How to Explain Real Estate Commission to Clients?

When someone begins the process of buying or selling a house, they will encounter the concept of a real estate commission. For someone who has not gone through the process of buying and selling a home before, a real estate commission can seem a bit confusing and expensive. It is important for clients to understand what the commission is and what it represents as they move forward with their real estate transactions. 

What is Real Estate Commission? 

The standard real estate commission is the fee that real estate agents and brokers get paid. This is the money that allows agents to receive their compensation for all the work they put in to help the client complete the transaction.  

As RIS Media explores, real estate agents help clients with a variety of tasks throughout the buying and selling process, and compensation for this assistance comes in the form of a commission. The real estate commission also represents all the years of experience and training that the agent has cultivated to help the client get the best possible price for the home they want to buy or sell. This training and experience help them become critical experts in real estate transactions so that their clients have a strong representation at the negotiating table. 

What Does an Agent Do to Earn Real Estate Commission? 

Real estate agents can help clients with a variety of different tasks that make it easier for them to buy or sell a home. A real estate agent will help clients with tasks such as: 

  • Guiding buyers to help them get pre-approved for a loan — Those who have not navigated the process can ask questions and learn more about how to secure the best pre-approval so that clients know their budget and can begin to look at potential homes to purchase. 
  • Daily research on homes — Real estate agents also typically stay on top of the local listings so they know if a potential house a client is interested in shows up on the market. 
  • The real estate agent will also help the client set up showings so that the potential buyer can see homes that will potentially appeal to them the most. 
  • If the real estate agent is helping a seller, the agent will help them analyze the market so they know how to set a fair price. 
  • The real estate agent can also help sellers market the property so they attract the attention of the best potential buyers. 
  • The real estate agent will write offers for the homes that clients wish to bid on — When a client finds a home that fits them well, the agent will help them determine the best price to offer, negotiate with the sellers, and write up the offer to submit. There will often be negotiations with the home seller before an offer is accepted, and the real estate agent can help buyers understand and navigate the process; the client will have someone representing their interests. The real estate agent can also help sellers negotiate, ensuring that the client gets the best possible price for their property. 
  • Help with the home inspection — Home inspection is a critical part of the home buying process, as it will help new homeowners avoid large unforeseen costs and problems with the purchase. The real estate agent can help buyers set up and then work through this process and understand the report from the inspector.

Typical Real Estate Commission Range 

In the U.S., the average real estate agent fees range from 5% to 6% commissions of the home’s sale price. Of course, this can vary depending on the state and the housing market. When fewer listings are available, commission rates have a tendency to drop.  

In some cases, home buyers working on a tight budget might work out a deal with a broker who will offer a flat fee or an “a la carte” pricing model rather than the traditional percentage model. When this happens, the home buyer only pays for the services they need on a per-hour or fee basis. This allows the buyer to pick and choose the areas where they need an agent’s expertise. 

How Real Estate Agents Can Boost Their Value 

For agents, real estate continuing education can be key to growing as a professional. Continuing education can help real estate agents take their real estate practice to the next level so they can provide even better services for their clients. When you take these extra steps to improve the services you provide to clients, it becomes even easier to justify your commission if you’re questioned by clients and need to help show the type of value and expertise that you bring to the transaction. 

For real estate agents who want to take their practice to the next level, Colibri Real Estate is the best online real estate school to get started. We help agents access the training tools they need to continually learn more about their field and how their expanded knowledge can help benefit their clients. 

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