Real Estate Commissions can be confusing and costly and most Vancouver home sellers do not realize how much commission they will have to pay when their home sells.
How much is real estate commission?
When using the services of a traditional Realtor®, a real estate commission in BC is typically 7% of the first $100,000 and 3+% on the balance, so on a $500,000 home, an amount in the ballpark of $20,000 would be expected at the very least, and don’t forget to add on the tax, too! Without tax, this is already costing tens of thousands of dollars, and using a traditional Realtor®, this amount would sadly actually be a decent deal.
This large amount is typically taken into consideration by the home seller, so because of the extra amount they will have to pay, they’ll definitely be looking to get more money for the sale of their home, increasing the asking price of the home, and thus, the cost for the buyer. Increasing the price could also price the home too high for many buyers, which could cost a sale.
Discount Realtors® allow for more flexibility on pricing than traditional Realtor®, because there is so much less money going to the Realtor® that it permits more wiggle room on the price.
By using the flat fee method, the home seller knows exactly how much they will be paying their Realtor® with no surprises, or alternately, the seller can choose a package that allows them to sell their home in the For Sale By Owner method for a lower price, but with the added bonus of being able to list their home for sale on MLS®.
Using the a discount or flat fee Realtor®, there have been many cases of buyers and sellers being able to come to an attractive deal for both parties without having to waste tens of thousands of dollars on pricey commissions – a win-win situation for everyone involved, including the Realtor® who builds his business on this effective model.
Although some traditional Realtors® may adjust their commissions on the fly, be wary of this: you could be using a less successful Realtor® who is desperate to make a sale and may skip other steps as well; however, because a discount Realtor® already has a low-cost, a flat-fee system in safe, you can feel comfortable in the fact that you will be saving money and be sure you are using a high quality of service. Because discount Realtors® are focused on a higher volume of sales, they are unconcerned about haggling over high commission fees.
Flat-fee Realtors® definitely have the leg up when it comes to services that home sellers can choose from. With no commission fees and an effective model in place, home sellers have more options and are able to price their homes more competitively, gaining ground over those trapped into a traditional Realtor’s® old-fashioned structure. In the end, it comes down to making smart home selling decisions by using a flat fee Realtor® to save money and prevent that extra stress you don’t need when in the midst of a home sale.