Why Are Real Estate Agent Commissions High & What Do You Actually Get?

Real estate agents are masters of home marketing, and they know exactly what buyers are looking for.  This includes knowing how to describe your home to make it stand out, getting the right angles in photographs to detail the property for a new owner and which features to focus on based on other properties that are selling or have sold in the area.  It’s important to remember that they only get paid when your home sells which is why your agent’s skills are so fine-tuned. They are masters at moving houses.

Aside from the points mentioned just now, here’s why your real estate agent deserves their commission and what you get in return for paying it.

The first thing they do is get your house in front of other agents.  Their network of peers has buyers looking for properties and this is something you do not have when you try to sell without an agent.  But that is only the beginning.

Next, your agent will list it on the MLS which is a private database for licensed professionals looking to buy or that are searching for properties for clients who are ready to buy.  Real estate agents also uses their own money for advertising and promotion and probably have deals with your local publications that home buyers use regularly. If you try to sell your home without an agent, you pay close to sticker price and the listing may not be as targeted or have preferred placement.

Because they do this for a living, their expertise in targeting the exact people who will be interested in your home is second nature to them. The commission is not only for the ads that run, it is for the years of experience they build finding buyers for homes and that is something only a trained professional can do.

They may also have contacts at real estate magazines, home buying sites and other marketing services that would take you countless hours to research, evaluate and find someone who will give you a fair price for listing your home.  The next benefit that only an industry professional can bring is his or her relationships.

From photographers to power-washing companies, contractors and stagers, even which title companies that can close your deal fast, your agent knows exactly who to contact for your old-home and who you can depend on to show up on time.  Because of the relationship and constant flow of business, there is quite possibly an industry or repeat business agreement lowering the price compared to what you would pay for a one time appointment.  In fact, negotiation is an area where your agent really shines.

They’re not emotionally invested in your soon-to-be ex-home, and going back and forth with a buyer’s agent isn’t as frustrating for them. They negotiate home sales regularly and know subtle tricks to make your position stronger.

For example, they might not put your offer of a home warranty in the listing, holding it back as a bargaining chip. Part of the commission you pay a real estate agent is to utilize their past experience in watching deals get put together that can close, and to come up with options and trade-offs you might not think of because you are not part of the industry. One of the biggest value adds that a real estate agent commission covers are the hidden traps to watch out for.  These can save you thousands of dollars by preventing you from making a mistake before signing the counteroffer.

The largest benefit to using an agent to sell your home, and why real estate agent commissions are high is that you do not have to disrupt your daily life.   Their job is to move the property and if it doesn’t sell, they don’t get paid.  That means you don’t have to take off work to show your house, you don’t have to miss an important event or even watching your kids play in a big game because an agent is calling about the listing or wants to see it.  The agent is there to show your home for you and work on sorting out everything from bringing foot traffic in to showing it only to solid perspective buyers.

The next time you wonder if getting a real estate agent is worth the commission you’re paying, and why you’re paying so much, think about all of the time they spend promoting your home, answering inquiries, and showing it to prospects so you can relax and keep living your life. The commission you pay your real estate agent covers all of this and in almost all cases, ends up being a great deal.

Get More Tips Like These

If you like this post, you'll love our monthly newsletter! You'll get a new theme with ideas for your real estate business from marketing tips to legal advice. Subscribe today!

Get An Instant Quote!