Your Agent's Commission

Understandably, sellers want maximum profit from the sale of their house, and to some, the commission involved is a large, unwarranted expense. Let’s analyze the commission from a typical sale and see where the money really goes, and what services the listing agent provides.

Your listing agent and his firm are your financial partners in selling your house. They make a sizeable up front and ongoing investment to list and market your property, often long before receiving any compensation. When the house sells, the commission isn’t pure profit.

• Part of the commission is used to offset numerous expenses, including MLS dues, marketing, advertising, (internet listings, website creation and maintenance, signs, flyers and brochures), open house expenses, office expenses, telephone and internet fees, cameras and equipment, automobile operation and maintenance, professional dues, continuing education, additional credentials, special training, insurance, referral fees and more.

• Part of the commission is compensation for professional services rendered. Your agent spent many hours working with you, your family and the other members of your selling team, advising you and solving problems. Your agent responded to inquires from other agents and from buyers, conducted agent caravans and open houses. He referred tradespeople and others to help you prepare your house for sale. He negotiated on your behalf with the buyer’s agent, and arranged the closing, including legal services. Believe it or not, this is a partial list!

Assume you’re selling a $250,000 house, paying 6% commission ($15,000) and your house is on the market for the typical period in your price range, currently about 185 days in Henderson County. The buyer’s agent’s firm receives half the total commission (in our example, 3% or $7,500), and your listing agent’s firm receives the other half. How the commission is shared with the agents will vary, depending on the support and services their firms provide. Assuming a 50/50 split, your agent receives a gross commission of $3,750, regardless of how long it takes to sell the house. 

(On-line PS:  The decline in selling prices combined with a longer time on the market means that your listing agent is working longer and harder for less income, while the costs of doing business continue to climb.)

Rather than being an unwarranted expense, the commission your agent receives is far outweighed by the value he contributes to a smooth and successful sale.

Smart Selling Tip:
Your listing agent is your financial partner who has made an investment in order to list and market your house. A portion of the commission your agent receives is reimbursement for expenses incurred in the process, as well as compensation for professional services.