Eva Bradley's Blog » Contract http://evabradleyrealtor.com Realty World - Corral Hollow Real Estate 104 W 10th Street Tracy, Ca 95376 Thu, 02 Sep 2010 00:11:17 +0000 http://wordpress.org/?v=2.9.1 en hourly 1 Real Estate Commission – Who Pays For It? http://evabradleyrealtor.com/2010/04/04/real-estate-commission-who-pays-for-it/ http://evabradleyrealtor.com/2010/04/04/real-estate-commission-who-pays-for-it/#comments Sun, 04 Apr 2010 23:01:53 +0000 Eva Bradley http://ebradley.blogs.rwnetwork.com/?p=364 rightListing Commissions
Real estate brokers normally charge a commission for listing and selling your home. The rate varies, both by region and according to service level. In most areas the commission is calculated as a percentage of the sales price and rates of up to 7% are not uncommon.  Your listing contract will specify both the amount of the commission and the timing for when it will be paid.  Like everything else in real estate, commissions are negotiable.

Discount commissions
It wasn’t to long ago that commissions below the “going rate” for an area were all but unheard of.  These days though, there are many brokers and agents willing to list your home for considerably less than the 7% that might be typical for the area.  You need to be aware though, that lower commissions are nearly always tied to lower levels of service.  Most agents willing to list your home for a bargain commission rate aren’t going to do any advertising or marketing of your home.  They will probably just list it with the local MLS and put a sign in your yard, and that’s about it.  Meanwhile, a full service, full rate agent will probably spend considerable time and money to advertise and market your home – particularly to other agents in the area.  So, when considering a low commission, be sure you know exactly what you’ll be getting, and what you’ll be giving up.

Often, lower commissions will be part of a package deal where you agree to use a particular mortgage broker or you agree to buy your next home through the same agent that sells your present one.  There are some good bargains to be had with these package deals.  But again, it pays to examine the details closely, and make sure the whole package fits your needs.

rightPaying commissions
It’s important to understand how commissions are earned, and when they are paid.  Your specific listing agreement will spell out the details.  In general, a broker is considered to have held up his end of the bargain when he brings you a “ready, willing and able” buyer.  If the broker finds such a buyer, and you change your mind and back out of the deal at the last minute, the broker is probably going to expect you to pay the commission anyway, since he did his job.

Buyers Commission:  Buyers do not have to pay a commission when purchasing a home! …unless the buyer hires an agent to find a suitable home and is willing to pay for the agent’s work and time. In this senario there should be a specific, written contract to  make sure both parties agree and understand the terms.

In general when a home has been entered on the local Multiple Listing Service (MLS) for sale, the listing agent points out how the commission will be shared in case another agent brings in a willing and able buyer.  Common practice is that the listing agent and the buyer’s agent share the total commission in a 50/50 split.

 
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At closing time, the last thing you want is a dispute over what goes with the house and what doesn’t. But it isn’t all that unusual for a buyer to think a particular item is included in the sales price, while the seller never had any intention of including the same item! Classic examples include window coverings, lighting fixtures and chandeliers. But just about anything which might be construed by a buyer as being “part of the house” has the potential for misunderstanding and disagreement.  

Generally, the law says that anything which is part of the land or attached to the house and is immovable, or can’t be removed without damage, or anything which is incidental or appurtenant to the land is real property. Personal property is basically everything else – the possessions you take with you when you move.  

The law recognizes the intent and manner with which an item is attached in determining whether an article or fixture is real or personal property.  Built-in appliances are usually considered real property, while free standing ones are usually personal property. If removing the item requires pulling nails, it’s probably real property. If it can be unscrewed and removed without leaving any damage, it might be an item ready to cause some disagreement!  

To avoid problems, both buyers and sellers should make detailed lists of any items to be included in the sale before closing.  As a seller, give your list of items to be included to the closing agent. If there is something you want to take with you, and it requires removing a screw or nail, put it in the contract.  

Remember, as with everything else in real estate, it’s all negotiable. If there is a unique item you want included in your purchase, you may be able to get it included at a reasonable price.  Especially if the item won’t fit in with the new home the seller is moving to.

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