The commissions play an important role in the financial equation, and one of the reasons you likely won't make that the decision to move lightly.

You’ll be pleased to know, though, that commissions are less than what they used to be. They are also negotiable.  What does this translate to in practice?

Commissions are split between the seller and buyer brokers, with a percentage going to the agent and a percentage to the broker, on each side. Traditionally the commission was split 50/50 between the seller and buyer brokers.

In our area, the rate paid to the agent bringing in the buyer, the buyer's agent, tends to be 2.5%. You can choose to pay less, but this is not recommended and seldom happens, as it’s a disincentive to the purchaser’s agent. Occasionally a higher percentage is offered.

This means that the negotiable portion of the commission is the portion you are paying to the agent representing you, the seller's agent.

It’s tempting to choose one agent over another on the expectation of saving a thousand to maybe a couple of thousand dollars in commission. We suggest you don’t make this the basis of your decision. Not that we're casual about this kind of savings. Time and time again, though, we've seen this decision costing sellers five to ten thousand more and even tens of thousands more, or the price of not selling at all!

What about the ads, often on billboards, that read, for example “only 2.5% commission”. Look closely for the asterisk! As we have just explained, this indicates the general going rate for one side of the commission.

This kind of advertising is a strategy that’s used to get a foot in your door. The question to ask yourself is, is this the kind of agent you would want to do business with?

Please also see Agency Relationships, Choosing an Agent and Selling Privately.