solely responsible for the costs of marketing and advertising homes for sale.
One very important expense of Realtors is their membership in the local Multiple Listing Service (MLS). When your Realtor adds your home to this database, it is instantly visible to qualified and motivated buyers who are also working with Realtors. MLS listings are also available on many publicly-accessible websites, such as Realtor.com, Trulia.com, Google and Yahoo.
Since online exposure of homes for sale is becoming virtually essential, most Realtors will also place your listing on multiple websites. Some of these websites offer enhanced services which make your home stand out from the crowd. The expense of these upgrades are all paid by your Realtor.
There are also several direct expenses for the property when it is listed for sale. For example, your Realtor provides yard signs and customized flyers for each property. For certain properties, your Realtor may also choose to hire a professional photographer. Virtual tours are an added expense that are becoming more and more common.
Realtors often pay to have a home staged by a professional designer. This direct expense can often result in a higher offer for the property. If your Realtor hosts an Open House, he or she provides advertising for the event, as well as refreshments or catering.
Nearly all home marketing tools have an associated expense. These may be print ads, online advertising, newsletters, direct mail postcards and postage, and even the labor costs that go into preparing all these materials and online postings.
So, the next time you close on a home, take a moment to think about the expense and effort that went into finding the buyer that is sitting across the table from you. Even if you simply look at the direct expenses, aside from the professional services and expertise of your Realtor, this knowledge should make it much easier for you to understand and feel good about the commission you are offering to your Realtor!