Here's what to look out for when discussing real estate commissions with a real estate agent. Don't let traditional scare you away from using a discount real estate broker because of these real estate commission myths.
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Top 3 Real Estate Commission Myths
1. Top 3 Real Estate Commission Rates Myths
squeezemoreprofit.com /top-3-real-estate-commission-myths/
“Myth is the hidden part of every story, the buried part, the region that is still unexplored
because there are as yet no words to enable us to get there. Myth is nourished by silence
as well as by words.”
–Italo Calvino, writer and journalist
Ahh Yes!
The unspoken and preferred “shhh” word in real estate – COMMISSION.
When it comes to real estate commissions (shhh!) it’s often what isn’t said that prevents progress in the
industry and in the profession.
Today I reveal what I consider to be the top 3 real estate myths that keep real estate commission rates out
of line with the public’s point of view.
1. Real Estate Commission Rates Have To Be A Commission
Everything about the real estate broker compensation is negotiable in Connecticut. Connecticut real estate
law provides that not only is the amount of the real estate commission negotiable, but so is the type.
2. That means that you don’t have to pay your real estate broker a commission at all. You can pay your real
estate broker by the hour, with a flat fee or any other way you and the broker agree. You can even barter.
2. Commission Has To Be Split 50/50 Between the Listing and Buyer Broker
This is a myth that causes great confusion especially when trying to explain how discount real estate
brokers operate.
It is assumed that 6% real estate commission rates would be split 3% to the listing broker and 3% to the
buyer’s broker. Or that in 5% real estate commission rates, the listing broker would receive 2.5% and the
buyer’s broker would receive 2.5%.
This sounds logical, but there are no rules or laws that say it has to be that way.
The 6% real estate commission could be divided with 3.5% going to the listing broker and 2.5% going to
the buyer’s broker. Or with a 5% real estate commission the listing broker could get 2% and the buyer’s
broker 3%.
How does this relate to discount real estate brokers?
Suppose you are offered a 4% commission. It is perfectly legal and acceptable for the listing broker to
keep only 1.5% and give 2.5% the buyer’s broker.
No rules are broken.
3. Lower Real Estate Commission Rates Will Kill Your Sale
Here’s the truth.
Your listing agreement with your real estate broker includes a total real estate commission amount that you
will pay for the real estate broker’s services.
The details of the amount you pay for the real estate broker’s services are kept private. The buyer’s broker,
buyer’s agent or buyer has no idea as to the amount or type of compensation you are giving your real
estate broker.
You could agree to pay your real estate broker $1 and no one besides you and your broker would know it.
The only part of the real estate commission that the buyer’s broker knows about is the buyer’s broker
commission.
These 3 Myths may never come up in a conversation with a real estate broker unless you know to ask —
but now you have information that you can use to your advantage when deciding which real estate broker
to hire.
Lisa Henderson is a Connecticut Real Estate Broker and Owner of Realty By Design. She is an
Entrepreneur, Marketing Expert for Connecticut Home Sellers and an Advocate for For Sale By Owner
Sellers. Her unique talent is using the principles of marketing theory to sell homes. Her systems help the
average home seller get the biggest bang for their commission buck. She has a track record of delivering
value to her clients while lowering the cost of selling a home. She has been successfully marketing her
own entrepreneurial businesses for the last 25 years.