Commission Guidelines

There is a standard percentage that real estate agents expect to earn as a service fee. Upon appointing the exclusive agent to represent in your property dealings, you and your agent will agree on the service fee amount payable after the property transaction. When you agree to a fee with a listing agent, you should keep in mind that there are usually two agents involved in most transactions. Most of the time, only part of the commission goes to the listing agent's company. The other portion goes to the company representing the buyer.

Some service fee related questions you could ask:

Will my property be listed in the Multiple Listing Service (MLS)? Being listed in the MLS expands your sales force. Every agent is invited to bring potential buyers to your property. This large supply of buyers will increase your pricing power and the ability to sell your home more quickly.

What kind of Internet marketing will you do? There are many high profile web sites you will want your agent to advertise on. Ask which ones he/she will use and ask for specific statistics. What about the agent's company and personal website? What newspapers do you advertise in? Ask if the agent advertise your property in the classified newspapers? What is the frequency of advertisements? Does the agent provide any virtual tours to your property marketing?

What multi-media marketing options do you employ? What kind of Virtual Tours is offered? Is 24/7 streaming video available? Where can it be found?

What Exclusive and Customized services do you offer? Go beyond the "traditional" marketing services that are available through most fine companies and find out what your agent and his/her company offers that the other companies and agents do not offer.

What is the effect of your co-broke offering on the company representing the buyer? Since part of the service fee usually goes to the company representing the buyer, you may want to ask whether that portion of the fee being offered is the standard amount. As mentioned above, the more agents bringing their clients to show your property, the more pricing power you will have and the sooner your property will be transacted. And the larger the amount of service fee to be shared with the co-broke agent, the more agents will be willing to show your property.

What is the effect of your marketing to other agencies? Very few properties are sold through advertising or open houses, but it does happen. Most often, those ads generate calls from potential buyers or sellers, who end up as clients for real estate agents -- and you want agents to bring potential buyers to your property. Advertising your property to other agents has a higher impact than direct advertising to consumers.

Lastly, ask yourself...

What is more important to you - getting the most amount of money from your sale, or paying the lowest service fee? Once you decide which is more important, how much service fee to invest in your property sale becomes clear.

Don't be fooled by discount brokers. Service fees pay for three items only - Profit, Overhead & Marketing. Overhead is a variable fixed cost and that leaves only Profit & Marketing.

Where do you think discount brokers cut back to make up for their reduced fees? It is surely not Profit... They cut back in Marketing which means that as a result of reduced marketing you are very likely to receive much less marketing exposure for your property.