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Determining a List Price for Your Home
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Commissions - SELLERS

In most areas, there is a customary percentage that real estate agents expect to earn as a commission. The percentage varies from region to region, and depending upon whether it is residential real estate or commercial real estate. However, just like anything else in real estate, this amount is negotiable. When completing the listing agreement, you and your agent will agree on the amount of the real estate commission.

Home buyers and sellers often assume that the entire commission paid at closing goes to one agent, when in fact commissions are usually shared by all agencies who participate in a sale.

Commissions are normally divided, with a portion of each going to the listing office and the selling office. Each office then pays its participating agent a percentage of the total received.

If an office is part of a franchise system, such as CENTURY 21® or Coldwell Banker®, the commission paid to agents within that office is decreased by whatever percentage the franchising company charges.

Many real estate offices pay commissions on a sliding percentage scale, with the agent’s commission percentage increasing as they bring more revenue to the agency.

Some offices pay agents a higher percentage of the commission income for 'in house' sales, where both the listing and selling agent are within their own office. The agency makes more from these sales since it does not have to share commissions with another office.

When the commission is earned. The listing contract also specifies when the commission is earned. This is important and you should pay close attention.

If a ready, willing and able buyer presents an offer that meets your listing price and terms, the agent has effectively earned the commission at that time. If a buyer presents an offer and you reach agreement on price and terms through counter-offers, the agent has also earned his or her commission.

Sellers occasionally get cold feet, just like buyers do. If this is going to happen to you—make sure you consider it before you agree to terms with a buyer.

Once you reach terms with a buyer, you have incurred two contractual obligations. One is to the buyer and the other is to your agent. The agent has earned their commission according to the terms of most contracts even if you should change your mind about moving and cancel the sale.

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