Northampton Realtors: About Commissions

There are many misconceptions out there about how much money Realtors make from the sale of your home.  In order to break down stereotypes and set things straight, this article discusses the truth about a Realtor's commission.

Realtors (including Northampton Realtors) work for weeks, maybe months, to help you get the best deal on your property.  At the close, they receive a commission, a portion of the sale price, as payment for their marketing, advertising and negotiation efforts. 

Typically, a Realtor's commission is between 4-6 percent of the total sale price.  On a $200,000 house, a 5% commission would be $10,000.  Now, that may seem like a lot of money, but keep in mind, it doesn't all go to your Realtor.

The commission is usually shared with the listing agent receiving 3% and the selling agent receiving 2%.  That means, after the split, your Realtor's commission drops to $6,000.

Next, subtract the costs for overhead expenses like advertising, including flyers, newspaper ads, mailings, open house costs, signs and virtual tours.  For the sake of this example, let's conservatively estimate this adds up to 30% of the Realtor's cut.  Suddenly, the agent is netting around $4,500. 

When you factor in the average amount of time it takes to list a home, market it and take it to closing, the best case scenario is 50 days.  In the end, the Realtor's commission winds up equaling $90 per day while actively selling your home.

Now, comes the big question?  Is it worth the expense? 

Sure, you could try to sell your house on your own, going the ‘for sale by owner’ (FSBO) route.  If you make the sale, you won't have to pay a commission, but you will still have to pay for the advertising expenses and documentation fees that are usually rolled into the Realtor's costs.

There's also the option of hiring a Realtor to only help with the closing paperwork.  While this commission will typically run between 1-3% of the sale price, you'll still be responsible for marketing costs to lure a buyer.

After you break it all down, hiring a full service Northampton Realtor, one who is highly knowledgeable, professional and savvy at marketing and negotiating sales, is a smart choice.  The bottom line is this: if your Realtor helps you sell your home at your desired price, he or she is worth every penny of the Realtor's Commission.