The Different Fees Paid To Agents Versus Investors

June 1, 2021
Share on facebook
Share on twitter
Share on whatsapp

You want to sell your house and you’re looking forward to putting some money in your pocket. But did you realize that selling your house may mean you have to pay money? In this blog post, we break down what are the different fees paid to agents versus paid to investors.

It’s true, selling your house can sometimes mean that you have to pay. (This isn’t always the case but it often is.) We want you to know about the different fees you have to pay because this information may help you decide whether to work with an agent or to sell your house directly to an investor.

What Are The Different Fees Paid To Agents Versus Paid To Investors? 

Agent Fees

An agent is a salesperson and they will try to find a buyer to buy your house. In order to do this, they will list your house in a listing service and use various marketing efforts to try and find a buyer.

So you’ll end up having to pay some fees to the agent. Those fees usually include a commission if they can sell the house (this is the highest amount of money you’ll have to pay and it’s often about 6% of the sale price of the house or about $6,000 for $100,000). There may be other fees you have to pay as well, and these might include different advertising fees or other costs associated with selling your house. There might be a fee to list your house, or there might be a fee to the agent’s brokerage or there might be a fee to get a sign in front of your house or there might be a fee for the title company. The list goes on and on. You can ask the agent about these and they should tell you.

What are the factors that determine agents’ fees and how to negotiate a lower rate?

Real estate commissions are not fixed and many factors push rates up or down depending on your area and your specific circumstances.

Being aware of the factors that affect commission rates can:

  • let you know if the agent is offering you a decent deal
  • help you negotiate lower rates. 

Why do agents lower rates for repeat clients?

You scratch my back and I’ll scratch yours

Agents occasionally offer lower rates in exchange for repeat business because the long-term value of clients that return for numerous transactions outweighs the losses incurred by lowering their rate for a one-off transaction.

If you sell your house and plan to purchase in the same locale, then take advantage of this. Ask your listing agent to represent you whenever you buy a home in exchange for lower commission rates. This way, you save on commission while your listing agent earns a commission on two real estate transactions, not one.

How do local real estate market conditions impact commission rates?

Real estate commission rates change over time depending on whether there’s a buyer’s or seller’s market.

A seller’s market means that more interested buyers are out there than homes for sale, consequently, houses sell quicker and at the listing price or above.

A listing agent’s job is simpler in a seller’s market so they are more likely to lower commission rates, but the opposite is the case in a buyer’s market.

A buyer’s market entails fewer buyers than homes for sale, therefore houses stay on the market for long periods of time and sellers usually lower their listing prices.

Investor Fees

This is the part that surprises most house-sellers: for most investors, there are rarely any fees to cover. Investors will usually take care of all fees associated with selling. Plus there’s no commission to pay because they’re not agents so they’re not listing your house. You might be responsible for closing costs but this depends on the investor so make sure you ask the investor who pays for those costs.

The One “Fee” You May Not Be Thinking Of

There’s one more cost (“fee”) that you might not be thinking of: when you work with an agent, they’ll get you to fix up your house and then you’ll have to pay bills and taxes for as long as it takes the agent to find a buyer. So although this isn’t a fee to the agent, it’s a cost you’ll have to pay because of the agent yet when you sell the house to an investor, they buy quickly so you end up saving this cost as well.

So what’s right for you?

It depends on how much you’re willing to pay and how quickly you need to sell.

If you want to sell your house to Sell for Cash AZ then please get in touch and we’ll be happy to walk you through it.

Share on facebook
Share on twitter
Share on whatsapp