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The Brokerage Fee - Where does it go?

Many people are reluctant to hire a Realtor because of the thought of having to give approximately 6% of their proceeds to someone who "just sticks a sign in the yard".  Ever wonder where that money really goes?

On a 6% brokerage fee:

Percentage

Goes towards...

3%

Cooperating Agent - This is the compensation given to the brokerage and buyer's agent that bring the buyer to your home. While it pays for the expenses of the brokerage on the buyer's side, it is also offered as an enticing reward for agents to show your home. Lowering this percentage lowers the incentive for buyers agents to sell your home, resulting in a longer time on the market and increased likelihood of having to lower your list price.

1.5%

Long and Foster - This portion is set per the contract between the company and the agent. It goes toward keeping Long and Foster the best. It provides agents with state-of-the-art offices and technology, marketing of the company which results in selling one out of every three homes, training agents to ensure you have the best people representing you, and the ability to offer mortgages, settlement, title, and insurance services.

1.5%

Listing Agent - This portion is split between Marketing and Listing Agent compensation. Lowering the brokerage fee results in less money available for marketing; a higher brokerage fee expands marketing capabilities.

 

3/4%

Marketing Costs - To maximize the exposure of your home in the marketplace to result in a quick sale requires an extensive marketing campaign.  Signs, advertising, internet publicity, open houses, and other direct marketing are covered by this fee.

 

3/4%

Listing Agent - This portion goes to the listing agent as compensation for facilitating the marketing plan, preparing the contracts and other agreements, acting as a negotiator for the home-owner, and managing both pre and post settlement activities.

6%

 

Total Brokerage Fee




So, does that mean I always charge 6%? No.

By law, commission rates are negotiable. I believe in being fair. The commission rate I will quote you for the listing side will be based on the sale price, estimated time on the market, and my labor time and expenses for the marketing plan needed to get your home sold.

You can choose what you'd like to pay the eventual Buyers Agent (assuming there is one). If you are also looking to buy a home and choose to have me represent you as a buyers agent on your purchase, I get paid for both sales. In that case, I will offer a substantial discount on the listing commission rate. 

I also offer another discount if the buyer of your home does not have a Buyers' Agent.  

The final overall rate is generally between 4.5% and 6%. I believe that is very fair and competitive considering the marketing services I will provide.


Closing Costs:

 In addition to the Brokerage Fee, there are other closing costs involved in selling a house.  They usually are another 1.5%-2%.



 




Jeff Escher of Long and Foster Real Estate, Inc. Rockville, Maryland - Homes Near Metro.  Real estate in Montgomery County, Rockville, Gaithersburg, King Farm, Kentlands, Lakelands and Silver Spring
Jeff Escher
Office 301.548.9700
Direct 301.519.1709
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Long & Foster Realtors®
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