When You Are Selling Your North Shore Home in
Winnetka, Wilmette, Kenilworth, Glencoe, and Northfield
Many sellers (and buyers for that matter) do not understand how the real estate commission they pay to their broker really works. They know they sat down with an agent and negotiated a commission fee for selling their home but beyond that, it's fuzzy. When buyers and sellers are at the closing table, the commission number is often misinterpreted.
It is important to know that commissions are negotiated, not set by any person or entity. There is a range and it varies depending on the brokerage, the agent's budget and fees, and what part of the country you live in. Some agents in certain areas get as much as 7%, but luxury properties may be lower with a sliding scale in place. It all depends on many factors. There are no "set" fees or "usual" fees because that would be a violation of anti-trust laws.
But the listing agent doesn't keep that entire commission. In fact, commission is paid at closing to the agent's brokerage (in my case, that would be Baird & Warner). The listing agent, when they list the property for sale in the Multiple Listing Service, offers a "cooperating commission" which is the portion that is paid to the real estate brokerage representing the buyers of your home.
If you have negotiated a 5% commission on the sale of your home, the listing brokerage determines what the buying agent will receive, but it is often one-half of that or, say 2.5%. But it can be less and it can be more.
Steve Harney, a real estate consultant, wrote that offering the buyer's agent more might result in a faster sale if you live in a neighborhood where all homes are somewhat similar and you are trying to make your house stand out. This strategy would not necessarily work in the North Shore towns of Winnetka, Wilmette, Kenilworth or Glencoe where homes are not cookie cutter. Doing this also implies a buyer's agent is more concerned about the commission than what is best for their client.
Now the next part. If you are paying a 5.5% commission for example, your chosen brokerage might keep 3%, and pay 2.5% to the "cooperating" buyer's brokerage. That 3% that goes to the brokerage is now divided between them and your listing agent. Again, that is a negotiated split between agents and their companies, but it can sometimes be just a 50/50 split for a newer agent. In other words, your listing agent, in this scenario, would receive 25% of the negotiated commission.
In the end, it is always much less than it looks on the closing statement where the lump sum is reported. Keep in mind that this commission amount is divided unevenly four ways.
If you are thinking of listing your home in Winnetka, Wilmette, Kenilworth, Glencoe, or Northfield, please give me a call. I'll explain all these details and answer any questions you have about the home selling process.
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Margaret Goss is a full-time real estate broker since 1998 working in the North Shore communities of Winnetka, Wilmette, Kenilworth, Glencoe, Northfield, Glenview, and Evanston.
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