How Commissions Work
Protect Your Profit in Real Estate, and Learn how the Listing Fee Structures Work.
You can end up having some regrets when you sell a home without fully understanding the fee structure of your realtor.
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Learn how commissions work
Feel confident knowing why our fee structure saves you money
Take charge of your own profits
At the ListPro Team, we’re up front about our fee structure, so you’ll be able to see clearly what your savings are.
Did you know realtors can choose their own fee structure?
You deserve to know what your options are going into a transaction
Don’t lose money because of lack of knowledge on the topic
Our fee structure provides you with significant savings.
Understand your options, so you can be confident you’re making the most profit.
Most real estate transactions have a buyer and a seller’s agent. Expenses for both realtors come out of the seller’s proceeds at closing, so it’s important to know what to expect with your particular agent.
Here are some of the most common commission models:
Standard 6% Commission
Most Common: 3% each to listing and buyer agent
Negotiable Commissions
Fees are negotiated based on the transaction size
Flat Fee Commissions
Low base flat fee for the listing agent, and 3% buyer commission
***Variable Rate Commission
*The ListPro Way*, With Our Signature 2% Listing Fee Formula
Our “Variable Rate” Commission of 2% Listing Fee Will Literally Save you Thousands.
Protect Your Profit, and Get informed about the different fee structures:
Standard 6% Commission – Most Common
This is what commonly comes to mind for clients when thinking of standard commission rates.
Particularly in the Midwest, many real estate companies and agents collect a commission at the closing in an amount of 6% of the purchase price, paid by the seller. This represents 3% for the seller’s agent, and 3% for the buyer’s agent.
Scenario 1: When Split between 2 agents
This 6% commission is most often split between the sellers agent and the buyers agent equally, so each agent collects a 3% commission:
$300,000 property = $9,000 fee to both agents ($18,000 total).
Scenario 2: If there’s only 1 agent involved
If the buyer does not have an agent, the listing agent gets paid both sides of the commission:
$300,000 property = $18,000 to the listing agent.
When Commissions are Negotiable:
Some real estate companies and agents are negotiable on commission rates, so it is possible to find agents willing to reduce their commissions on the list side, and even the amount offered to a buyer agent.
When would a commission be reduced?
Studies have shown that the higher priced the property the more likely an agent would be willing to reduce their commission. For example, an agent may be willing to drop their commission to 2.5% and offer a buyer agent 2.5% or 3% bringing the total commission due at closing down to 5% or 5.5%.
This would result in a total commission as low as $15,000 saving a seller up to $3,000 on a $300,000 property.
What Impact can a lower commission have on the purchase?
Agents and sellers are often concerned that offering 2.5% to a buyer agent instead of 3% will result in less showings. While it would be unethical (and technically illegal) for agents to not show a property due to a commission being offered for less than 3%, agents are human.
Did you know?
Studies have been conducted that have concluded that homes offering 3% to buyers show more often and sell faster than those only offering 2.5%.
Flat Fee Commissions:
For many years flat fee commission brokerages have been an option for sellers that are not wanting to pay commissions of these amounts. Flat fee commission companies, often referred to as discount brokers, offer a way to put a property on the multiple listing service (MLS) for a flat fee.
Flat fee commissions typically range between $395 to $1,000 for the listing commission, but a 2.5% – 3% commission is still usually offered to buyer agents resulting in a total commission of 2.75% – 3.25%.
How would this work with a $300k Purchase?
For example, a seller lists with a flat fee company for $595 (paid at the time of listing) and sells to a buyer [with an agent] with an offer of 2.5% to the buyer agent. The buyer agent would collect $7,500 for the $300,000 transaction.
The seller will have paid a total of $8,095 in commissions resulting in an effective commission rate of 2.7%. If the seller had paid 3% to the buyer agent, the resulting effective commission rate would have been 3.2%.
Some context for Flat Fee companies:
- Flat fee companies have had most of their success when the real estate market is hot. Most have not survived or greatly struggled through recessions.
- No flat fee company has been able to effectively expand into multiple markets due to the difficulty in providing premium services that sellers desire such as professional photography, 3D tours, and video walkthroughs.
- Professional photography and video walkthrough packages cost hundreds of dollars, so discount brokers typically do not have the margins to offer these services.
While there are many models that offer hybrids or pay for service type of listing agreements, there is not a company that has survived the test of time that has been able to provide high-quality services at drastically discounted commissions.
Variable Rate Commission:
The ListPro Way: We offer a Win-Win Reduced Commission Formula
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With our “Variable Rate” Commission, our 1% Savings Adds up Fast!
Two Scenarios that Bring You the Savings:
When we Sell the Home:
Only 2% fee with ListPro, not 3%!
Just 1% savings on a $300k home
saves you $3,000 in fees!
Summary: 2% to the listing agent
and 3% still goes to the buyer’s agent.
When we Sell the Home AND We Bring the Buyer:
Summary: 2% to the listing agent, and just 2% to the buyer’s agent.
Take a Look at Some Real Life Savings by our Clients in 2021!
At ListPro, we use a Variable Rate model, which is a Win-Win for the seller and the agency.
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At ListPro, our brokers have had decades of experience with other brokers, with access to many other agencies and their financial models. Their experience has allowed them to witness what works best for the client, which is best for the agency, and which models are a win-win for both parties. At ListPro, we use a model that’s a win-win:
- Our lead Broker, Bill Baird, actually spent several years (insert years) as the President of the Heartland Multiple Listing Service in Kansas City
- The Bairds were brokers of an agency for (insert years), and supervised (insert number) agents, being exposed to 1000’s of transactions
Protect Your Profit, and be Prepared by Understanding the Difference in Realtor Fees
We know that you want to be savvy enough to protect your profit in the sale of your home. But let’s be honest. You’ll need to make informed decisions about your realtor before you agree to a contract, not after.
The problem is, even if you’re friends with your realtor, it’s hard to know what type of commission you’re getting if you’re not informed about the different types of commission options available. This makes you feel vulnerable, because it’s hard to stay protected if you’re missing important information.
We believe every seller should be aware of the types of realtor commissions they’re agreeing to. We understand that not every home seller automatically knows what their options are, which is why we want to make sure that our clients have access to knowledge about different fee structures.
We are passionate about saving our clients money with our Variable Rate commission of just 2% for the listing agent.
Here’s how our client process works:
- First, set up a free consultation with us, and tell us your story.
- Next, we’ll customize a plan for your specific situation, based on our proven process.
- Finally, you can sit back with your new listing, knowing that we’re navigating the best deal for you, with our low fees intact.
So, call now for a free consultation on the sale of your home. In the meantime, download our free Home Selling Guide (designer, please leave this highlighted in red, so we can remember to add in the download option), to help you get prepared on what to expect throughout the listing process.
When you work with ListPro, you can stop worrying about how to protect your profit, and instead feel confident about our low fee “Variable Rate” structure. When you List with the Pros, you Save.
Keep Your Profit in Your Pocket, in these Easy Steps!
Setup a Consultation
Call, text, or fill out our form. We want to hear your unique story.
We’ll Design a Custom Plan for your Listing
From staging through closing, we guide you through the process with ease.
Let’s Celebrate your sale!
We’ll do all the work from start to finish. You’ll close the deal and save thousands in fees!
List Your Home with a Realty Team You Can Count On
We provide experience, expertise and exceptional savings in your real estate transaction. As seasoned local real estate experts in the Lee’s Summit and surrounding markets, we are your best choice for listing your home at the best price, with the most savings for you. Our real estate brokers have over 4,000 transactions of experience and are on top of every step in the process. You sit back and we do all the work.
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