Who Pays Real Estate Commissions?

I heard the seller pays all of the commissions in a real estate transaction...
A common myth is that homebuyers shop for free because sellers are responsible for all commissions in a real estate transaction, but it's not that simple. We will walk you through how real estate agent fees affect homeowner equity in the infographic below, then we'll explain how the math actually out works for buyers and sellers in the scenarios that follow. 

 

 

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That’s informative, but cut to the chase. Who is responsible for paying real estate agent commissions?

Because we believe in the power of technology and the capability of human intelligence. We believe in the value of knowledgeable, experienced real estate professionals assisting you in the process; we also believe it is unfair to charge buyers and sellers lofty commissions under the guise of “the mysterious magic of real estate.” You’re smarter than that.

Scenario #1:

Traditional Real Estate all around

If you are purchasing a $300,000 home, the listing agent is probably charging somewhere in the neighborhood of 6% (or more) to list the home for sale.

They’ll keep 3% of the purchase price as a commission, and they will typically offer a buyer’s agent around 3%. These percentages are always negotiable, and there is no legal statute defining how much commission real estate agents should be paid or must charge the consumer.

In this example, the listing agent will receive a commission of $9,000 and the agent representing the buyer will receive $9,000, as well.

Pretend you are the seller in this case, and take another look at those numbers. 

A seller listed with a traditional real estate agent, selling to a buyer using a traditional real estate agent, is about to wave goodbye to $18,000 worth of the equity they thought they had in their home. 

Yikes! 

In Colorado, the buyer does not write an actual check to his/her real estate agent in most cases; but make no mistake – the buyer is very much “paying commission” in the form of a higher closing price to help cover the cost of the agents’ commission.

Now let’s look at the same scenario with commission-free TRELORA representing you as the buyer:

Scenario #2:

TRELORA is on your side, a traditional agent represents the seller

Let’s consider the same $300,000 house. Remember, the listing agent is probably charging around 6% to represent the property. The seller is already out $9,000 for the listing side of the transaction.

Enter you, the buyer, with TRELORA negotiating the transaction on your behalf. You found the house online, scheduled a showing (maybe even a 2nd or 3rd showing), and you have made an offer with the help of your expert team at TRELORA which has now been accepted by the seller.

Remember the $9,000 the paid to the traditional buyer’s agent in Scenario #1? Let’s divide that in half… and then – let’s cut it even further. Your commission free transaction with TRELORA will cost a flat fee of $2,500 on the buy side; that’s a savings of $6,500 over a traditional real estate commission. This means the seller has more equity to show for the sale, and you have stronger negotiating power to say, “Hey – I’m basically saving us $6,500 on the cost of doing business. Show me the money and give me a better price on the house!”

Scenario #3:

TRELORA is on your side, you purchase a TRELORA home listing

Have you ever cracked open a fortune cookie that read, “You are wise in matters of money,”? This one’s for you.

Remember the $18,000 in real estate commissions right off the top in
Scenario #1? Us too. That’s a lot of money when it’s all piled up on the table, isn’t it?

When the team at TRELORA is representing both sides of a transaction, the flat fee is a total of $5,000 – less than 1/3 of the amount paid in a traditional transaction. And the cool thing is this amount stays the same, even if the price of the house is $400,000, $500,000 or more.

Why would we assist real estate buyers and sellers for so much less?