Published July 27, 2021
Triangle Real Estate Commissions…… Who Pays and How Much??
It is very common practice for individuals when buying or selling real estate to “employ” the help of a licensed real estate professional. Real Estate agents know the local market, they understand the fine points of the laws and regulations that govern the transaction, have better negotiating skills based on experience and relationships with other agents and can make the overall process much easier on the client than if they were to go it alone. To compensate for that service, real estate professionals earn a commission based on the sales price of the home sold or purchased.
Although commissions paid for services are always negotiable between agents and clients (as to not violate any state or federal laws), on average we see the commission payout between 4.5% and 6% with the 6% amount being the old industry “standard”.
Real Trends reported in 2019 that the industry average across all transactions was 4.96% which was down from 5.03% the previous year.
You may be asking yourself, who is responsible for paying the commissions and where does that money go? Typically the seller pays the commission in a transaction and that percentage amount is negotiated with the listing agent as part of the listing agreement. The listing agent then agrees to pay a buyer agent commission from the money received as part of their compensation. For example, let’s say that a buyer and seller come to terms on a contract for $300,000. The seller had agreed to pay the listing agent 5% for their services (300,000 x 5% = $15,000). That same listing agent agreed to pay the buyer agent on the transaction a commission split of 2.4% ($300,000 x 2.4% = $7,200). At the closing table, the split on the commissions paid out of the $15,000 paid by the seller would be $7,200 to the buyer agent and the remaining $7,800 to the listing agent.
A changing trend that we are seeing in the Triangle market is that the commissions paid out to buyer agents is dropping from its “normal” 2.4% on resale homes and 2.5% on new construction homes. Again, since there is no set standard commission, these amounts do fluctuate.
When they go below these “normal” rates, then buyers may have to make up the slight difference in commission compensation for their agent’s services. For example, if the buyer agent contract states that the agent will be paid 2.4% on a resale home and 2.2% is all that is being offered, then the buyer can be charged the 0.2% fee at closing to compensate the agent for the difference. In the current Triangle real estate market, this is a small price to pay for a good Buyers Agent’s services.
Real estate can be a complicated animal if you don’t know what you are doing. Getting the help of a real estate professional is often key to having a successful and enjoyable experience. For that professional assistance, a commission is often negotiated. Obviously you are welcome to go at it on your own and if you do, then best wishes to you. If you are looking to buy, sell or invest in real estate in the Raleigh area, then give our team at the Kima Real Estate Group a call and let us discuss with you how we can best be of service and help you obtain your real estate objectives. 919-300-5421 or check out our website WelcomeToCarolina.com
Chad Wingler
Lead Buyer Specialist
