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I want to list my condominium for US $1.3 million. How can I decide on a fair real estate commission?

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In the US, real-estate agents in many markets join a multiple listing service -- all members of the service list all the properties of the agents in the group on their own web sites, advertisements, etc., and try and sell them/bring them to the attention of their own buyers. These people usually charge 6% of the selling price as their commission, which is split between the agent who sells and the agent who lists. So naturally the listing agent works harder on selling the property that he lists, but other people will be working to sell your property too. Alternatively, you can also get an exclusive deal with some agents (usually not those who belong to the multiple-listing service) and negotiate a commission with them or get a flat-fee deal but you get less publicity and fewer people trying to sell the property. Of course, it is also possible to try and sell the property yourself and save the commission entirely, but then you have to pay for advertising, handle nuisance calls and screen potential buyers, show the condo yourself, do all the paperwork, etc.

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More accurately, there is a seller's agent commission and a buyer's agent commission, both typically 3%. Traditionally, the buyer and seller each paid their agents separately. In modern times, with people just starting out in life having a reasonable expectation of buying their first house with very little down, the seller is the one who ostensibly has money, and so is typically expected to pay both agents' commissions. –  KeithS Feb 4 '13 at 16:54
    
@KeithS - the term "buyer's agent" means something different. When I ask a local broker to show me a house, that broker is representing the seller, unless I sign a specific deal with her. –  JoeTaxpayer Dec 26 '13 at 16:09
    
That was not the way it worked when I bought my house. We had an RE agent who showed us around various houses in our price range. He wasn't trying to sell us any one house; his job was to get us into the right house for our needs and budget, and to be our representation in the negotiating and closing process. Then, the sellers had a "listing agent" who worked to sell their house and represented them. Both of them earned a 3% commission on the sale, which the sellers paid per a "buyer pays closing" stipulation in the sale contract. –  KeithS Dec 26 '13 at 16:13
    
Single-agent deals do happen, and they're becoming more popular as the initial cost of buying a home is daunting to those who've never seen it work. However, I feel in that situation neither buyer nor seller can be absolutely sure that the agent is working in that person's best interest; the agent's trying to get the sale made so they can take home a commission. –  KeithS Dec 26 '13 at 16:15
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Many states have instituted caps on commissions, some have formulas(Florida for example). Look into the NMLS guidelines and your states banking/real estate regulations to find out if this is the case.

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Can you cite one such cap? I just took the exam for a real estate license and their was no mention of caps, only that rates are negotiable. –  JoeTaxpayer Feb 19 at 2:01
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While it might or might not be possible to negotiate on the commission, it is something to discuss with the three agents you interview before listing the house. You will also care about how they plan to market the home, what they think the selling price will be (and how they determined it), and what they think you need to do to get the house ready to sell

The commission is just part of the equation. A poorly performing agent can result in final price that is too low, or an initial price that is too high which will waste weeks or months.

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protected by Dheer Feb 18 at 12:32

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